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 25 luglio 2012

Market Comment - July 25

(Marco Bonelli) There should be a SEC rule that prohibits publishing or circulating BS rumors in regard to monetary policy after 3.00pm EST (especially when the originator leaves the impression of utilizing sources who are familiar with what's going on inside the Fed)!

Come on, the WSJ has to publish an article at 3.50pm about possible next steps from the Fed (that, by the way, doesn't even contain anything new). How much more coincident can it be after three days of sharp declines in the stock market? At the same time, in this environment of manipulated markets, it's surprising that it took three full days before rumors about the Fed or rumors out of Europe emerge (and promptly a ridiculous statement about turning the ESM into a bank sadly led to wide-ranging excitement).

On a more serious note, it is always fascinating that the "big picture" view very often gets associated with certain macro events.
The "situation in Europe" or the "Fiscal Cliff" gets mostly stated as the source of all evil and once we fix this, everything is fine.
Not surprisingly, the sell-off on Monday was seen as an over-reaction to European news by some market participants. Every day you hear that everybody "knows" the situation in Europe (therefore it shouldn't pose any downside risk!) and the "Fiscal Cliff" gets also discussed to death, therefore is no longer new news (and expectations are very low anyway!). Really? Shouldn't there be more attention to the interconnectedness of all global macro and micro developments instead of concentrating on one or two events without even putting those into a broad context? Unfortunately, the desperate focus on single events causes high and unpredictable volatility; fortunately the longer-term market trend eventually reflects the real "big picture" a lot closer and there, most data point to an ongoing self-feeding down-slope.

Talking big picture, the market gets a little break today after a very disappointing day on the earnings front yesterday:
The discussion of some stabilization to the deterioration of global economic growth already started yesterday after China's Flash PMI for July increased from 48.2 to 49.5, which got many observers excited and hopes confirmed that the second largest economy might have turned the corner and that recent stimulus measures already kicked in. Then this morning, a major investment bank published a note declaring that the "growth decline in the US has hit bottom". And finally CAT reported a strong second quarter and provided a rather positive outlook. CAT already trades a few points higher (contributing to most of the gains in the Dow Jones along with BA) that not only follows a similar reaction of fellow industrial names like HON or ETN (representatives of the industry sector that showed one of the biggest declines since the highs in March) but also sends a symbolic ray of light from one of the global industrial poster-children.

Financials and the beaten-down technology sector participated in the intraday rebound yesterday. Industrial will follow today.
In addition, the fact that the Dow Jones, SPX and NDX defended their 50day MA yesterday should also help the rebound this morning, disregarding that the Russell 2000, S&P 400 (Mid-Cap) and Dow Jones Transportation broke through their 50day and 200day MA and the Nasdaq Composite closed below its 50day MA. Despite a better opening, this rebound doesn't look any different than last week's rally that lacked substance and conviction, so let's see when the downward pressure from the real "big picture" takes over again (unless the WSJ decides to issue a "follow-up" to yesterday's valuable article).

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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