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 3 agosto 2012

Market Comment - August 3

(Marco Bonelli) At the end, everything will be good, right?

The key events so far this week, the FOMC and ECB meetings, left plenty of room for interpretations that prevented the market from moving lower, despite initial disappointing news, so it was up to the labor report in combination with the outcome from the monetary policy decisions to determine where the market might go from here in the near-term.


Another disappointing / mediocre payroll number wouldn't have gone well with a delayed decision if central banks may start buying bonds and launch another QE liquidity wave as it could be a long cruel five, six weeks of further economic deterioration until the almighty central bankers come back from vacation. On the other hand, a better than expected report - as we have seen this morning - (on back of a couple of better than expected economic reports earlier this week that showed some life on the consumer side in particular) in combination with anticipated upcoming additional stimulus bodes well for even a hint of a make-believe summer rally. It's all a question of interpretation...

It is quite striking that European bonds gave up all of the "whatever-it-takes"-rally gains and it's not that the macro situation in Spain improved during these six trading days. When Spain was supposedly discussing a $300Bln full sovereign bailout last week, the country will probably need one no matter if 10yr interest rates trade around 7% or around 6% as fundamentals continue to deteriorate and all calculations are based on unrealistic economic models fed with old data and a big dose of political nice-talking. So again, the upcoming five weeks until the next ECB Meeting on September 6 could turn out to be longer than market participants hope.

After all the headlines sank in yesterday, the market reverted back to good old day and intraday trading and perfectly played the levels from the minute charts: Once the SPX broke through the lows from Wednesday at 1373.35, the downtrend for the day was established; an early rebound failed exactly at that level and after follow-through selling dried out after the 100day MA (1359.77) got broken, a moderate recovery held into the close (a similar move could be watched in the NDX, only that the 100day MA (2631.58) runs a little higher relative to the short-term chart pattern, so the initial rebound turned out to be steeper). As a result, the Dow Jones and SPX held above their 100day MA , the Nasdaq Composite held above the 2900 level while the underperformance in mid and small caps kept the S&P 400 and the Russell 2000 below their 200day MA. Worth noting is also that last week's rally still left gaps open, 1351.50 - 1338 in the SPX and 2568.50 - 2549 in the NDX. And by the way, the worst looking chart remains the one from the Value Line Index VGY!

The payroll data confirmed pieces of "good news", like the mentioned better consumer data (July retail same-store sales in particular) or recent better than expected earnings that lifted Q2 earnings growth to +2.81% (for 400/500 S&P companies reported). In addition, market resilience in the past eight weeks was quite incredible: in 43 trading days, the market traded lower on 22 days but closed at or near the lows of these days only six times. This combination should support a further lift in stock prices, however, the big picture isn't any prettier, the economic and earnings outlook barely changes and with that the question remains: where is the perspective and where is the upside? Still, unless market players get disappointed because they realize that QE3 will likely not happen in September, we might get a nice finish to a nerve-wracking week or as mentioned at the beginning, at the end (of the week), everything will be good!


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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