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

lunedì 25 giugno 2012

Market Comment - June 25

(Marco Bonelli) Is the "same old" getting old or does it renew itself?

It feels like hopes are still riding high that the well-known issues around the world but particularly in Europe (as developments there get almost exclusively blamed for all going wrong...) will get resolved soon, only to get crushed again and again. Each European Summit is the one where the "Euro zone will be saved" or ECB's decision to lower the ratings threshold for collaterals accepted gets interpreted as a positive step and even contributed to the half-hearted counter rally on Friday. Other factors like relief that the uncertainty of the Moody's downgrades is behind us, that Thursday's sell-off was overdone or that valuations across the board are cheap (it looks like that argument doesn't get old at all) also contributed to the mediocre move.


This week should be quite interesting. The major averages are "hanging in" there, still trading mostly above their 200day MA (only the Value Line Index trades below, while small and midcaps - as represented in the S&P 400 and Russell 2000 - trade right at the relevant line) but generally below their highs from 2007 and 2011. In this context, a close look at the Nasdaq Composite is worth as the index just broke again below 2861.50, the 2007 and 2011 top. Only the NDX trades decisively higher. Furthermore, we entered the last week of the month and the quarter, which is always good for a certain degree of repositioning or window-dressing. Next week is largely holiday interrupted and the Q2 earnings reporting season starts after that. PG, MO, BBBY, DSW, FDX, R, ORCL, JBL, RHT and MU issued the most prominent earnings warnings for the next quarter last week. Estimates for Q2 and Q3 get revised down on a daily base and earnings growth is now expected to be negative 1.1% in Q2 and positive 4.3% in Q3 (to put things into perspective, just two months ago, in the middle of the last reporting season, Q2 earnings growth was expected a positive 2.0% and Q3 7.1%, earlier in the year the same estimates were as high as 4.2% and 9.1%, respectively). If this development sends any kind of message, it is that the expected acceleration of economic and earnings growth in 2H of this year turned out to be an illusion and has to be pushed out to 2013!

Earnings from LEN (06/27) and KBH (06/29) this week will get specific attention as comments from these companies will give investors are better sense regarding the recovery in the housing sector and will complement economic reports like New Home and Pending Home Sales for May. The development of the American Institute of Architects' ABI Index for April and May doesn't suggest any acceleration and even points to some contraction in the construction sector in the months ahead.

The performance of financials (follow-through?), 2861.50 in the Nasdaq Composite (support or resistance?), various 200day MAs (support or resistance?) and the economic calendar (will the trend of deteriorating fundamentals continue?) are probably the highlights of the week that will peak in high hopes for the European Summit on Thursday and Friday!

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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