THE LISTS FEAR THE DEFAULT OF GREECE
EURO AT A TEN-YEAR LOW VS THE YEN
As in a slow motion that repeats itself endlessly, the markets are witnessing a new Monday dominated by the nightmare Greek default and the risk of contagion: government bond spreads are flying, banks are collapsing and stock lists are sinking. After a brief recovery in the afternoon in the wake of Wall Street, the indices closed sharply down: the Ftse Mib dropped 3,89% to 13.474,14 points, slightly above the low for the day at 13.398,39, the Dax 30 on 2,27, 5.072,33% to 5 after falling below 100 thousand points in the intraday, the Ftse 1,63 4,03% and the Cac 2,91% dragged by the banks but also by EDF (-XNUMX) following the Marcoules nuclear accident.
From Brussels they reassure that the talks with the Troika are going ahead, that if new interventions are identified to close the gaps that have emerged with respect to the agreements made, the next tranche will be unblocked in time to avoid Greece's insolvency and that "it is a matter of commitment political” (with the commitment undertaken on 21 July by the Eurogroup to save the country). Over the weekend, the Athens government announced a new extraordinary tax on real estate, with the aim of raising 2,5 billion euros and thus meeting the deficit reduction target agreed with the EU and the IMF. But from Germany, worried about not paying the political price for the debts of others, new hypotheses are emerging on the possibility of a selective default being studied by the top government officials.
The underlying reason is clear from a certain point of view: as sanctioned by a survey released yesterday by the company Emnid, 53% of German citizens are against providing further aid to Greece and would prefer a default. There is also an attempt to correct the shot. "What interests us is the stability of the Euro and we want Greece to remain in the Euro", commented the spokesman for Economy Minister Philipp Roesler. And in the early afternoon, the German chancellor, Angela Merkel, and the president of the European Commission, José Manuel Barroso, confirmed at the end of a meeting that "the approval process of the enlarged state-saving fund (EFSF) will have to be closed between now and end of September”, agreeing that “the stability and growth of the eurozone countries are the essential condition for a stable euro” and “on the extreme importance of the euro for Europe and for Germany”.
But the mood of the markets weigh on the facts: such as the resignation on Friday of the German representative in the ECB Jurgen Stark, contrary to the support provided by the European Central Bank to Spain and Italy through the purchase of BTPs and Bonos on the secondary market. Which are added to the divisions already recorded in the European Union, at a crucial junction for the survival of the euro and which collides with the need for a stronger leap towards putting economic and fiscal policies as a common factor, which obviously means the cession of part of their sovereignty by the Member States. The euro fell to a six-month low against the dollar at 1,3499 before returning to 1,36 and a 10-year level against the yen close to 104,0. In New York, gold continues to retrace its highs, down 1,19% to 1.837,3 dollars an ounce.
HELLENIC SPREADS FLY
RISING RETURNS FOR BOTS
Here is that investors are back to selling Greek debt with both hands while Germany collects once again the benefits of the fly to quality, which leads investors to buy bunds because they are considered a safe haven in the entire euro area: the spread between bonds bonds and German Bunds reached 2052 points, expanding by a further 173 basis points, a level never seen before since the introduction of the euro in 1999 and Greek bonds returned 21,08% while German 1,73-year debt yields minus 63,17%. But it is on Greek two-year maturities that even more impressive returns are recorded at an all-time record of XNUMX%.
Just today, the Italian Treasury placed three-month and one-year Treasuries for 11,5 billion dollars but had to offer sharply higher interest rates: for the 1-year tranche (from 7,5 billion) the rate rose to 4,153% from 2,959% in the August issue. For the 3-month tranche (from 4 billion) it rose to 1,907% from 1,034% at the March auction. Demand is also slowing down: the bid-to-cover ratio was equal to 1,53 on 1,94-year Bots (1,86 the previous one) and 2,42 times (3 the previous one) on XNUMX-month Bots . The appointment is now for tomorrow's Btp auction.
