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 7 giugno 2012

Market Comment - June 7

(Marco Bonelli) Is China saving the global economic recovery or just distracting from its own non-existing recovery?

After the ECB and BoE sort of disappointed investors by delivering only words and no action, at least the PBOC doesn't disappoint and cut its key interest rates. This along with lowering reserve requirements for banks in past months and the recent fast-tracking of infrastructure project approvals becomes quite an aggressive accommodative package that leaves the question open, how serious the economic slowdown in the People's Republic really is.

Still, given the almost unconditional dependence on the ability of central banks to fix any kind of economic problem, the kind of unexpected rate-cut in China is definitely a positive. You add a nice-talked and kind of successful Spanish bond auction and two of the biggest concerns in investor's minds (the faltering global economic recovery and the pending bankruptcy of Spain) has been fixed for a few hours or days. The risk is, if the Fed delivers the same at its FOMC meeting in two weeks what the ECB delivered yesterday, it will probably be considered a major disappointment.

Did you ever wonder why snap-back rallies like the one yesterday that follow a longer period of market declines almost always take a monstrous shape? Strong trading volume, bullish market breadth, technical level that got broken in the decline get reclaimed, (almost) everything looks like the world is back in order (since all the negative news is on the table and well discussed) and the media is close to running out of words how to describe "the best one day gain" in months and "the most powerful two-day move" in weeks. Well, any move like that probably has to be dramatic in order to confuse market participants and quickly clear a one-sided sentiment (which has been quite bearish as of late). However at the end, it was a typical powerful rebound out of oversold territory, driven (as usual) by a decent amount of short-covering (and of course, nobody wants to go short into the Humphrey Hawkins Testimony) in all speculative asset classes (including currencies, the Euro in particular). Not surprisingly, energy and basic materials were among the Top-4 best performing sectors on back of a strong broad-based rebound in commodities. The group was rounded up by financials and technology, two of the most oversold sectors that outperformed on both days of the rebound and could very well lead this short-term rally further - as long as it lasts. It's a great environment for short-term market players but it's also worth keeping in mind, that market bottoms get very rarely built with a 2.5% short-covering rally after a 10% plus correction!

Following the surprisingly constructive and positive description of economic activity in the latest Beige Book, it will be interesting to see, how Ben Bernanke describes the state of the economy at 10.00am EST and whether he joins his dovish colleague San Francisco Fed President Janet Yellen in hinting at further policy accommodation in the near-term future.

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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