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 23 maggio 2012

Market Comment - May 23

(Marco Bonelli) Is the underlying meaning of "modest to moderate" positive or negative?

Investors are familiar with the Fed's statement of "modest to moderate growth". After a strong Q1, economic activity slowed considerably since March, April according to mostly disappointing data but at least economic growth can be described as modest to moderate. Although an anticipation of a strong recovery in the housing market helped propel the stock market in Q1, the actual recovery is not as breathtaking as hoped according to volatile housing data (Existing Home Sales in April grew the first time in three months) and earnings reports and comments from homebuilders (TOL sounded positive on the conference call but their Q1 revenues missed estimates) and other companies like LOW that sharply guided Q2 numbers down a few days ago. Still, home sales and housing starts show a modest to moderate uptrend. Finally China's growth can no longer be described as stunningly strong and a modest to moderate (in China terms) 7% to 8% growth could easily be the reason why China's call for new growth measures (fast-tracking infrastructure project approvals and pulling orders from 2013 sound like an outstanding strategy!) gets more greeted with concern and questions how much the economic activity really slowed and less with excitement about a better outlook.

The debate is alive but China probably poses a greater risk to the global economy than the European crisis. Ongoing concerns about the health of the second largest economy in the world are possibly a good explanation (among others, like the Dollar, Europe etc.) why commodities are on a steady decline since end of February (the CRB Index dropped 13% since February 24), why they trade at the lowest level since September 2010 and why an early rebound yesterday didn't see any follow-through. The weakness in commodities also shows that global economic weakness and soft demand is a valid concern and that a speculative liquidity injection via QE is not expected to be on the near-term horizon.

Despite an ongoing takeover frenzy in the (cloud) software space (SAP - ARBA; ORCL - Vitrue are the latest), the technology sector (the same sector that made a few attempt to rebound last week and was one of the best performing sectors on Monday) took a beating again yesterday, AAPL didn't see any follow-through buying from Monday's rally and dropped $20 throughout the trading session, semiconductors, networking and storage continue to trade at levels from fall last year and poor guidance in DELL and ADI not only shows how selective growth became in this sector but also gives another (painful) reminder, how the Q2 earnings season might look like (which doesn't point to modest to moderate growth but no growth at all).

So hopefully, New Home Sales from April and encouraging remarks from the European Summit in Brussels provide some support, other wise, Monday's rebound was nothing else but a one-day-wonder.

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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