“If 7 million jobs are created in 4 years there may be distortions but the benefits are so greater that the distortions are ignored”. Mario Draghi thus defended the QE policy before the assembly of the International Monetary Fund. The governor then confirmed that rates will remain low for a long time, even "well beyond" the horizon of the end of the purchases of securities. But he acknowledged that "we're not there" on wage growth. Meanwhile, Peter Praet, the ECB's chief economist, noted the lack of connection between economic recovery and price recovery, a phenomenon which requires the central institution to proceed with the utmost caution on the interest rate front. In short, the ECB is preparing to resist a compromise between hawks and doves: Bloomberg reports that the ECB's leaders are thinking about halving the bond purchase plan, to 30 billion euros a month, starting from January 2018 .
Inflation that does not rise, moreover, is a great unknown that is holding back the choices of the Fed. The data on prices released today will be decisive in guiding the latest choices of the Fed led by Janet Yellen. To the successor the honor (and the burden) of managing rates in the season of Donald Trump's tax reform.
After the sharp rises in the share prices, Meteo Borsa reports sunny variable.
CHINA ON THE RISE ON THE EVE OF THE CONGRESS
In addition to the meetings in Washington, the price lists are preparing for perhaps the most important event between now and the end of the year: the Congress of the Communist Party of China which will open in five days. The economy arrives at the appointment in almost ideal conditions: today's data signal a moderate increase in imports, in line with the growth of the GDP, at 6.7 percent, exceeding by two. The renminbi is in good health, capital is no longer fleeing and foreign exchange reserves have started to grow again. The Shanghai stock exchange, after the storms of 2015, is back composed and in constant growth. The CSI 300 index of the Shenzen and Shanghai stock markets gained 0,3%.
TOKYO NEW 21-YEAR HIGH, US RISE STOPS
In this context, the Asia Pacific index has advanced by 3,6% since the beginning of October, in Tokyo the Nikkei index +0,2% marks a new record since 1996, despite the Kobe Steel scandal which falsified the data on the quality of aluminum and copper components sold around the world. Hong Kong +0,1%. Seoul +0,1%. Bombay +0,1%.
Wall Street slows down after however updating several records during the session. Sales were triggered by the collapse of AT&T-6,10% caused by the sharp decline in subscriptions. The Dow Jones falls by 0,14%, S&P -0,17%. NASDAQ -0,18%.
WALL STREET COLD ON BANK ACCOUNTS
The quarterly campaign kicks off without ringing. Both JP Morgan -0.9% and Citigroup, down 3,7% presented better-than-expected bills, but the market punished the negative trend in credit cards.
Bonds are on the rise, also because expectations on the rapid arrival of the tax reform continue to decline. Yesterday Donald Trump signed an executive order that cuts subsidies to insurance companies, which, as part of the health care program called Obamacare, are committed to offering low-cost policies to the less well-off.
The yield on the Treasury Bill moved to 2,32%.
Brent oil fell on the day of the release of data on US crude inventories and production, the first day of decline after three days of gains. Yesterday evening the closing price was 56,3 dollars a barrel (-1,2%), this morning on Asian markets Brent is trading at 56,5 dollars.
At Piazza Affari Saipem -0,63%, Eni -0,43%.
MILAN PAYS FOR THE UNCERTAINTY OF BAD LOANS
Draghi's declarations on the need to maintain an expansive policy for long came too late to influence the European markets, still grappling with the problems of recent days (Catalonia and Npl) but also by the risk of a breakdown in Brexit negotiations.
Milan, usually the most sensitive to credit performance, is the worst place, -0,68%, Ftse Mib index at 22.398 points.
Flat Madrid, -0,02% and Paris -0,03%; moderately positive Frankfurt +0,09% which during the day crossed the threshold of 13 thousand points.
Positive closure for London +0,30%. The pound plunges after the words of the EU chief negotiator for Brexit Michel Barnier, who announced that there is no substantial progress in the negotiations with the United Kingdom. The British currency lost 0,7% against the greenback at 1,3137 dollars and 0,9% against the euro, which rose to 0,9022 from 0,8966 pounds.
Eurozone industrial production rose well beyond expectations in August. This is what emerges from the data released by Eurostat which in detail says that the index settled at 1,4% on month and at 3,8% on year.
