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

giovedì 30 agosto 2012

Market Comment - August 30

(Marco Bonelli) Does "gradual" change the perception that Ben Bernanke will likely disappoint tomorrow?

First of all, the Fed added another word in describing the struggling economy: the ranking now goes from "moderate" to "modest to moderate" to "modest" to now "gradual", which, just for the record (according to one dictionary perfect translation), means moderately soft! But let's get a bit more substantial: yesterday's Beige Book still sounded relatively positive, referring to expanding retail sales, loan demand and the real estate market.


Economic data in the past few weeks were rather mixed but retail sales and housing related data were indeed reported better than expected (this continues with strong same-store-sales for August, as reported this morning). Given that the economy kept on expanding "gradually" since the last FOMC Meeting, the question is if this development and the recent description of the economy will change the more dovish attitude of "many" FOMC member, according to the Fed Minutes from the July 31/August 1 FOMC Meeting. The next FOMC Meeting will be held on September 12/13.

Now we get to the part whether Ben Bernanke will disappoint tomorrow when he holds his Jackson Hole Speech at 10.00am EST.

During the last few months there is a strange pattern in the expectation and anticipation process: first the majority is convinced that further monetary easing measures get announced at a certain event; this expectation then gets diluted and suddenly a week before the event, the majority is convinced that nothing will happen but an announcement is definitely anticipated for the next event. This happened at the June 20 FOMC Meeting, at the August 1 FOMC Meeting, now happens ahead of the Jackson Hole Symposium and will happen again at the September 13 FOMC Meeting. Needless to say that stocks and commodities get pushed higher from one event to the next because everybody is convinced that something will get announced at the next meeting. Two weeks ago, most market participants were convinced that Ben Bernanke will use the Jackson Hole Speech to announce further easing, now, all of a sudden, the majority doesn't expect anything anymore. The big question is how long this self-deceive game lasts; in this context, the FOMC Meetings in a year from now are scheduled at September 18, October 30 and December 18, 2013!!!

In the meantime, the Dow Jones and SPX remain in a tight range just below the March/April highs; the Nasdaq holds the levels reached after a strong outperformance in the first half of August, mainly driven by the technology sector; the Russell 2000 (and small-caps in general) struggles to outperform and has trouble breaking above the levels from beginning of July and the Dow Jones Transportation Index continues its weak performance (7 consecutive down days and counting!) and basically hasn't done anything between June 6 and yesterday! While the technical picture still bears the possibility of a break-out to new multi-year highs, it will still be interesting to see if another disappointment tomorrow, next week (ECB Meeting) or the week after (FOMC Meeting) can be easily offset by anticipating something to happen at the next event. No matter what happens, looking at the global macro picture, the medium-term outlook for the next few weeks and months is not very promising at all!

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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