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

venerdì 10 agosto 2012

Market Comment - August 10

(Marco Bonelli) Do central banks really have to interfere with economic cycles?

Weak economic reports raise chances of more central bank easing; sharply slowing growth opens the door for more stimulus activity; lower than expected inflation figures indicate that central banks might start buying bonds in the near-term future and so on...


Recent data out of China, India, Japan and Europe continue to show that the global economic slowdown that started unfolding in Q4 2011 is well underway with little indication for stabilization and if there is, it's mainly based on the hope that central banks are able to change natural cycles of economic growth. At least history shows that this is not possible which makes daily calls for QE and the make-believe perception that an expected strong stock market performance will offset the pain of unemployment, lower income, lower sales etc. and the negative effects of a structural healing after a couple of decades of economic excesses kind of ironic and desperate!

While the major indexes and SPX and NDX in particular surprisingly backed away from the upper resistance of the 2-months trading channel (today the lines run at 1404.30 for the SPX and 2727 for the NDX, respectively), sentiment almost expectedly underwent some changes (to the positive) within the last days: the number of bullish participants moved up in almost all statistics and survey (II, AAII, Hulbert's Newsletter Sentiment etc.) and market players in general seem to walk through the classic routine of being numb and quiet as the first reaction to rising stock prices (beginning of the week), then talking and betting against it (a couple of days ago) and followed by attempts to explain the rally while mostly staying skeptical (right now). The next steps would be slowly tapping into the water and after the first small profits doing this, fully embracing it. Although mostly defined otherwise, sentiment overall isn't probably as negative as it's mostly talked about. The underlying optimism is one of the reasons why this rally gets quickly accepted because the market is always right and discounts what will happen in six months from now, right? The fact that during the last two months neither bulls expected a lot of upside nor bears expected a lot of downside also put sentiment into a "range-bound" neutral stage, from where a "break-out" to the upside turns out to be a lot easier. Bottom-line, sentiment "officially" moved back into neutral territory and each single day of upside will unleash the underlying optimism.

The mentioned trading channel, the lagging Dow Jones Transportation Index, weak volumes, no clear sector leadership and also the relative underperformance of industrial/metal commodities are just a few indicators that describe the rally we have seen during the last two weeks as weak and unconvincing. Until investors will see new magic from central banks, macro-economic data will show whether the latest optimism is justified. On a side-note, although higher energy and food prices (the UN Global Food Price Index rose 6% in July) will only marginally show up in the upcoming official CPI figures, they definitely won't make the consumer who has to pay higher prices any happier.

Although it's unlikely the recent rally has already run its course (mainly due to short-term sentiment games), it is based on a very fragile base that justifies profit-taking in any further strength as it will probably only be a matter of time before the recognition of fundamental reality will become the dominant force again.

Trade well and have a great weekend.


(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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