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

martedì 15 maggio 2012

Market Comment - May 15

(Marco Bonelli) How successful will be the rebound this morning? It depends on the perspective!

A better than expected Q1 GDP in Germany and the whole discussion about Greece and Europe in general wearing off a little bit, it's kind of easy to launch another rebound attempt, especially after losses between 5 and 10% for the major indexes from their tops in April (SPX -5.91%, Nasdaq Composite -7.40%, Russell 2000 -8.13%, BKX -10.83% and SOX -12.28%, just to name a few) and the Nasdaq Composite in particular trading at the important 2900 level.

Given very disappointing market breadth, lack of follow-through buying at each of the last attempts to stage a rally, lack of leadership in the market and lack of conviction on the investor's side, it would be surprising if any kind of rebound turns out to be anything more than a "dead-cat" trading bounce; although short-term traders will certainly like it.

Looking a bit further ahead, the perspective changes "slightly". We are 47 days away from the 2nd half of the year, the time when most market participants, corporations, politicians and the Fed expects the economic recovery to gain speed. It has to come because that's what almost the whole rally until April was built on, wasn't it? So how do record low yields in the 10yr bonds for instance fit into that scenario? How do collapsing commodity prices, or to be more specific, how does a 8.4% price-drop in May for the (formerly) best indicator for industrial and economic activity, copper and the lowest prices since early January fit into that scenario? And while the calculation of Fed economic activity indicators becomes more mysterious by the month - nevertheless, a sharp increase in the component for shipments and average workweek (!) propelled the Empire Manufacturing Index for May back to the levels from February and March-, how does a drop in the 6-months outlook for general business conditions to levels last seen in October last year (remember, when the world came to an end!) into the scenario?

A lot of things don't fit together and the process of realizing that fundamental reality is disconnected from what stock prices suggest and that the acceleration of economic activity may have to be pushed out into 2013 will continue for a while!

It seems like the rebound was a V.I.P. session for the pre-market players only... Ongoing uncertainty around the Greece and mixed to negative news from the retail front (weak April retail sales, disappointing guidance from HD and SKS, better numbers for TJX and DKS / JCP will report after the close, although the already gave disappointing guidance) weighs again on the market. So it's up to the technology sectors to pull the market out of the swamp. The sector already staged an attempt yesterday and if the Nasdaq Composite holds above 2900, the growing excitement around the FB offering may hopefully help traders to get excited about the whole sector for longer than a couple of hours. Although 2900 is important to hold for the Nasdaq, the Value Line Index trading below 350 and other major indexes also having broken technical support levels, the overall outlook isn't too bright, though!

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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