Focus Shifts to Italy - Analyst Blog
07 Novembro 2011 - 7:00AM
Zacks
With the economic calendar today and the rest of this week on the
relatively thin side, the market will likely reflect developments
in Europe. The Greek situation appears to have stabilized following
the end of the referendum affair and the weekend decision by the
prime minister, George Papandreau, to step down in favor of a unity
government. Such a unity government is expected to rubber-stamp the
latest bailout deal and get on with the politically unpopular act
of implementing it.
Attention has now shifted to Italy, where the situation is no less
dire. The market appears to be fast losing confidence in the
Italian government's ability to take the structural steps needed to
fix the country's economic outlook. These concerns have started
showing up in heavy selling pressure on short-term government
bonds, where yields have risen to Euro-era highs. Yields on
longer-dated government bonds are also flirting with levels beyond
which Ireland, Greece and Portugal had to ask for bailouts.
Italy is not in bailout territory yet, but the situation is not
that good either. The only silver lining in the Italian situation
is that it may force Silvio Berlusconi to let go of his hold on
power. The prime minister is reportedly contemplating plans to step
down. The Italians are not exactly famous for coming up with stable
unity governments. But even then it is hard to find anything
negative in Berlusconi's departure.
With respect to the domestic economic scene, we have few reports on
the docket this week following last week's busy schedule. The broad
take-away from the recent run of U.S. economic readings, including
Friday's October jobs report, has been positive. In an absolute
sense, the economy remains weak and soft. But relative to fears of
another recessionary downturn, the data is pointing elsewhere.
The third quarter reporting season has turned out to be
reassuringly strong relative to pre-season fears. Estimates for
2012 have been coming down. But even there, the revisions have been
very orderly and not worrying. If anything, the negative revisions
for 2012 have likely bottomed already.
The bulk of the major earnings reports have come out, but some
important ones still remains. After the close today, we have
Priceline (PCLN) reporting results. In other
corporate news,
American Dental Partners (ADPI), a
$160 million market-cap provider of services to dentists, was
acquired by a private-equity firm.
General
Dynamics (GD) is acquiring
Force
Protection (FRPT), a $300 million market-cap maker of
blast-protected vehicles.
AMER DENTAL PDT (ADPI): Free Stock Analysis Report
FORCE PROTECTN (FRPT): Free Stock Analysis Report
GENL DYNAMICS (GD): Free Stock Analysis Report
PRICELINE.COM (PCLN): Free Stock Analysis Report
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