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 2 maggio 2012

Market Comment - May 2

(Marco Bonelli) Is the market looking backwards or ahead?

The surprisingly strong ISM Manufacturing for April (with highest readings for production, new orders and employment and lowest readings on inventories for almost one year) look more like a description of the first quarter this year than a forward-looking indicator.


Yesterday it got treated as evidence of a strong recovery and a major de-coupling from the rest of the world and didn't seem to capture any other macro-economic developments (which confirms once again that it's a sentiment driven survey that sometimes appears disconnected from reality).

Most economic data since beginning of March were reported below expectations (as reflected in the Citigroup Economic Surprise Index that steadily fell since beginning of February and crossed the zero-line on April 26 last week; closing at -12.80 yesterday). This morning's ADP Employment Change data for April only showed a modest 119k private jobs added, which raises fears for Friday's payroll number. Per definition, employment related statistics are lagging indicators, nevertheless, since the US economy tried to emerge from the Great Recession, the BLS report became the most important data. At least the ADP report fits right into most other numbers that point to sluggish growth but is it merely a reflection of the deteriorating economic activity in the past two months or is it an indicator for more bad news to come?

By now, everybody knows that Q1 earnings handily beat expectations and showed 8.47% growth over last year (of 343 S&P500 companies reported). The market celebrated and recorded a few strong sessions in the past two weeks that almost erased the losses from beginning of the month. At the same time, earnings estimates for Q2 get sharply slashed after an unusual high number of profit warnings for the current period. So the past earnings season gets rewarded and extrapolated for strong annual growth in 2012 and 2013 but the current season gets ignored, a sort of risky and questionable practice to make investment decisions, isn't it?

At least the Dow Jones closed at slightly new highs yesterday, the SPX and S&P 400 Midcap came very close to the recent highs from beginning of April intraday, while the Nasdaq, Russell 2000 and Value Line Index disappointed thanks to a late afternoon sell-off

So will the mediocre rally yesterday, a recent pick-up in M&A activity (in the technology and consumer sector in particular) and continued cautious sentiment (that only gets affirmed by the weak ADP report) in combination with some confusing "forward-looking" interpretations (a lot of it probably nursed by another round of QE3 hopes) be sufficient for the major averages to make another attempt to break out to new highs? The first 15 minutes of trading almost suggest so but the day is not over, yet.

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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