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 12 settembre 2012

Market Comment - September 12

(Marco Bonelli) Just a few more thoughts...

The SPX remains in break-out territory, many technical analysts describe the market outlook in bright colors (a retest of 1550 and the 2007 highs at 1576 gets openly discussed), the German Constitutional Court declared the ESM as constitutional, the new iPhone5 will be introduced later today (which could add 0.25 - 0.5% to Q4 GDP and 4.4% of the chip industry's 2013 sales according to one study) and market participants no longer discuss if QE3 will be announced tomorrow but how it will be structured and which size it might be, assuming that it's a done deal that the Fed will launch a third round of asset purchases.

In this environment it's not surprising that the market (sort of) reversed Monday's losses again, a pattern we have already seen on August 24 and August 31, when the market completely recovered a sell-off from the day before. So should investors happily embrace where the market wants to go and will the still existing skepticism work as a contrarian driver going forward?

The market is largely driven by sentiment, liquidity and fundamentals. If the fundamental picture changes, fundamentals are usually the predominant drivers; once the fundamental picture is stable or "known", sentiment and liquidity take over as the most important variables to determine the future direction. It comes down to the question if the fundamental picture still changes or if it's stable! The market obviously treats it as "stable" with investors accepting this low-growth scenario and declaring all head-winds and uncertainties as "known" and "manageable", supported by a large part by undeniable complacency towards central bank "easing"! Consequently, the expected (but not yet existing) liquidity from central banks and additional liquidity from asset allocation shifts drives risk-on assets higher, usually triggered by short-covering. How about sentiment? Right now, it may be described as reluctantly positive. Investors appeared relatively positive going into Ben Bernanke's Jackson Hole speech, then bullish sentiment cooled down but more recently more market players, strategists and commentators appear again more positive. Certain skepticism remains and will probably remain as long as the rally is only backed by multiple expansion and the expected recovery of fundamentals doesn't occur but that doesn't necessarily mean that the same investors don't get forced to participate due to performance pressure.

Over the next few weeks, market participants will find out of the current perception of the stable, low-growth fundamental picture is right or part of a make-believe fairy-tale. Realizing that the stable fundamental scenario shows a further deterioration of earnings growth (earnings recession!), an intensifying of the recession in Europe and no real recovery in China following only conditional asset purchases by the ECB and also a possible disappointment from the Fed tomorrow (in other words less "liquidity" than expected) could turn out to be an unpleasant combination!

Short-term, let's keep an eye on the March/April highs for the SPX at 1422.38 and the NDX at 2794 but keep in mind that the underlying industry sector charts look less compelling  than the major averages.

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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