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 25 aprile 2012

Market Comment - April 25

(Marco Bonelli) Can 7.36% Q1 earnings growth be ignored?

So far, the stock market's reaction to reported Q1 earnings in general and better than expected earnings in particular has been rather muted.


Some companies artificially beat on lower effective tax rates or due to other accounting magic like charges or changes to reserves; others (like TXN and JNPR) chose to "warn" during the quarter only to "beat" in the official report, which then turned out to be the original guidance given at the beginning of the quarter; then there were companies that pulled some business from 2Q into 1Q; a large majority of companies already warned on Q2 but then there were also a number of companies that really reported strong earnings (and investors saw quite a few of these reports in the past couple of days. Thanks to the generous contribution of AAPL, Q1 earnings growth for the 173 companies of the SPX that reported so far currently stands at 7.36%, better than Q4 and a lot better than the 0.5% estimates going into the reporting season.

Going into this event-loaded week, the market lacked the famous "catalyst" to convince hesitant investors to buy the dips:

[...AAPL crushing numbers by a big margin once again, investors reluctantly embracing a positive earnings season and the Fed hinting towards QE3 amid weaker than expected economic numbers will most likely provide the catalyst to buy the dip...]

After AAPL crushed numbers by a big margin and a number of other companies reported strong results, will investors still see the numbers as "not good enough" or "already priced in" or will they embrace the positive earnings season and trigger the almost traditional mind-shift during the reporting season?

As AAPL was the center of attention yesterday, so is the FOMC announcement today - 1583 interviews, surveys, opinions and comments later, investors will know about the latest decision from the liquidity factory at 12.30pm and at 2.15pm from the factory master himself. Although the QE3 discussion got pushed back in recent weeks, the market is probably still eager to filter out any hints of "further accommodation". Unlike the positive earnings season, investors might get disappointed on the QE front. Although macro-economic numbers mostly disappointed since beginning of March, they haven't been weak enough to justify any additional liquidity injection (at the same time they haven't been good enough to call it a strong recovery - March Durable Goods Orders were another great example of a development that the Fed will likely still call "modest to moderate" growth!).

Interestingly, bonds started selling off yesterday and continue to do so today in a sign of another asset allocation shift out of bonds into stocks on back of the better than expected earnings picture. So maybe the market doesn't need any soothing words from the Fed and the buy-the-dip strategy finally turns out to be successful. At least for a few days, there is a good chance it will!

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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