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 9 luglio 2012

Market Comment - July 9

(Marco Bonelli) A few thoughts about market sentiment...

All you hear these days is how negative sentiment is and that the bearish mood will be one of the drivers for a summer rally or more.
So on first sight, the market appears to be a perfect playground for contrarian bets and the resilience the market showed last week even seems to support this observation. I wonder if this description is correct...


Negative sentiment is currently a lot less defined than it used to be. Everybody talks about the obvious headwinds and that the market faces many uncertainties. However you hear were little precise calls, not even a lot of calls that see the market substantially down due to these uncertainties and headwinds. Apparent negative views lack substance: Why are investors really negative, how can the mentioned headwinds be quantified and qualified and how do they reflect on the market. Surprisingly there aren't a lot of calls out about a well defined direction in the market and even less how far any kind of trend may take the market. So, it appears that negative sentiment might more be a stage many market participants talk themselves into than a clear reflection of their conviction!

The well-known sentiment II and AAII surveys showed bullish sentiment rise from low (not depressed) levels last week, currently settling in almost neutral territory compared to historic averages. Market strategists still pound the tables on their bullish year-end targets for the SPX whenever they find the opportunity, although their official asset allocation recommendations show a very defensive choice (by the way, over the last 15 years these recommendations even show a negative track-record).

In summary, overall "negative" sentiment could probably better defined as "not-knowing-what-to-do", which is not surprising as the global events in the past five years have very little to no historic precedents. Nevertheless, something that is obvious is an underlying complacency, complacency towards the effectiveness of any solution of the European crisis, complacency that slow growth is good enough, complacency that the Fed will step in and pump up stock and commodity prices every time things look bad (the weak and desperate "rumor" on Friday 3.00pm that the weak job data increases likelihood of more Fed action exactly matches this point), complacency that earnings will recover after a "soft-patch" and so on...

Probably some of the more important levels to watch are the 2011 highs in the Dow Jones and SPX (12876 and 1370.50) as both averages fell again below these levels on Friday after last week's rally briefly carried them above (with that both averages also fell back below their 100day MA!). Only retailers outperformed while the other economy-sensitive sectors, technology, industrials underperformed. Many sub-sector indexes in the technology and capital goods/industrial space hit several resistances and already dropped below all moving averages, leaving it vulnerable for more negative news.

The news to watch this week is AA earnings tonight and JPM's results on Friday and some second-league economic data. SEMICON West 2012 from July 10-12 in San Francisco might also deliver some headlines in the battled technology sector. After that, it's all about Q2 earnings and Q3 outlook - let's see how the contrarian call resulting from "negative" sentiment deals with the possibility of an earnings recession...

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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