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 9 aprile 2012

Market Comment - April 9

(Marco Bonelli) Is it really a "one month's data"?

In the middle of the debate whether the weak employment report from Friday makes the economic recovery more or less sustainable, probably two issues are worth mentioning:


       I. The improvement in the labor market over the last months has been overstated!

1) It's well known, well discussed and obvious that large parts of the reduction in the unemployment rate came from a smaller labor force, so the lower unemployment rate is more a mathematical than an economic gimmick.

2) The Bureau of Labor Statistics (BLS) upwardly (!) revised its first estimate of seasonally adjusted jobless claims in 56 of the past 57 weeks (!?!?). In the meantime 357k new jobless claims from last week were cheered as the lowest number in four years.

3) More bullish comments on back of the labor report pointed out that March payrolls only came in lower because January and February numbers were inflated by unseasonably warm weather. January added 275k payrolls, February 240k and March 120k - the trend over the quarter is down and the average dropped from north of 250k (which many economists see as the minimum rate to cause a reduction of unemployment) to 211k.

     II. The overall trend of economic activity points to moderate growth at best instead of a strengthening economic recovery. Continued weak trends in Europe and China clearly pose as a head-wind but many US economic data since the end of February was reported lower than expected and (similar to other times in the past years) economic "strength" was inflated by misinterpretation of sentiment-driven data.

Quickly going back to the market on Thursday last week: It's been quite a disappointing performance given better than expected retail same-store-sales from March, a higher reading for the Bloomberg Consumer Comfort Index (Bloomberg certainly issued another biased summary by posting the "Consumer Confidence hits 4-year high on US Job-Market gains" headline in the Top News Stories), an upbeat ADP Employment Change Report from Wednesday and the fact that many major averages could have easily rebounded from technical supports like a multi-month uptrend or a 50day MA. A few weeks ago, the described scenario would have lead to a positive reaction in the stock market, so does the fact that we didn't see a rebound after a couple of weak days reflect a change of pattern, change of attitude, change of mind or is the change of perception in regard of fundamental reality already well on its way?

Many (bearish) comments slam the labor report as "terrible" and describe it as a "disaster" and "illusion". Time will tell if this portray is correct or not; however, the sharp rebound in bonds and the selling in equities and commodities doesn't really reflect strong fundamentals. Beside that, the Dow Jones again below 13000, the SPX below 1400, a break in many up-trends from October and November as well as 50day MA doesn't really make it appealing for investors to jump right into stocks, economic-sensitive like industrials in particular. The rally clearly ran out of arguments during the past weeks, it could be that it eventually ran out of steam (liquidity)! With that, the pressure on the Q1 earnings season that gets kicked off tomorrow (AA reporting after the close) is quite high!

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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