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 5 aprile 2012

Market Comment - April 5

(Marco Bonelli) How useful or useless is the media?

Bloomberg displayed "US Economy enters sweet spot as China's growth slows" and "US Service Industries keep growing in sign job market improving" as one of their day-long Top-Stories on Tuesday and yesterday, respectively. It's well known that CNBC frequently pushes certain opinions and their commentary is often very biased (also thanks to certain financial sponsors of the program) but the Bloomberg headlines show not a lot less bias.


Looking at the majority of economic statistics in March, looking at the ISM Non-Manufacturing Index, which was released yesterday (with declines in new orders, backlogs, export orders and general business activity) and looking at retail same-store sales from March (which once again displayed strong sales), you can't see more than slow to moderate growth at the moment. The broad consensus still anticipates an acceleration of the recovery in the second half of 2012 but the way the media and many market participants paint the current picture leaves the impression that this acceleration is already underway.

What happened yesterday? Along with frequent calls that support an extension of the recent rally, quite a few comments called the "decline unwarranted" as investors focused too much on the Fed Minutes. The big question is if it really was the Fed Minutes or something else that caused the second biggest decline (shocking!) on high volume, very weak market breadth that found the best performing sectors from the rally among the worst performing sectors yesterday. It is also possible that the Fed Minutes were just another trigger to look at the current fundamental situation and it appears that monetary accommodation was a major factor in the perception of the current situation and the expectation of things to come.

Could the record-breaking Nasdaq lead the overall market lower? Ok, this headline could also appear as "Breaking News" on CNBC, nevertheless, it is worth pointing out that we just experienced the second time this year that the index significantly declined over two consecutive days, a move that broke the steep uptrend of relative outperformance versus the Dow Jones and pushed MSFT and ORCL below their 50day MA. Surprisingly or not, earnings worries were a major contributor to the decline as SNDK pre-announced, YHOO announced another restructuring, IBM was downgraded on concerns about the sustainability of earnings growth and CSCO made cautious comments. All this is backed up by major pre-announcements from PLCM and PMTC this morning. Derived from the forecasts that call for the rally to last another few years or decades, many comments emphasize that "the bar is set low for Q1 earnings"! Looking at pre-announcements in the technology sector, this observation might not be correct and by the way, does the classic beat-low-expectations-game really work with flat earnings growth? As usual the outlook for Q2 will be once again crucial!

While market internals continue to deteriorate, the general chart picture isn't broken yet (at the same time, we are not oversold, yet!!!) and the process of analyzing and recognizing the real fundamental situation continues (however this looks like)! On the positive side, strong March retail same-store sales (with positive earnings pre-announcements from TGT, TJX and ROST) and a NFIB survey that shows that 57% of small businesses have made capital expenditures over the past six months (the biggest number since March 2008) is encouraging, at least until the next data hit the headlines.

Trade well and have a great Easter Weekend!


(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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