Il Primo Ministro greco Lucas Papademos riceve l'approvazione del governo su tagli al bilancio che corrispondono al 7% del Pil nei prossimi tre anni e su una ristrutturazione finalizzata a ridurre di €100 mld gli oltre €200 mld di debito detenuto dai creditori privati, atteso il voto del parlamento • Standard & Poor's declassa il merito creditizio di 34 banche italiane tra cui UniCredit a BBB+ da A, Intesa Sanpaolo a BBB+ da A e Banca Monte dei Paschi di Siena a BBB da BBB+, S&P anticipa "una redditività decisamente debole per le banche italiane nei prossimi anni" • La produzione industriale italiana aumenta a dicembre +1,4% da novembre +0,3%, oltre le stime degli economisti +0,5%, anche se i dati del quarto trimestre -2,1% suggeriscono che la terza economia della zona euro è entrata nella seconda recessione dal 2009 • I Btp decennali salgono per la quinta settimana consecutiva, il periodo di recupero più lungo in oltre cinque anni, la prossima settimana il Tesoro vende €4 mld di buoni al 6% con scadenza 2014 • L'euro cala dal massimo di due mesi contro il dollaro, il mercato azionario europeo cala dal massimo di sei settimane e l'azionario Usa registra la prima settimana di perdite del 2012 dopo che i ministri delle finanze europee non hanno concesso il pacchetto di aiuto necessario a prevenire il collasso economico della Grecia

mercoledì 1 febbraio 2012

Market Comment - February 1

(Marco Bonelli) Do I sense quite some busy searching for reasons why the market should trade lower?

Alright, the SPX staged the best January since 1997, the Nasdaq the best January since 2001, both indexes are up around 22% from the October lows, a performance that generally gets defined as a "bull market" and with the exception of the NDX (that trades at 11-year highs), almost all major indexes trade within a couple of percent to the highs from last year.

So what are the reasons why the market should sell off from here? The majority of arguments mention either technical reasons or concerns about the European debt crisis. In addition, mediocre earnings get blames (well, however you define it but still, 61% beat expectations so far and a lot of blue-chips actually reported positive surprises (ignoring GOOG and AMZN!)) and yesterday - after weaker reports for the Chicago PMI and Consumer Confidence - the economy gets talked down as there haven't been good economic data recently.

Let's look at this argument: Since January 6th, when the BLS reported strong labor data, retail sales, housing starts, the Phili Fed Index, new home sales, GDP for Q4 and the two reports yesterday were reported below expectations. By the way there were more positive surprises than negative and regarding the disappointing data, with the exception of retail sales, all data showed unexpected strong readings in the prior two months so you could argue if a weaker report following two strong reports is the start of a new downtrend or just some "correction" from the unexpectedly high numbers. Looking at the 3-months average, almost all trends indicate improvement or recovery. Same with the ADP Employment Change data this morning: the December number was revised down but at 292k, which is still above levels from the heydays in 2004, 2005 and 2006 when the data never exceeded 275k. The three-month average shows that the private sector added 223k employees a months, data that easily qualifies as improvement or recovery!

Beside that, you find arguments that QE3 (if and once it comes) will be negative, that the January Barometer might not work this year or that the "Golden Cross" is actually more a contrarian indicator, not to mention that we had the last day of the month and most activity this week (including the many intraday reversals to the upside - Number 13 yesterday this month!) was window-dressing anyway.

The technical picture remains healthy in my view, the market consolidation featuring the many intraday reversals is healthy, sector rotation (yesterday financials took again the lead) is healthy, economic data in general continues to show improvement in the US and stabilization in Europe and China (according to the latest PMI Manufacturing data that delivered positive surprises for China, UK, Italy, Spain and Germany), all reflected in a steady uptrend for cyclical/capital goods and the fact that the search for reasons why the market should trade lower is just another indicator that investor's sentiment continues to be hesitant to cautious. As long as sentiment remains that way and economic data continues to point towards improvement and recovery, any downside potential might be limited (short-term speaking) and the rally might last for a little longer (again short-term speaking)!

Trade well.

(Marco Bonelli is the Managing Director of International for CL King & Associates in New York. The opinions expressed are his own.)

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