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 20 settembre 2012

Market Comment - September 20

(Marco Bonelli) You might think...

In July and August, the stock market ignored disappointing Q2 earnings and one of the worst forward guidance periods in years.

Since June, the stock market also ignored mostly negative economic data out of Europe and China (although the broad trend of slowing global economic activity with recessions already in place in various places in the world surprisingly has never really been a major issue). So you might think that at one point these negative headlines have to break the back of the stock market. You might also think that the latest profit warnings (INTC, FDX, ADBE, NSC etc.) that not only suggest a dismal Q3 earnings season but also point to another round of lower earnings guidances for Q4, should be somehow reflected in lower prices.

"Skepticism returns over Europe's crisis..."; "...stocks decline on growth concerns..."; "...commodities tumble on China growth worries..." (on back of the HSBC Flash Manufacturing PMI in contraction territory the 11th consecutive time) are all headlines that investors already read multiple times over the last few months. And talking about investor's concerns, Europe and the famous "fiscal cliff" once again occupy the front seats in many market participants' minds.

Despite all developments, prices held and the SPX advanced 15% and the NDX even 17% since the lows in June (in the last few weeks in a strange step-by-step pattern interrupted with long periods of frustrating range trading) and investors might think that now after all the good news about global stimulus measures is out, the market should sell off, the less likely it will happen!

For the moment, the same negative news doesn't move the market too much anymore as it will be offset by the "stimulus" effect of QE3 and beside that, it may have reached a temporary state of maturity; in other words mostly positive news gets registered and moves the market and as the Fed will buy assets way beyond the time when the economic recovery starts accelerating, positive data may have a double positive effect on the market that could result in another 5 to 10% upside from here. One of those positive news came from the housing and construction sector yesterday, where existing home sales for August rose a sharp 7.8% and the Architecture Billing Index rose from 48.7 to 50.2, indicating a stabilization or even slight increase in demand for design services and with that construction spending in six months from now). Although housing starts for July were revised down and grew less than expected in August, still, all data combined continue to emphasize a moderate but steady housing recovery of the housing sector!

A few negative headlines and a weaker opening only reinforces the short-term skepticism with consensus expectations of a near-term pull-back so sentiment may turn out as an even bigger contrarian driver. Therefore, over the next few weeks into middle of October, traders may get rewarded playing long positions while investors should hold on to their existing holding, maybe even adding a bit: Many sectors in the technology (semiconductors, networking, storage), capital goods and energy sector (oil service, E&P, multinationals) have room to move higher before they run into resistance levels; the financial sector also has plenty of upside before it reaches the upper end of the broad 3 ½ years trading range and consumer and retail stocks are trading at all-time highs anyway!

Watch out for ORCL earnings after the close - even a slightly better than expected report and INTC, ADBE and a bunch of other profit warnings from the technology sector will be forgotten.

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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