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 12 ottobre 2012

Market Comment - October 12

(Marco Bonelli) Do investors overestimate or underestimate this earnings season?

"Poor earnings [referring to AA, CHV and CMI] send markets tumbling."
"The worst earnings season since 2009."
"Earnings season should hurt stocks."
"AA, CMI - early indications for earnings season."
"JPM, WFC only look ok on the surface, the details disappoint."

As if market participants didn't realize that earnings growth and quality of earnings already started deteriorating in 4Q11, the unusual focus on the negative elements of this earnings season and the shock and surprise following just another pre-announcement appears a bit fabricated.

Probably, the next few weeks will be similar to any other season when investors are afraid of earnings. Most likely, the majority of companies will once again be able to beat sharply reduced estimates by a small margin, other companies will report in line and the rest will disappoint with chances that the entire reporting season may turn out to be better than current low expectations, in other words, nothing new.

It is the same with other fundamental developments: concerns for global growth, fiscal cliff, European crisis, Spanish bond yields or global PC sales also get presented as new news but latest data simply confirm the status quo.

Somehow detached from the intense discussion is the stock market that sometimes reacts to comments about fundamentals and interpretations of numbers and data but sometimes doesn't. The way the market trades, the close reaction to technical chart levels and the light trading volume suggest that we are more in a trading market that either consolidates in a range before it starts a more sustainable move into either direction or simply looks for the next direction. Obviously last Friday there was not enough power to break out to new highs, so profit-taking kicked in which even pushed the market into short-term oversold territory. Most importantly, the Dow Jones remains above 13338 and the SPX above 1422 (the respective highs from March, April) while the Nasdaq and Russell 2000 trade only slightly below the same levels. As long as these critical levels hold, the intraday activity falls more into the category ´short-term trading´ than ´investing on fundamental developments´ and should be seen as a healthy and therefore positive consolidation.

Negative sentiment and comments based on warmed up negative news not only leave plenty of room for positive surprises but also a substantial short-covering rally. As much as 1465 worked as a resistance in the SPX, 1422 may work as a fabulous support and the focus on mostly negative news in this earnings season could be one of the triggers to enforce the technical support.

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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