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

giovedì 1 marzo 2012

Market Comment - March 1

(Marco Bonelli) Let's start with a case study: Silver - or: why do we even talk about QE3?
The price of silver rose almost $2 on Tuesday, supposedly on "massive fund buying " and "panic short-covering", triggered by breaking the $35.75 level (short-term resistance but more importantly, downtrend  from April 2011) but driven by strong fundamentals. Yesterday the price edged up to $37.50 but after Ben Bernanke basically erased the near-term chances of any QE operation, the price collapsed by 10%, dipped below $34 and closed at $34.65.

Is it an extreme example or does it perfectly capture the characteristics of the current stage of the rally in general? Massive fund buying, panic short-covering, bullish fundamentals, bullish technicals, risk-on - this description was used to explain the move in the silver price on Tuesday but could easily be projected to the stock market and a "No QE3"-call reverses the whole picture? How surprising is it that the Fed Chairman mentions the drop in unemployment rate and the rise of gasoline prices and with that catches up to the recent economic developments? In this environment, how surprising is it that QE3 probably has been off the table for quite some time?

Investors get a bunch of better-than expected economic data that confirm the increasingly bullish outlook, including the February Chicago PMI from yesterday, strong retail same-store-sales and vehicle sales from this morning, the Beige Book states that the "economy continues to recover", that even "residential real estate improved somewhat" and that the "outlook for retail sales is generally positive" and they are disappointed that QE3 won't happen? Give me a break!

Looking at the sell-off in bonds, commodities and stocks, the most important question is how much of QE3 expectations contributed to the rally in the past two months! Whatever the answer is, the whole reaction reflects the poor quality of the rally in recent days.

Let's see how long this probably temporary effect lasts, how long the CRB Index stays below its 200day MA (with energy prices already back in rally mode), how long the DXY Dollar Index strengths last (as it still trades below its 50day and 100day MA), how long the selling in bonds goes on and when the "massive fund buying" and "panic short-covering" returns.

From a contrarian point of view, it's a big positive that the bullish economic outlook gets embraced by more and more market participants, including the Fed as it raises the risk once weak durable good orders are no longer one-time events in a string of positive statistics but become part of a trend. This in combination with increasing evidence of the poor quality of the rally could feature more and bigger sell-offs going forward.

But for now, investors should be grateful to experience an economic recovery without QE3, use the money from their bond sales to invest in the stock-market and play the currently bullish scenario, which would coincide with a historically strong performance at the beginning of this month.

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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