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 5 ottobre 2012

Market Comment - October 5

(Marco Bonelli) It's all about perception and sentiment!

Fundamentally, nothing has changed, neither on the macro level, nor on the micro level; in fact the deteriorating trend sort of continued looking at global economic data, although U.S. based data was recently mixed and even leaned to the positive; however, on the corporate front, many negative pre-announcements confirmed negative expectations for Q3 earnings and the outlook doesn't look a lot better.


Still the market keeps on grinding higher - not because of any real improvement in the data but because of the way, investors look at it and the employment data is another perfect example. A report of 114k payrolls used to be seen as disappointing as it doesn't even match the population growth. But the market got used to benign reports and the "sluggish" labor market became the status quo. At one point (in the probably not too distant future), somebody will most certainly wake up and say that the slow payroll growth is not enough and anything below 200k job creation is bad but at the current stage, economic data like the one from this morning is seen as stable. Once you add 86k upside revisions for July and August, an uptick in wages and workweek and the miraculous implosion of the unemployment rate (thanks to counting all part-time jobs that are available to count, which was worth the exercise as 582k jobs were found!), you even create the illusion of improvement which leads to hope.

Over the course of the week, at least some comments reflected the recognition of a very resilient market that doesn't really come down, despite all the "smart money" selling into strength and into each close (at least that's what even smarter market commentators concluded in an attempt to explain the recent intraday volatility). Despite a few more positive comments, overall sentiment probably remains highly cautious and skeptical, especially ahead of the Q3 earnings reporting season that starts next week, which already got the "disappointing" tag from the majority of market participants.

Combining this sentiment with the current perception of fundamentals and the fact that the SPX remains well above 1440 (a level many traders look at, although 1422 is the more important level as this marked the breakout to new multi-year highs) and the NDX defended 2800 makes a great stage for higher stock prices. Also of note is a narrowing in market breadth (according to the daily adv./decl. ratio) with no extremely positive or negative reading in the past two weeks. At one point, this will break out to one side and a few better than expected (or perceived) earnings reports could give the trigger for a break out to the upside, pushing the SPX towards its all-time highs within the next few weeks.

Therefore staying or even getting invested in the technology, financial, capital goods and energy sector might turn out to be a successful move for the short-term.


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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