In anticipation of the G20 which will open today in Cannes, all the European stock exchanges open in red. Milan once again black jersey, with losses exceeding 2%. London (-0,8%), Paris (-1,7%) and Frankfurt (-1.8%) were also bad. In the immediately following minutes, however, the trend reverses: the lists reduce losses, Piazza Affari even turns positive by 0,2%. Meanwhile, the Italian spread sets a new historical record: with an opening flame, the differential between the BTP and the Bund widened up to 462 basis points, to then fall back in the following minutes to 454.
EURO IN FOCUS, EU ECONOMY SLOWS DOWN
THE RATES DOSSIER FIRST EXAMINATION FOR DRAGONS
It is difficult to imagine a more delicate first time for Mario Draghi. The meeting of the ECB directorate at the Eurotower, the first chaired by the former governor of the Bank of Italy takes place while the euro, faced with the pressing Greek crisis, is losing blows on all international markets, slipping to lows from October 12: in Singapore this morning the single currency is worth 1,3714 against 1,3747 last price in New York. In Hong Kong the euro slipped below 1,37. Meanwhile, the solicitations of economists are multiplying for the ECB to proceed with a rate cut. But a move in this direction, amply justified by the data on the fall in manufacturing activity in the EU in October, would cast the suspicion of "Mediterranean laxity" on Draghi.
BERLUSCONI WITHOUT A DECREE AT THE CANNES SUMMIT
IRA OF PARIS AND BERLIN AGAINST ATHENS
Silvio Berlusconi will attend a mini-eurozone summit in Cannes tomorrow morning ahead of the G20 meeting, the office of French President Nicolas Sarkozy has announced. But he will not have the expected decree in his pocket with the measures agreed at the European level: the President of the Republic Giorgio Napolitano, with the full support of the Minister of Economy Giulio Tremonti, has ensured, as a minister told the Reuter agency, that “the government was banging on a wall”. And so, after about two hours of the council of ministers, it was decided to introduce the new reforms in an amendment to the Stability law currently under examination by the Senate. The leaders of Germany, Spain and France will also take part in the meeting in Cannes, set for 10,30. The participation of representatives of the European Central Bank, the European Commission and the EU Council is expected. The presence of the International Monetary Fund is not excluded. Meanwhile, Germany and France yesterday invited Greece to decide whether it wants to stay in the eurozone, after the shock initiative to hold a referendum on the 130 billion bailout package that caused panic on global markets. Greece will not receive the tranche of 8 billion euros it urgently needs, and which was expected this month, until after the referendum, because creditors want to be sure that Athens sticks to the austerity plan.
The Greek premier's move has provoked anger and surprise in public opinion, especially in the German area. “Enough is now: the Greeks out!” headlined the Kronen Zeitung, the best-selling Austrian newspaper.
BERNANKE: “THE STIMULI ARE ON MY TABLE”
THE ECONOMIC RECOVERY REMAINS TOO WEAK
The Fed does not exclude purchases of mortgage backed securities, i.e. bonds linked to the financing of real estate mortgages, to help overcome the real estate crisis which "remains a very, very important sector" as underlined by chairman Ben Bernanke who added: "other stimuli to the economy are always ready on my table”. As expected, the FOMC meeting has brought no news, for now, to the central bank's policy: rates remain at historic lows and will be at least until 2013. Inflation is not scary, the economy is showing some signs of recovery but stay weak, too weak. Hence the signals from Bernanke himself who made us think about the next exceptional maneuvers, along the lines of quantitative easing, starting precisely with mortgages. Too little, according to Charles Evans, president of the Illinois Fed who once again played the role of the left wing of the central bank, acting as a counterweight to the three hawks who are pressing for a less permissive attitude of the bank. In short, the situation remains difficult: despite the slight increase in employment in October, the forecasts for 2012 are far from rosy for unemployment, which at the end of the year, in the middle of the electoral campaign, will be around 8,7%. .
WALL STREET RECOVERS POSITIONS, ASIA NO
RISE OF HOPE FOR THE PRICE LISTS OF EUROPE
Wall Street celebrated the indications on the cost of money arriving from the Fed: the Dow Jones rises by 1,53%, the Standard & Poor's scores +1,61, finally the Nasdaq +1,27%. In Asia, on the other hand, the downturn prevailed. The Japanese markets were closed for holidays, the Kospi index fell by 1,2%, Taiwan fell by 1,7%, Hong Kong -1%.
