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

martedì 3 luglio 2012

Market Comment - July 3

(Marco Bonelli) How high is the famous "Wall of Worry"?

Cautious comments regarding the decision from the European Summit but also ongoing concerns of the global economic slowdown (particularly after the weakest ISM Manufacturing Index since July 2009, which also represents the first reading below 50 in three years) get countered by statements like...

§  ...but the index (ISM) does not suggest that anther recession is looming.

§  ...but a lot of negative news is already in the prices and is well known.

§  ...but recent developments in Europe clearly restore confidence.

§  ...but the FOMC will be forced to implement QE3 at their next meeting on July 31/August 1, given the weak data.

§  ...but the housing recovery is real (and better than expected May Construction Spending also plays into it) and will help consumer confidence and the economy.

While some kind of sentiment-driven rally is fair and even healthy, the question is how high the wall-of-worry is and it's probably also fair to say that the variable "worry" is an unknown component in the current equation despite many calls that all the problems and concerns are on the table!

Stocks keep on grinding higher towards the highs from April and May on healthy market breadth and surprisingly strong trading volumes (despite the holiday featured week), commodities resume their sharp rebound after some profit-taking yesterday (mostly in energy commodities), only bonds don't join the party as yields even dropped back to the lows of a 3-week range. The remarkable resilience isn't only the result from mostly cautious sentiment among market participants but also from the ongoing and underlying hope that bailouts and monetary stimulus (ECB's expected rate cut on Thursday plays right into it!) will solve all existing worries and will greatly assist in climbing the wall. In this context it wouldn't even be surprising if possibly disappointing June retail same-store sales and another possibly weak labor report on Friday get greeted as positive as it puts the whole game another step closer to QE3 (at least that's the theory).

Anyway, let's not worry about the height of the "Wall of Worry" but enjoy the holiday! The market continues to be a pleasant playground for traders; however, investors might prefer to wait for a different timing to step into the market!

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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