Will there be a final squeeze? Or will the positions of Italy and the EU Commission still be too distant? The leap at the weekend in Piazza Affari signals that the financial markets are convinced that the agreement on non-performing loans and capital increases of Italian banks is close. And the right opportunity to close the deal, at least on a political level, is offered by today's (Eurogroup) and tomorrow's (Ecofin) meetings. But there is certainly no shortage of knots to untie.
While awaiting news from Brussels, the first political shock comes from Tokyo, up 3,7%. The long wave of Wall Street contributes to push the bull in Japan as in the rest of Asia, which rose sharply on Friday after the data on the labor market. But the real engine is political: Shinzo Abe won two-thirds of the seats in the upper house in yesterday's elections (the first in which 18-year-olds voted), enough to amend the constitution. The Premier will thus have carte blanche to relaunch Abenomics. Japan could renounce the pacifist charter in force since the end of the Second World War, accelerating military spending.
The Sydney Stock Exchange also leapt forward (+2%): Malcolm Turnbull, leader of the Liberal Party, received the mandate to form the new government. Hong Kong also performed well (+2%) and Chinese lists, with increases of around 1%. Oil was weak this morning: Brent -1,2% to 46,22 dollars a barrel, Wti at 44,81 (-1,3%). The yen fell slightly (100,71 against the dollar). The pound traded at lows of 1,2950 against the dollar, awaiting central bank moves.
TOWARDS THE CUT IN BRITISH RATES. US QUARTERLY UNDERSTANDS TONIGHT
In fact, the Italian (indeed European) banking game is not the only issue affecting the financial markets. The Bank of England's top management will meet for the first time since Brexit on Wednesday. Although Governor Mark Carney has already anticipated that the package of expansionary measures to counter the risk of recession will be decided in August, observers already expect the discount rate to be cut from 0,50 to 0,25% this week.
Strong expectations also for the data arriving this week from China relating to gross domestic product, retail sales, trade balance and industrial production. Economists expect GDP to have risen by 1,5% in the second quarter compared to 1,1% at the end of March, also thanks to the soft devaluation of recent weeks, which went almost unnoticed (the spotlight was all on the pound) . But forecasts for the end of the year remain cautious: growth at the end of 2016 should be 6,6% (against 6,7% in 2015).
Having set aside the anxieties about Brexit, Wall Street is once again focusing its attention on Corporate America. Tonight, with stock exchanges closed, the Alcoa board will inaugurate the US quarterly season as per tradition. The forecasts are cautious, even negative. Profits are expected to drop 5,2% from a year ago, the most negative figure since 2009 on the back of the slowdown in the energy sector. The slowdown in the rest of the list was much more modest: -0,7% compared to the previous quarter. But the credit sector suffers even more: -8% expectation of profits compared to 12 months ago. Also for this reason, the most awaited balance sheet of the week is that of JP Morgan, which on Thursday will open the accounts of the big banks.
In the USA, the spotlight is also on the Beige Book, that is, the most faithful photograph of the state of the stars and stripes economy. Consumption data is also important. After the brilliant data on the labor market (287 hires in June, the best result since last October), the S&P 500 index closed Friday just a hair's breadth from its all-time record, surpassed during the session before a modest correction: latest reading at 2.129,9 against an all-time high at 2.134,72.
THE EU DECIDES ON SANCTIONS FOR SPAIN AND PORTUGAL
Europe, on the contrary, has not yet overcome the Brexit effect: compared to 23 June, the day of the British referendum, the lists still report a loss of 850 billion. A positive opening is expected this morning. Meanwhile, today's Eurogroup meeting will have to decide whether or not to sanction Portugal and Spain, guilty of having breached the deficit according to EU rules.
The sanctions could reach up to 0,2% of GDP and at the same time the disbursement of structural funds could be at least partially suspended. Concerned about the delicate political context and the growing disaffection with Europe, however, the Commission has hinted that the sanctions could be symbolic.
SPOTLIGHT ON MPS AND UNICREDIT (MUSTIER ARRIVES TODAY)
At Piazza Affari, attention will be focused on the bank dossier, pending the agreement on non-performing loans and capital increases. Already on Friday, the market anticipated the happy ending with several double-digit rebounds: Banco Popolare scored a rise of 18,4%, followed by Bper (+16,4%) and Intesa (+10%). Unicredit also did very well (+8,7%), on the eve of the inauguration of the new CEO, Jean-Pierre Mustier, expected with today's board meeting.
