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 30 maggio 2012

Market Comment - May 30

(Marco Bonelli) Remember the highs from 2007 when the world was seemingly still intact?

Taking this mark as a symbolic level before the global financial crisis unfolded and looking at the development in securities markets again as a symbol for working through the crisis, the major stock indexes tell an interesting story:

The most classic development shows again the broad Value Line Index, whose downtrend from the 2007 highs was defined by the highs from May 2011 and was again tested in March this year, moving lower from there! The Dow Jones and SPX broke out of the equivalent downtrend earlier this year but dropped back to this 4 ½ year trend line during the sell-off this month, trading slightly above these levels now. While the Value Line, Dow Jones and SPX developed a downtrend, all other indexes managed to reach and/ or exceed the highs from 2007. The best example is the NDX that trades more than 300 points above the relevant levels (regards from AAPL). The S&P 400 Midcap Index and Nasdaq Composite also broke out of the 2007 highs (926.50 and 2861.50, respectively) but fell back to these levels last week; only the Russell 2000 drew a classic horizontal line that was defined by its 2007 and 2011 highs (856.50) and (almost) tested again in March this year.

What does it all mean? Generally, as long as indexes trade below the 2007 levels or within a defined downtrend from these highs, symbolically, the financial crisis itself and its (mostly negative) implications are still in the process. Right now the averages tell a contradicting story but with more indexes trading at or below these levels, the broad outlook could be muted as long as the global deleveraging story and/or credit crisis, particularly in Europe is still alive.

Anyway, the day-to day game is less about symbolic meanings but all about risk-on or risk-off, isn't it? After a frustrating month of May, at least the yesterday's session had the risk-on tag - at least for a day! Whether it was risk-on because the US is once again seen as a safe haven or the best of a number of bad options for equity investors, whether it was risk-on due to a simple combination of end-of-the-month window-dressing and short-covering or whether it was a reaction to another round of negative macro-economic news (the Conference Board's Consumer Confidence and the Dallas Fed Manufacturing Activity Index - isn't Texas seen as one of the healthier local economies in the US?) that (hopefully) invite further central bank accommodation, probably market players don't know themselves.

With Spain, Greece and the Euro still on the daily radar screens, the risk-on, risk-off switch will be flipped a few more times over the next trading sessions until we get a more specific message from the Government employment report on Friday, the Greek election on June 17 and the FOMC meeting on June 20. Until then, market participants will either opt to stay on the sidelines or engage in busy but unconvinced crowd behavior, which is reflected in a many consensus opinions on a variety of topics - specifically Spain, Greece, the Euro and the call for QE, LTRO and more alphabet soup action from central banks

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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