TAX DECREE AT THE START, THE ROSATELLUM PASSES TO THE ROOM
The council of ministers will meet this morning to examine the tax decree linked to the budget law. The decree ensures part of the 5 billion additional revenue that contributes to the coverage of the Budget law for 2018, the launch of which is expected between Sunday 15 and Monday 16 October. The Minister of Economy, Pier Carlo Padoan, will not be present because he is busy in Washington.
Yesterday in the evening, the new electoral law that favors coalitions was approved by secret vote by the Chamber. The Senate vote is expected to arrive before the end of the month.
BTP AUCTION WITHOUT PROBLEMS, SPREADS DOWN
The market easily digested the auction of medium-term securities in which the Treasury assigned just under the maximum ceiling of 7,5 billion.
The lessened tensions in Catalonia have allowed the peripherals to recover a couple of cents of spread against the Bund: from 171 basis points on Wednesday, the Btp/Bund spread on the ten-year segment closed at 168 after a plunge to 166,3 cents, record since 22 September.
The new three-year, expiring October 15, 2020, coupon 0,20%, was on the gray market yesterday evening, up 3 points at a yield of 0,197%.
ABERTIS, ATLANTIA GETTING READY FOR THE RACE
The Italian-Spanish duel on the highways is about to start. Spanish builder Acs will launch a cash and paper offer for Abertis next week, complicating Atlantia's takeover bid. The Iberian offer will be half in cash and the rest in newly issued shares of the German group Hochtief, controlled by Acs.
Atlantia's offer (€16,3 billion mainly in cash for all Abertis shares) will close on October 24. The deal is subject to attaining at least 50% plus one share.
BANKS. FOR EQUITA UNCERTAINTY PREVAILS
Banks?in sharp decline.?There are still fears of tightening?of?the?rules?for the management of new generation non-performing loans. Equita writes: ? “The Commission document (…) reduces the threats to the sector compared to what emerged last week with the ECB addendum on NPEs. However, the risk remains evident, in the case of banks more exposed to NPEs, that a request for acceleration in derisking/increase in coverage could translate into significant impacts on capital. In fact, the uncertainty linked to the measures announced by the ECB on stock coverage remains in the background”.
Meanwhile, writes Minister Padoan, Italy deems it appropriate to verify that the new guidelines on non-performing loans published by the ECB are "fully compliant with the prerogatives that the Treaty assigns to the Commission, the Council and the European Parliament, and to the framework legislation of the Union".
CARIGE BOUNCES, AZIMUT SLIDES TO THE MINIMUM
Unicredit? -1,4%,?Ubi -3,5%,?Banco Bpm?-3,5%,?Intesa -1%.
Banca Carige?+1,5%, is moving towards full acceptance of the bond conversion and is close to the sale of a property in Corso Vittorio Emanuele in Milan.
In the weak managed Azimuth? -3,5%, which closes at its lowest since April. Kepler-Cheuvreux cut the target price to 19,50 euros from 20 euros. The judgment remains unchanged at Hold.?
CAMPARI AT THE TOP, ITALGAS FLAMES
In the main basket:
Among the utilities,?Italgas?+1% stands out. Berenberg has initiated coverage with Buy, target 5,30 euros.? Enel?goes back by 0,5%.?A2A -0,6%.?Snam? -0,1%.
Campari?+3,2%, marks a new historical record.
Luxottica -2%, closed at its lowest since November 2016 despite the bride-to-be Essilor announcing a corporate reorganization functional to the merger operation.?HSBC confirmed?the Buy decision, however cutting the target price to 59 euros from 64 euros.
MONDADORI SUPERSTAR, ERG SELLS TO API
In the rest of the list:
– Mondadori shines with +6,2%, driven by the good prospects of the book sector in the second half.
– Sudden collapse of Amplifon, slipping up to -9% in the late morning with a peak in volumes, which saw profit taking ahead of results.
– Stefanel gains 10% after the approval of the debt restructuring and capital strengthening agreement by the Treviso court.
– Sale Erg + 2,78% supported by the start of exclusive negotiations with Api for the sale of the 2.600 service stations belonging to the Jv TotalErg.
