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

martedì 13 marzo 2012

Market Comment - March 13

(Marco Bonelli) It's the FOMC Meeting and Wall Street will listen!

No matter how many Fed Governors commented in the past weeks, no matter how much has been said or how much information is known, it's wrong to ignore a FOMC meeting or declare it a non-event!

There is always something investors try to read into the statement, between the lines or what's not been said. With that Wall Street will look for any changes in the Fed's assessment of the economic recovery, outlook for inflation and unemployment and of course new wording in regard of further stimulus and the prospects of QE, if it ever happens in this cycle.

The stock market still rides the supposedly "perfect-world"-scenario and enjoys a nice comfort level. Sentiment mirrors thoughts like "...look around the world; the US looks like the best place to be..."; liquidity provided by the Fed and central banks in general is seen as a cushion to the downside that even pushes short positions on NYSE and Nasdaq to 4-year lows; liquidity on the sideline but also from continued asset-allocation shifts out of bonds is expected to give stocks additional support (of course, investors have to make room for the new $35Bln in 3yr notes from yesterday, $21Bln in 10yr notes from today and tomorrow's $13Bln in 30yr notes) and economic data like better than expected January and February Retail Sales continues to support the economic recovery scenario. As a result, the comfort level (a nice synonym for "complacency"), as reflected in indicators like the VIX Index that dropped to an almost 5-year low this morning, is relatively high and market participants either expect the rally to continue or only expect a short-term pull-back before the rally resumes!

The financial sector continues to enjoy the combination of improving economy and rising interest rates (the "stress-test", whose results get announced on Thursday, is nothing more than a side-show at this point) although it seems, investors are divided how much upside potential remains after 45% performance since the October lows and multiple technical resistance levels from 2009 and 2010 - a question that not only applies for financials but for the overall market.

On the contrary, the economy-sensitive Dow Jones Transportation Index continues to build a down-trend after having broken the uptrend from October three weeks ago and failing regain levels like 5172 or the 50day MA at 5203. Small-cap stocks continue to generally underperform but at least the Russell 2000 rebounded right from the October uptrend line last week. In the medium-term picture, the Russell 2000 and the broad Value Line Index still trade in a rising wedge formation, generally a bearish chart formation - overall a bit confusing market activity amid generally weak market breath. Short-term speaking it's that confusion and the reasons mentioned above that give stocks the current resilience.

Let's see if the statement from the FOMC meeting will add to or reduce the short-term confusion!

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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