The increase in US rates is now imminent, but the minutes of the interventions of the last Fed meeting show a widespread willingness to proceed without haste: first we need more evidence on the recovery of inflation. The increase in the cost of money is in any case considered a "close to call" event, or rather "relatively close". Almost certainly the upward adjustment, the second in the last eight years, will take place in December, after the US elections on November 8th. The confirmation came with the speech held yesterday in Albany by the president of the New York Fed, William Dudley: the improvement underway in the economic cycle, he said, will lead to a rise in interest rates. Traders will try to grasp Janet Yellen's point of view from the speech she will give tomorrow in Boston at the annual meeting of US economists. But it is now certain that the pre-election calm is winding down.
Meanwhile, a new threat is looming on the markets. In fact, fears about the Chinese economy are back after the disappointing data on the trade balance: in September exports fell by 10%, the sharpest drop in the last seven months. The consensus was expecting -3,3%. In August they had fallen by 2,8%. Analysts fear that the slowdown will push Beijing to accelerate the decline of the yuan, thus putting the whole area under pressure.
WEAK ASIAN PRICE LISTS. STUMPF EXECUTED FROM WELLS FARGO
Asian price lists fell sharply this morning. Tokyo drops 1%, Hong Kong 1,5%. The Chinese price lists are weak. Toyota stable (+0,10%) after the agreement with Suzuki to develop self-driving car technologies.
Wall Street closed in positive ground: Dow Jones +0,09%, S&P 500 +0,11%. The Nasdaq is down (-0,15%). The yield on the 1,79-year bond rose by two basis points to 4%, on the highs of the last XNUMX months.
The most sensational news was announced after the markets were closed: John Stumpf, overwhelmed by the scandal of false Wells Fargo accounts, resigned last night. On the eve of the quarterly, the leadership of the second US Bank passes into the hands of President Tim Sloane.
The accounts of the big US banks will arrive tomorrow when the data from JP Morgan will be published (today - 0,1%): the consensus expects earnings per share of 1,39 dollars, slightly down from the 1,43 dollars of the second quarter. The quarterly Cititgroup (+0,2%) will also be released on the same day.
OIL, RECORD PRODUCTION. ENI -0,6%
Among the weakest sectors are health (-0,55%) and energy (-0,41%). Oil prices slipped (Brent to $51,9 a barrel) after the OPEC bulletin revealed the cartel's September output was the highest in eight years.
Down in Piazza Affari Eni (-0,6%), but Saipem gained 2,7% on the expectations of orders for the construction of the Turkish Stream gas pipeline. Tenaris +2,1%. Saras also rose (+0,61%). Kepler Cheuvreux raised the target price on the stock, confirming the hold recommendation.
TECHNOLOGY, BLACK DAY. COLLAPSE ERICSSON, STM -2,5%
Black day for technology penalized by a series of bad news. Cisco (-2,4%) was among the worst stocks on the US market. Weighing on the company that produces networking equipment was the long wave of negative sentiment that swept across the entire technology sector after the Ericsson meltdown, the Swedish giant that dropped 20% on the Stockholm Stock Exchange after announcing that its third-quarter profit will be "significantly lower" than expected due to a drastic drop in broadband activity.
Ericsson is laying off thousands of employees in an attempt to cope with falling demand and competition from Finland's Nokia (-4,8%) and China's Huawei. The group has been without a permanent CEO since the end of July, since Hans Vestberg left his post after months of criticism of his leadership and his salary.
In addition there is the debacle of Samsung, forced to withdraw the Galaxy Note 7 smartphone after the numerous cases of fire of the device. The Korean group announced a cut to its operating profit estimates of 33,3% for the third quarter. Takes advantage of the problems of the Korean group Apple : The title has gained 4% in the last seven sessions and is now moving on the highs of the last 11 months. In Piazza Affari Stm, it was among the worst in the list, losing 2,5%.
12-MONTH BOT AT A MINIMUM, FLAT BUSINESS PLACE
Sterling still under fire, traded at 1,2185 against the dollar. According to the Financial Times, Brexit will cost £20bn to liquidate dual-currency bond issues. In Piazza Affari, the Ftse Mib index (-0,02% to 16.470 points) closed the session virtually unchanged. Frankfurt lost 0,5%, London 0,7% and Paris 0,4%.
The most positive note concerns the trend of industrial production in the euro area, which rebounded by 1,6% compared to the previous month, well above expectations. For JP Morgan, "the figure confirms the rebound already shown by Italian industrial production".
Closing down for the Italian bond market, in line with the euro zone sector. The Italian 1,42-year rate rose to 0,06% in the evening, the spread with the same maturity of the Bund (up yesterday to +135%) is stable at 0,238 basis points. It fell to a new all-time low of -XNUMX% the auction yield of the 12-month Bot, placed for 6,25 billion euro, compared to 7,1 maturing.
