ETFWorld.co.uk

ETF Weekly Market Update

42 MONETE

Flows, Market Snapshot and Axes… 


            Sign up for our weekly Newsletter and receive the latest ETF and ETC news.
            Click here to register for your free copy


            Market Snapshot

            Having enjoyed five days of optimism and risk-on mode in the preceding week, markets fell back into risk-off mode at the end of last week. The headache started with the assessment by S&P that the Paris Model which describes private sector participation in the Greek debt saga might lead to a selective default rating.
            News reports suggest that private sector participation will amount to only EUR 15bn, about half the amount that was envisaged by Merkel/Schäuble, but any final amount certainly depends on the model applied. Participants in the rescue operation are now discussing an old and a new model: the old one tries to formulate a default-free bond buy-back operation with the help of the EFSF. The new idea tries to accept a default of Greece while its duration and contagion effects should be contained.
            “Default” is no longer a taboo. On Tuesday, Moody’s downgraded Portugal by four notches to junk status. Moody’s justified its heftily criticized decision with growing risk that Portugal will require a second bailout package with participation of the private sector, i.e., Moody’s sees a reasonable probability that Portugal will have to go the Greek way. On Thursday, the ECB raised the refi rate to 1.50% (as expected). The central bank regards this level as accommodative, and the term “we will monitor very closely” signaled that Trichet & Co. intend to lift the refi rate another time in October. Last week ended with a horrible US labor market report. Following a strong private sector ADP reading (157k), investors were prepared for a similar reading in the NFP number.
            Disappointment about the meager 18k reading sent stock markets down by about 1%, whereas yields fell by up to 20bp (5-year UST). – The past few weeks in financial markets were almost exclusively dominated by the Greek debt tragedy. In particular, discussion about a second rescue package and several models of private sector participation kept investors and traders on high alert. In the coming days, the Greece issue might remain top on the list, but several other issues will add to nervousness.
            First, EU President van Rompuy has called for an emergency meeting on the EU debt crisis today. The same day, the Ecofin will discuss a second bailout package for Greece; members will also elaborate on new proposals of private sector participation. In this respect, it’s worth noting that a German news article (Welt) stipulates that the ECB wants to double the rescue umbrella to a volume of as high as EUR 1.500tn. Second, the EU will release the results of this year’s bank stress test on Friday late afternoon (from 6pm CEST).
            Already on Tuesday, EU finance ministers are scheduled to discuss the results of the stress test. News reports suggest that institutes that failed the stress test will be given until the end of September to present plans for making up their capital shortfall. Ongoing speculation about which institute might have passed and which not will be a crucial element of this week’s trading in European financial markets.
            Third, with the disappointing US labor market report, fears about a faltering US economy have been revived. In this respect, markets will also focus on a series of US economic data releases on Thursday and Friday (PPI, CPI, industrial production, retail sales, Michigan consumer sentiment). Fourth, the US quarterly earnings season starts with Alcoa today and JPM on Thursday. Fifth, the FOMC Minutes (Tuesday) and Ben Bernanke’s semi-annual testimony to Congress will be watched closely for any hints on a possible (though unlikely) QE3 program. Bernanke will also discuss our sixth topic, which is the US debt debacle. By 22 July, Democrats and Republicans will have to agree on a savings plan so that the necessary legislation process to raise the debt ceiling will be accomplished by 2 August, the US debt D-day. Seventh, investors will also have a look at China. In June, inflation accelerated to 6.4%. On Wednesday, China will – as usual – be the first country in the world to present its 2Q GDP growth figures. Other economic data (EMU IP & CPI and UK CPI) will probably get lost in the tsunami of events in the coming days.

            ù


            DISCLAIMER

            This publication is presented to you by:
            Corporate & Investment Banking
            UniCredit Bank AG
            Arabellastr. 12    D-81925 München

