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

venerdì 22 giugno 2012

Market Comment - June 22

(Marco Bonelli) Surprised that the market is finally disappointed?

It's the same old formula: You pump up prices in anticipation of a certain event (QE3, earnings or economic recovery in 2H for instance) and the risk for downside rises substantially in case the event doesn't occur.


The Greek election confirmed the agonizing status-quo and only made the previous government elected and no longer appointed. Still, it was treated as great pro-European success which -unfortunately- didn't lead to any dramatic measures like emergency G-8 meeting or even a coordinated global central bank intervention. Then came the FOMC Meeting that also confirmed the status-quo as the main purpose of the symbolic extension of Operation Twist was not to stimulate the economy (see analysis below) but to justify the original Operation Twist and not make it look completely unsuccessful. Given the fact that the stock market rally between Thursday last week and Tuesday this week was predominantly built on high expectations for aggressive action from central banks in general and the Fed in particular (the last straw of hope was that the Fed pro-actively reacts to the trend of weak economic data), the events of the past days didn't live up to the anticipation and have to be declared a non-event!

Instead, the Fed thinks and observes and many officials (including its Chairman) probably still wonder why the economy still doesn't pick up, despite all massive use of a variety of "tools". At least some market participants got excited as "the Committee is prepared to take further action as appropriate", a phrase that has been included in the official statement, although Ben Bernanke and some of his colleagues used the same words more than a dozen times in speeches and press-conferences over the last couple of months.

Here is a quick analysis, how successful Operation Twist was, which got announced on September 21, 2011 with the purpose of lowering the long end of the yield-curve and supporting the kind of reckless commitment to keep interest rates exceptionally low until the end of 2014 in another attempt to ignite economic growth: On Sept 21 last year, 10yr yields were at 1.86%, 30yr yields at 2.99%. In Q1 when the economy showed signs of life (with compliments from the weather), yields rose substantially (to 2.39% in the 10yr and 3.48% in the 30yr) but dropped again to 1.93% (10yr) and 3.12% (30yr), respectively by May 3, a day before the disappointing job report for April was released. So despite using roughly $315Bln buying long-term bonds, yields moved higher and the recent drop to 1.66% in the 10yr and 2.73% in the 30yr didn't happen because of Operation Twist but was mainly a result of a sharply declining economic outlook (which by the way was intended to get avoided). In other words, eventually, the economy dictates yields or as Richmond Fed Governor Jeff Lacker said this morning: "I do not believe that further monetary stimulus would make a substantial difference for economic growth and employment without increasing inflation by more than would be desirable."

Despite some muted optimism out of Europe here and there, it's not about any extreme levels in bond yields, CDS, credit spreads, ECB deposits and borrowing or the possible or not-possible functions of the existing or not-existing ESM bail-out fund. It's about a sharp deterioration of global fundamentals that includes economic and earnings growth (which by the way is expected to drop to -1.1% for Q2) that extends well into the second half of this year. The trend of revising down GDP and earnings for Q3 and Q4 just got started!

Even if the rally was built on desperate or non-desperate expectations, the 7.6% advance in the SPX and NDX between June 4 and June 19 corrected the oversold condition of the market and bumped up sentiment that could at least get depicted as neutral. However, general uncertainty gets mirrored when some market players were still impressed by the "underlying bid" and "resilience" of the market and even talked about a "summer rally" or "extended bounce" on Wednesday and yesterday morning, only to get seamlessly replaced by sell and short recommendations during the session yesterday and this morning.

Without any further catalyst, short-term supports and resistances levels will get played, 50 and 100day MA are back in the focus (in this context, the S&P 400 Midcap and Value Line Index trade again below their 200day MA while the Russell 2000 closed slightly above) but at the end, stock prices will most likely follow the fundamental trend over the next few weeks with the Q2 earnings report season being the next milestone to check reality and the outlook for the rest of the year!


Trade well.


(Marco Bonelli is the Managing Director of International for CL King & Associates in New York. The opinions expressed are his own.)

Nessun commento:

Posta un commento

Per commentare é necessario un indirizzo email "@gmail.com". Se non ce l'hai puoi farlo qui, oppure iscrivendoti al vlog. Altrimenti puoi usare una delle altre opzioni disponibili nel menù "Commenta come".