While the maneuver to correct the accounts reaches the Chamber, Europe, in the 2011 report of the Commission on the state of public finances of the Union, exhorts Italy to be ready to take "additional measures if the revenues deriving from the tax authorities are less than as planned and if there were difficulties in cutting spending as planned. The spread rose to 382 basis points in the afternoon, close to the historical record: in the morning it had already reached 381 basis points and then retraced to around 375 basis points. During the day, the CDS on Italy exceeded the threshold of 500 basis points for the first time at 505.
The ECB confirmed last week that it continued to buy Italian and Spanish government bonds: it bought for 13,960 billion euros, an amount up on the previous week (13,305 billion), thus rising to 70 billion in total purchases since 8 August. And from the G10 central bankers' meeting, where the Greek crisis was reportedly not discussed, Eurotower President Jean Claude Trichet said: "We see a slowdown in the global economy and particularly in Europe but that doesn't mean that there is a recession, rather there will not be the same growth rate experienced recently”. Central banks around the world, Trichet says, are ready to provide all the necessary liquidity to the financial system.
BANKS UNDER PRESSURE
DOWNGRADE FEARS FOR FRENCH INSTITUTES
On the ESF Mib (on which there were updating problems in the late afternoon and briefly restored) sales hit the banking sector with Unicredit, suspended in the session, which lost 10,91% to 0,686, Intesa 9,54% to 0,868 euro%, and also insurance companies with Fondiaria Sai losing 8,01% while Generali lost 2,56%. Going against the trend in positive territory for a while, MPS didn't make it and closed down by 1,63%. The Sienese institute sold Monte Paschi Monaco Sam to Andorra Banc Agricol Reig SA for 21,7 million euros (equity included) and a net capital gain of 7,7 million euros. But sales once again also hit industrialists such as Buzzi Unicem (-6,86%), Ansaldo Sts (-5,53%) and tcl with Telecom Italia losing 5,35%. Fiat, under pressure in the morning, closed down 2,97%.
The Antitrust has today given the go-ahead to the Dr motor company for the acquisition of a business unit owned by irisbus Italia, controlled by Iveco Espana (Fiat group). Heavy also for energy: Enel sells 3,11%, Edison on which there is no progress on the restructuring sells 3,32% and Eni 2,40%. The six-legged dog has left UBS's list of favourites, while CEO Paolo Scaroni said today that the group aims to restart gas exports from Libya to Italy through the Greenstream pipeline between October and November. Stm (+0,48%) benefits from Broadcom's offer on NetLogic for 3,7 billion dollars which provides for a premium of 57% compared to last Friday's closing price. NetLogic climbs 50%.
The lenders sector is under pressure across Europe on fears of contagion risk over a possible Greek default and following news that Moody's may cut the rating of French institutions due to exposure to Greek debt, the judgment is expected in week. Socgen, which in a note communicated an exposure of around 900 million, lost around 10,78%, Bnp Paribas 12,35% and Crédit Agricole 10,64%. And to calm the markets, lenders are accelerating their disposal plans to reduce costs and bring more fresh resources into the house.
Société Générale has ready a plan for the sale of assets worth 4 billion euros by 2013 and a cost-cutting plan which envisages a "significant reduction" of the workforce in various countries and a 5% reduction in basic costs of the investment banking segment. Bank of America, the CEO announced today, will cut costs by 5 billion dollars between now and 2013, while HSBC has started the process of selling its non-Life business, a global division worth 1 billion dollars and which is now it is part of the non-core assets that the bank wants to sell.
WALL STREET OPENS DOWN
RULE 48 APPLIED, GREAT VOLATILITY
Trading on Wall Street opens down. The Dow Jones is currently trading down 0,51% while the Nasdaq is in positive territory by 0,40%. At the opening of trading, Nyse and Nyse Amex Cash announced the application of rule 48: it allows the suspension of price indications, which normally facilitate the determination of the control price at the start of the session, making it possible to speed up the start of trading. Rule 48 is invoked when expecting particularly high volatility. Highlights include Oracle which has been included by Goldman Sachs in the conviction buy list and target price at $33 per share and McGraw Hill which has announced plans to split into two distinct entities, on one hand the markets division which will include Standard & Poor's, Platts and JD Power, on the other the educational that will deal with the related issues