Today the Treasury will offer up to 8,5 billion BTPs. The launch of the new 3-year October 2019 coupon 0,05% is expected, in addition to the reopening of the 7-year and 15-year benchmarks. On the gray market, the new three-year offers a positive yield of 0,07%/0,08%, while the old April 2019 pays a rate of 0,04% (above the -0,02% of the mid-September auction).
The ECB also seems ready to move. At next week's meeting, according to Reuters, the European Central Bank could discuss technical changes to the current Qe mechanism. But even in Frankfurt, decisions will only be taken in December, when it will also be established whether or not to extend the plan beyond March 2017. Among the hypotheses is the easing of the rule which obliges the purchase of government bonds in proportion to the size of the economy of individual countries, thus reducing purchases of German bonds.
DEUTSCHE BANK, OTHER BANKS DO NOT TRUST
Deutsche Bank (+0,4%) pays more to borrow money from other banks than its rivals, including troubled Greek and Italian banks. This is what emerges from the Euribor data, which highlight a trend that underlines the seriousness of the German institute's problems. Deutsche is the only bank that pays to borrow over a 9- or 12-month period among a sample of 21 banks surveyed to determine the price of interbank lending in the sector. Data collected by the European Money Matket Institute place Deutsche in a worse position than even Monte dei Paschi or the National Bank of Greece. The institution had to pay 0,02% to borrow money from other banks over the nine months. For a one-year loan he paid 0,06%.
CITIGROUP AWARDS ITALIAN BANKS, FLY UBI AND POPULAR
Italian banks in great evidence: the sector index rose by 1,38% against the flat performance of the European Stoxx. The rally was favored by a Citigroup report: “We are positive on the Italian banking sector – writes the US bank – because the latest results are encouraging. The quality of credits is destined to improve, the analysts add: in the next three years the amount of non-performing loans on total loans will be reduced by three percentage points”.
Above all, Ubi Banca (+6%) and Banco Popolare (+6,07%) benefited from the forecast, in the past among the most penalized by the market precisely because of the bad loans issue. Bpm rises again (+1,2%) in view of Saturday's meeting which will decide the merger with Banco.
New Unicredit blitz (+2,4%). Yesterday evening, after the close of the Stock Exchange, the Bank carried out the placement through "accelerated bookbuilding" of 20% of FinecoBank. The price, according to initial indications, is around 4,48 euros against today's closing of 4,788 euros with a discount of around 6%. The value is around 580 million euros. On July 12, 10% was placed at 5,40 euros per share. Unicredit's stake will therefore be reduced from approximately 55% to 35% of the capital. The institute has also signed a 360-day lock-up commitment during which "it may not carry out any act of disposal of FinecoBank shares without the prior consent of UBS on behalf of the joint bookrunners".
Monte Paschi +0,7%. The government reiterated “that no public support measures or nationalization measures are envisaged for MPS, as well as the opening of resolution procedures. Any reference to the application of the bail in is only the result of unfounded speculation”, said Economy Minister Pier Carlo Padoan during question time in the Chamber.
Insurance companies were positive, favored by the prospect of a rise in US interest rates. Allianz and Generali gain 1,4%, Axa +1,3%, Unipol +1,2%. Cattolica Assicurazioni also rips (+3,5%).
MEDIASET REQUESTS THE SEIZURE OF THE VIVENDI SHARES
Mediaset fell sharply (-3,9%), which yesterday evening announced that it had launched the offensive against Vivendi: the company filed a precautionary motion with the Court of Milan in which it requests the seizure of 3,5% of the capital of the French group held as treasury shares. The hearing to discuss the appeal has been set for November 8 before Judge Vincenzo Perozziello who will also have to rule on the civil lawsuit brought by Mediaset and Fininvest against Vivendi to request compliance with the Premium sales contract signed last April . Mediobanca Securities, however, continues to be convinced that an agreement is in the interest of both parties, even if nothing can be seen on the horizon in the short term.
Telecom Italia lost 2,9%: despite the reassurances, the market fears that it could be involved in the conflict over the fate of Premium.
THE AGREEMENT BETWEEN FCA AND SAMSUNG IS WITHDRAWN
Fiat Chrysler lost 1,4%: according to rumors, the Korean Samsung would have frozen the negotiations to buy Magneti Marelli, because the management is totally focused on the Galaxy Note 7 smartphone problem. Cnh Industrial goes up (+2%), down Prysmian (-2%) and Buzzi (-1,7%).
FIERA MILANO PAYS THE PROCUREMENT INVESTIGATION
M&C +5,69% after the board of directors decided to proceed with the acquisition of control of the Treofan group by abandoning the sale process.
Fiera Milano dropped 3,28% but came close to -7% in the session: yesterday the prevention measures section of the Court of Milan ordered the judicial administration for six months of the group's exhibition stand sector (Nolostand spa), which in 2015 was worth 14% of consolidated turnover.