Monte Paschi also rose (+5,5%), the parent bank of all non-performing loans, on which it plays a large part of the game. While the government is negotiating the suspension of the bail-in rules with the EU authorities, negotiations continued over the weekend between the Atlante fund and the top management of Monte to fix a price to be assigned to the 9,6 billion bad loans that the bank will have to give in shortly to meet the ECB's requests.
In the event that the EU authorities grant the derogations provided for in Article 45 of the EU banking system directive, a plan in two or more stages could in fact be announced shortly: first, to relieve Monte of a good portion of its 47 billion euro of non-performing loans which should be transferred to a new fund (after Atlante Giasone could see the light of day) capitalized with 5-6 billion provided in part by Atlante (1,7 billion), by Sga (bad bank of the former Banco di Napoli) for about 500 million and again from Cassa Depositi e Prestiti (Cdp) and some social security funds. Then we will proceed with a capital increase (three billion) with the public guarantee.
Banks occupy the last places in the weekly ranking of the Ftse Mib index. The black jersey was assigned to Monte Paschi (-15,8%), ahead of Banca Ifis (-13,9%), Azimut (-12,1%) and Bper (-10,7%). Unipol is also bad (-10,6%). Conversely, utilities and energy occupy 4 of the top 5 upward positions: Snam +12,5%, Eni +11,9%, Terna +10,7% and Enel +10,4%. In third place is Italmobiliare, +1% after completing the sale of Italcementi.
TREASURY AUCTIONS UNDERWAY: THERE IS ALSO THE BTP 20
Bond market rates continue to fall. The yield on the 0,20-year German Bund stands at -0,28%, very close to the historic low. The Japanese 1,37-year trades at -XNUMX%. The US Tbond is also close to the lows, at XNUMX%.
While awaiting confirmation of the (unconfirmed) rumors of a change to the criterion for allocating purchases by the ECB, last Friday the spread narrowed to 119 basis points, the lowest since May, while the 1,13-year rate fell to to XNUMX%, the lowest level for over a year.
In this context, the mid-month auctions kick off. Tomorrow the Treasury will offer 6,5 billion euros in twelve-month Treasuries, against the 7,06 billion maturing. Wednesday 13 July will be the turn of medium-long term securities: from 1,5 to 2 billion Btp 3 years; from 2 to 2,5 billion seven-year olds; from 750 million to 1,25 billion Btp 15 years. Finally, from 1,25 to 1,75 billion Btp over 20 years.
RCS, THE FINAL DUEL ON FRIDAY
Clash to the last cent for control of RCS. On Friday evening, the group of investors made up of Andrea Bonomi, Diego Della Valle, Mediobanca, Unipolsai and Pirelli decided to raise the amount offered for each RCS share to 1 euro. The publisher Urbano Cairo, supported by Intesa-Sanpaolo, has instead adjusted its offer by switching to an exchange of 0,18 treasury shares against each RCS title and adding 0,25 euros in cash. Based on the closing price of the Cairo stock, the value of the offer would be 1,038 euro. But it will be necessary to see what the Cairo Stock Exchange will be this morning when the market also discounts the fact that the publisher takes on 130 million in debt to adjust its offer.
ENAV, DISCOUNT OFFER. THE GOVERNMENT CHALLENGES BREXIT
Enav's stock market offer kicks off this morning. The government, which expects to collect about 800 million from the sale of a stake in the air traffic controllers company, has decided not to postpone the IPO, despite the market turmoil. The offer is thus placed in the low end of the range suggested by the banks involved in the privatisation, between 1,571 billion and a maximum of approximately 1.896 billion, equal to a minimum of 2,90 euros per share and a maximum for the public offer alone of 3,50 ,XNUMX euros.
In fact, the IPO concerns 42,5% of the share capital (46,6% in the event of full exercise of the greenshoe option), against the maximum 49% set by the decree which governed the placement. The offer to the general public and the institutional placement will last from 11 to 21 July 2016. The offer reserved for group employees will end on 20 July. 90% of the global offer is reserved for institutional investors. As for the listing of Poste Italiane, incentives are envisaged for employees who purchase shares.
