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 29 agosto 2012

Market Comment - August 29

(Marco Bonelli) Optimism versus fear - or what's the real driver behind the market's resilience?

The optimism argument already started kicking in end of last year and wore out some time in spring. After a few questionable "decisions" and promises in context with the European crisis and a handful of better than expected economic statistics in the US, "optimism" once again made it on the list of arguments why the market should be bought from the lows in June.


Looking at most recent economic reports like core durable goods orders, consumer confidence, the latest PMI readings around the world and various indicators that show China's economy struggling (best reflected in the lowest stock market close since February 2009) and also taking into account developments in Spain that suggest that it is only a question of time when a massive bail-out gets requested from the European Union, optimism fades considerably as a reason to keep market players on board. That leaves fear, which probably is and always has been the true driver of the rally and the reason why most major indexes trade around multi-year highs: the fear of missing out on the next rally, fueled by highly anticipated bond purchases by the Fed and the ECB. Fear of course gets followed by reluctant acceptance of the rally and then artificial display of optimism, but fear of missing out on the next move can hardly be a sustainable investment strategy unless it gets backed up by more substantial data!

In both cases, fear as well as optimism, negative news get ignored as was yesterday's Consumer Confidence for August, which fell into "recession-territory" in February 2008 and saw its two highs in February last year (72) and February this year (71.60), declining since then. Using the defined 100 mark as a starting point in 1985, the composite index at 60.6 and the sub-components present situation (45.80) and expectations (70.5) paints a rather weak picture in a historical context. Almost more importantly, consumer confidence shows a close historic correlation with the SPX, running almost in sync in the 90s and early 2000s, consumer confidence even turned out to be an early indicator for future stock price performance in the past five years. In terms of consumer spending and retail sales, higher confidence always gets translated into higher spending while lower confidence sometimes has a delayed effect on spending and in rare circumstances no effect at all.

With that, this last week in August, last week of vacation and week heading into a three-day weekend, it's all about waiting for Ben Bernanke confirming that the Fed stands ready to act if needed, which will get translated into the message that QE3 is coming soon and carries on the fear of missing the event!

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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