            The information in this publication is based on carefully selected sources believed to be reliable. However we do not make any representation as to its accuracy or completeness. Any opinions herein reflect our judgement at the date hereof and are subject to change without notice. Any investments presented in this report may be unsuitable for the investor depending on his or her specific investment objectives and financial position. Any reports provided herein are provided for general information purposes only and cannot substitute the obtaining of independent financial advice. Private investors should obtain the advice of their banker/broker about any investments concerned prior to making them. Nothing in this publication is intended to create contractual obligations. UniCredit Corporate & Investment Banking consists of UniCredit Bank AG, Munich, UniCredit Bank Austria AG, Vienna, UniCredit CAIB Securities UK Ltd. London, UniCredit S.p.A., Rome and other members of the UniCredit Group. UniCredit Bank AGis regulated by the German Financial Supervisory Authority (BaFin), UniCredit Bank Austria AG is regulated by the Austrian Financial Market Authority (FMA), UniCredit CAIB AG is regulated by the UniCredit CAIB AG is regulated by the Austrian Financial Market Authority (FMA) and UniCredit S.p.A. is regulated by both the Banca d’Italia and the Commissione Nazionale per le Societàe la Borsa (CONSOB).Note to UK Residents:In the United Kingdom, this publication is being communicated ona confidential basis only to clients of UniCredit Corporate & Investment Banking Division (acting through UniCredit Bank AG, London Branch (“HVB London”) and/or UniCredit CAIB Securities UK Ltd. who (i) have professional experience in matters relating to investments being investment professionals as defined in Article 19(5) of the Financial Services and MarketsAct 2000 (Financial Promotion) Order 2005 (“FPO”); and/or (ii) are falling within Article 49(2) (a) –(d) (“high net worth companies, unincorporated associations etc.”) of the FPO (or, to the extent that this publication relates to an unregulated collective scheme, to professional investors as defined in Article 14(5) of the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001 and/or (iii) to whom it may be lawful to communicate it, other than private investors (all such persons being referred to as “Relevant Persons”). This publication is only directed at Relevant Persons and any investment or investment activity to which this publication relates is only available to Relevant Persons or will be engaged in only with Relevant Persons. Solicitations resulting from this publication will only be responded to if the person concerned is a Relevant Person. Other persons should not rely or act upon this publication or any of its contents. The information provided herein (including any report set out herein) does not constitute a solicitation to buy or an offer to sell any securities. The information in this publication is basedon carefully selected sources believed to be reliable but we do not make any representation as to its accuracy or completeness. Any opinions herein reflect our judgement at the date hereof and are subject to change without notice. We and/or any other entity of UniCredit Corporate & Investment Banking may from time to time with respect to securities mentioned in this publication (i) take a long or short position and buy or sell such securities; (ii) act as investment bankers and/or commercial bankers for issuers of such securities; (iii) be represented on the board of any issuers of such securities; (iv) engage in “market making” of such securities; (v) have a consulting relationship with any issuer. Any investments discussed or recommended in any report provided herein may be unsuitable for investors depending on their specific investment objectives and financial position. Any information provided herein is provided for general information purposes only and cannot substitute the obtaining ofindependent financial advice. HVB London is regulated by the Financial Services Authority for the conduct of business in the UK as well as by BaFIN, Germany. UniCredit CAIB Securities UK Ltd., London, a subsidiary of UniCredit Bank Austria AG, is authorised and regulated by the Financial Services Authority.Notwithstanding the above, if this publication relates to securities subject to the Prospectus Directive (2005) it is sent to you on the basis that you are a Qualified Investor for the purposes of the directive or any relevant implementing legislation of a European Economic Area (“EEA”) Member State which has implemented the Prospectus Directive and it must not be given to any person who is not a Qualified Investor. By being in receipt of this publication you undertake that you will only offer or sell the securities described in this publication in circumstances which do not require the production of a prospectus under Article 3 of the Prospectus Directive or any relevantimplementing legislation of an EEA Member State which has implemented the Prospectus Directive.Note to US Residents:The information provided herein or contained in any report provided herein is intended solely for institutional clients of UniCredit Corporate & Investment Banking acting through UniCredit Bank AG, New York Branch and UniCredit Capital Markets, Inc. (together “HVB”) in the United States, and may notbe used or relied upon by any other person for any purpose. It does not constitute a solicitation to buy or an offer to sell any securities under the Securities Act of 1933, as amended, or under any other US federal or state securities laws,rules or regulations. Investments in securities discussed herein may be unsuitable for investors, depending on their specific investment objectives, risk tolerance and financial position. In jurisdictions where HVB is not registered or licensed to trade in securities, commodities or other financial products, any transaction may be effected only in accordance with applicable laws and legislation, which may vary from jurisdiction to jurisdiction and may require that a transaction be made in accordance with applicable exemptions from registration or licensing requirements.All information contained herein is based on carefully selected sources believed to be reliable, but HVB makes no representations as to its accuracy or completeness. Any opinions contained herein reflect HVB’sjudgement as of the original date of publication, without regard to the date on which you mayreceive such information, and are subject to change without notice. HVB may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented inany report provided herein. Those reports reflect the differentassumptions, views and analytical methods of the analysts who prepared them. Past performance should not be takenas an indication or guarantee of further performance, and no representation or warranty, express or implied, is made regarding future performance. HVB and/or any other entity of UniCredit Corporate & Investment Banking may from time to time, with respect to any securities discussed herein: (i) take a long or short position and buy or sell such securities; (ii) act as investment and/or commercial bankers for issuers of such securities; (iii) be represented on the board of such issuers; (iv) engage in “market-making” of such securities; and (v) act as a paid consultant or adviser to any issuer.The information contained in any report provided herein may include forward-looking statements within the meaning of US federal securities laws that are subject to risks and uncertainties. Factors that could cause a company’s actual results and financial condition to differ from its expectations include,without limitation: Political uncertainty, changes in economic conditions that adversely affect the level of demand for the company‘s products or services, changes in foreign exchange markets, changes in international and domestic financial markets, competitive environments and other factors relating to the foregoing. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement.

            Source: ETFWorld – Corporate & Investment BankingUniCredit Bank AG

             

            – Valuesabove100% indicatean above average turnover compared to either the prior 30 trading days or the prior 260 trading days.

            Related Articles

            SPDR Strategy Espresso : Happy Birthday US Communication Services

            1admin

            WisdomTree : Oil price shock and large geopolitical tremors

            Webmaster

            Tabula : Investors highlight fixed income frustrations

            Webmaster