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

lunedì 16 aprile 2012

Market Comment - April 16

(Marco Bonelli) What was the most defining moment in the market last week?

No, not China's 8.1% GDP growth (against 9.0% "whisper" expectations but at the end some bullish comments called it "still strong" and probably the "end-point of the cycle").

No, not mixed results from GOOG or better results from JPM, WFC (whose earnings continue to be highly confusing with their reserve management).

I think the most interesting question is if the strong and broad-based rally on Wednesday and Thursday tells more about the future direction of the market or if the two days (Tuesday and Friday) sharp and broad-based sell-off sends a more powerful message.

You could argue that some pumped-up optimism that China's economy will turn the corner, some speculation about earnings being easily able to jump over the dramatically lowered (expectation-) bar, hopes that cash-rich companies will aggressively initiate or raise dividends or the good old speculation about further stimulus ("...the Fed is ready to provide more accommodation if necessary...") could support the market.
At the same time you could hold arguments like macro-economic numbers mostly below expectations (including China's GDP), mixed earnings, an outlook that is mostly defined by hopes that the economic recovery in the second half of the year will pick up, a Fed that doesn't send clear signals that it's close to jumping into the stimulus pool again and partly broken chart-pictures against it.

How does sentiment look like in this battle of arguments? It goes with the wind... - one weak day and the majority of market players is cautious, wondering when the correction is over, the next day (after the Dow Jones and SPX recorded the "best 2-day gain in a month", for instance), the majority of participants thinks the correction is over and it's safe to get back to business. The broad consensus anticipates a shallow and short-lived correction (and some players might already think that it's really over after the major averages lost between 4 and 7% by Tuesday last week) and clearly embraces a buy-the-dips investment and trading strategy. Each market rebound and also this morning's strength in the futures (based on ECB hopes and better than expected, Easter-fueled retail-sales for March) assures investors that the consensus approach is right, which should raise some caution flags!

Looking at last week's performance of the stock market in general, the identical performance in commodities, the rising trading volumes on down-days, the weakness in financials (mostly driven by concerns about Europe but also mixed earnings) and the erratic moves in the technology sector that ended in sharp declines in GOOG and AAPL on Friday, the action looks like a classic 2-steps down/ 1-step up approach, something investors might have to get used to over the next weeks and months.

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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