European stocks closed higher after a mixed day. No real news has arrived. Thus the markets experienced a climate of expectation. In Milan, the FtseMib index closed up by 2,3%, London gained 1,2%, Paris rose by 1,4%, Frankfurt +2,2%. The euro moved to 1,373 from 1,370 yesterday against the dollar. Government bonds remained under strong pressure and this is the real sore point of the day. The Btp/Bund spread fell to 436 from 445 yesterday with a yield (6,18%) that remains above the fateful 6%.
To understand how much our country suffers from low credibility today, just think that the analogous Irish bond (a country that fell into default) today yields 7,84% against 15% in July: in three months Ireland has recovered 700 basic points! And all not because oil was discovered in Ireland but only because the government kept its promises and implemented blood and tears measures that the country accepted obtorto collo.
VISCO: SOLID BANKS, RECOVERY IS URGENT
SUSTAINABLE DEBT EVEN WITH RATES AT 8%
The Italian banking system is not a source of instability: its capital position is solid; it will be further strengthened within the framework of ongoing initiatives at European level” . These are the words of the new governor of the Bank of Italy, Ignazio Visco, who irily noted that "to regain investor confidence and permanently reduce sovereign risk, to preserve the stability of the financial system - observes Visco - it is necessary to continue with decision in the action to restore public finances”. The situation is serious, therefore, but there is no need to panic. The Italian debt is sustainable even if the interest that the Italian state pays rises up to 8%. The critical threshold, according to some observers however, would be 7%. This was supported by the Bank of Italy in the "Financial Stability Report". In Piazza Affari the banks rebounded vigorously, in particular Unicredit +7,3%. Intesa +5%, Monte Paschi +2,8%, Banco Popolare +1,7%. Together with the banks, insurance companies recovered: Generali +0,7%, Fondiaria-Sai +1,6%. Popolare di Milano, on the other hand, closed down by 2,9%. It is the fifth consecutive session down for the title. In the last four sessions, the share has lost 25%, to 0,40 euro, thus approaching the price at which the new shares are offered (0,30 euro) of the 800 million euro capital increase that started last Monday . Meanwhile, Andrea Bonomi's Investindustrial has risen to 4,89% of the capital.
FIAT-CHRYSLER: OK IN THE USA, ITALY IN REVERSE
STM IS AWARDED THE CONTRACT FOR THE NEW NOKIA
Among industrialists, Fiat rose by 3,1%, Fiat Industrial +3,7%, Pirelli +2,7%. Fiat's recovery is linked to the good results arriving from Chrysler: the Detroit subsidiary closed the month with a 27% increase in registrations compared to October 2010 to 114 units. Sales to the general public, excluding company fleets and car rental sales, grew by 40%. Overall, in the United States, car registrations rose by 7,5%. Another scenario in Italy: Sales in 2011 will amount to 1.750.000 cars, 200 units less than a year ago. Not only. According to Unrae, the decline will continue in 2012 as well. In this losing market (-5,5% in October), the Fiat group has recovered 0,8% of its share, now slightly above 28%.
Brilliant Stm which gained 4,1%. St-Ericsson communicated that it has been chosen by Nokia as chip supplier for the new series of mobile phones running on the Windows operating system. St-Ericsson is a joint venture between Stm and Ericsson active since 2009 in the segment of chips for mobile telephony, the company closed the third quarter of 2011 with revenues of 412 million dollars and net losses of 211 million dollars. Diasorin was up 2,9%. The construction sector was among the best: Buzzi rose by 4,1%, Impregilo +2,4%. Decrease for Finmeccanica -2,8% with investors fearing that the government maneuver will lead to new cuts in the defense budget. Indesit also fell -4,5%. Ansaldo Sts climbs +2,5% after the announcement that the company has been awarded a 62 million euro contract in France. Ansaldo STS will supply its railway signaling technology for the new 182 km long Le Mans – Rennes high-speed line. Oils were positive: Eni rose by 1,8%, Saipem +5,2%, Tenaris +3,4%. The Rocca family company has announced that it will not proceed with the public offer for the delisting of the Brazilian subsidiary Confab Industrial. Deloitte's auditors had certified that the fair price to pay to minority shareholders was 5,2 reais. Too little for a fierce minority who went to war even before the announcement of the official offer. And so Tenaris pulled back: Maire Tecnimont rose by 13,8%.
