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 24 maggio 2012

Market Comment - May 24

(Marco Bonelli) Which kind of investment environment is it when you primarily hope for the next stimulus measure and when your main fear is to miss the next central bank or government intervention?

The global economy continues to deteriorate, PMI measures from Europe and China show further contraction, various GDP data and sentiment indexes in Europe disappoint badly (and even the seemingly invincible German economy is no longer immune to the developments outside its borders), the second consecutive monthly contraction in US Durable Goods Orders (not the headline numbers!) and the latest round of disappointing earnings reports (particularly from the technology sector, where HPQ's figures almost look like crushing-the-numbers compared to CSCO, DELL, ADI, NTAP etc.) doesn't leave a lot of room to get excited unless you have a multi-year investment horizon.

Which kind of investment environment is it when confidence gets stomped into the trash-can?

The biggest and most-hyped stock offering in (recent) history turned into an investor nightmare right after 421Mln shares got priced last Thursday. The biggest and most prestigious bank lost oversight of highly speculative trading (oh, sorry, I meant hedging) activities that probably accumulated losses worse than $2Bln. To which degree do securities markets get manipulated by the ultra-aggressive accommodative monetary policies by central banks? Politicians and central bankers around the world are mostly following the trend and reacting to developments instead of showing leadership and coming up with real decisions. I guess it's a fair question if there is anything left where confidence is unshaken.

Many comments point out the striking similarities between 2012 and 2011. Yesterday's volatility, the sharp reversal to the upside and the reaction to any remote hints of rumors admittedly feels very familiar, although I think 2012 and 2011 should be seen as one piece instead of two separate developments that surprisingly look alike. In this context one other question comes to mind:

Are louder calls for and the likely resulting slight departure from austerity towards stimulation of growth good for the investment environment? Although it may sound positive on paper and in countless meetings and news-conferences, the process will take forever, which rather adds to uncertainty instead of reducing it. As Angela Merkel said yesterday ahead of the Dinner-Summit (oh, sorry, I meant Summit Dinner): "Leaders won't decide anything today." / "Leaders will only exchange opinions today." / "Regions need better cooperation on structural reforms." These statements and the experience from last year suggest that any kind of implementation of growth measures could be a 2013 or 2014 event!

Having said all that, the investment environment in this minute embraces the hope that consumer spending will further pick up (as witnessed in the continued outperformance of the consumer discretionary sector), puts all the faith back into AAPL, cheers HPQ's earnings report from last night, acknowledges that the major indexes defended their Friday lows (the Dow Jones even dropped a few points below before it turned around) and put all the confidence that is left into the hands of central banks, that have to intervene if the global economies continue to deteriorate or the global market continue to slide - at least that's the theory among the trading community. Given all developments and given the ongoing deterioration of the fundamental picture, selling any strength and further lightening up positions (except in gold and silver) might prove to be a successful strategy!

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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