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 4 aprile 2012

Market Comment - April 4

(Marco Bonelli) Do economic cycles still exist?

With overly dominant central banks, did the definition of "cycle" get diminished to extreme events like the "Great Recession" or the "European Debt Crisis" and everything else gets smoothed by aggressive central bank (and government) action?


Investors got spoiled to a degree where weak economic data immediately gets answered by calls for monetary (and fiscal) stimulus and the reaction to fundamentals and trends (as we know it from the past) no longer seems to exist. Central banks around the world manipulate natural cycles and developments that create a frightening dependency on the "easy money" drug.

This in itself but also as a result explains the market's "surprise" following the FOMC Minutes yesterday, whose key headlines ("...no need to ease unless growth slows..." / "...significant outlook change could alter 2014 rate outlook...") still get discussed and put pressure on the markets (among other minor important macro-economic data or a minor important tightening in European bond markets). After tons of information and dozens of speeches and comments from Fed officials (including the 7 doves and 3 hawks among the voting members of the FOMC) the market is surprised that the Fed currently doesn't evaluate further stimulus as necessary? Shouldn't it be positive if the "economy expands moderately" and the "recovery is expected to gradually strengthen" or is economic growth only acceptable in combination with a wave of liquidity and ultra-low interest rates?

In the meantime, calls for an extended rally get louder and louder after many commentators and strategists observe frustrated investors who desperately wait for some kind of pull-back or correction but run out of arguments to stay sidelines after a stellar first quarter. Interestingly (and frighteningly but not surprisingly), the forecasts for a resumption of the rally go way beyond a 1500 year-end target for the SPX: "...until 2014...", "...3 to 5 years..." or Goldman's famous call as the "opportunity of a generation" gets traded and clearly overpowers the "...can it continue...?", "...is the strength warranted...?" or "...how long will the markets stay calm..." questions?

Three and a half months into the rally and the major averages revisit where they have already been last week. The weak opening will cause the Dow Jones to break its uptrend from October (after forming a triple top), the SPX to confirm yesterday's break of the November uptrend (after forming a triple top) and the S&P 400 Mid-Cap, Russell 2000 and Value Line Index to fall below the highs from February (and the small and mid-cap indexes to also break their October uptrend).

Whether greed prevails fear, whether the market forms a double, triple or quadruple top or whether April remains the month with the best performance for the Dow Jones will hopefully still get determined in investor's minds and not on the draw-board of central banks around the world. The process of analyzing and recognizing the fundamental reality (which started a few weeks ago) might get into a critical phase and the outcome favors many investors' calls for a short-term correction, only that all those who now plan buying the dip will be afraid to do so!

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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