Slight rebound for the Milan Stock Exchange, which opens up 1%, then turns negative. The tension, however, continues to weigh on the European markets.
MARKETS IN THE SIGHT OF THE RATING. TOUCH THE POLICIES. ON FONSAI THE WORD NOW GOES TO GOLDMAN SACHS
The judgments of investors, economists and politicians seemed positive. But what should have been the day of European redemption has turned, hour after hour, into a dramatic session, dominated by flurries of angry selling on the Italian stock exchanges and government bonds. A hurricane triggered by:
1) from the draconian verdict of Moody's, which announces the downward revision of the ratings of EU countries for January due to the absence of "decisive political measures" at the Brussels summit; softer Fitch merely forecasts a robust decline in the European economy for next year;
2) by the decision by Standard & Poor's to place the 15 main insurance companies under observation because, once the rating of the EU states was downgraded, even the insurance companies would end up penalised;
3) from the symmetrical reasoning, that of the EBA which, by imposing a capital increase on the banks in these situations, causes new reductions which will weigh on sovereign bonds and, consequently, again on insurance companies. Ahead of this pace we don't know where we will stop.
METEOBORSA, CONTRAST IN THE SKY. The bad weather that marked yesterday's session does not allow us to predict anything good. In Asia, futures on US stock exchanges are balanced, those on London down, but not too much. After yesterday's sharp drop, a price stabilization cannot be ruled out, as demonstrated by the slight recovery of the euro on Asian stock exchanges. But distrust reigns supreme: yesterday a new record for bank deposits with the ECB was reached: 333 billion euros, remunerated at 0,25%.
THE BTP IS IMPROVING, THE NEW TEST TOMORROW. Italy is able to sustain high yields on its government bonds "for a certain time, provided it maintains market access" claims the Bank for International Settlements. Who knows if the markets will be able to grasp this signal this morning, the feast of Saint Lucia, amid the storm of sovereign bonds. In reality, there has been some small progress compared to the most acute phase at the end of November. First of all this morning the Italian Treasury managed to place the expected 7 billion Bots in 1 year to a slightly decreasing yield to 5,95% from the 6,08% of the previous November auction and with requests much higher than the offer (1,92 times).
The government bond yield curve, i.e. yields from the shortest maturities (3 months) to the longest maturities, is nonetheless recording a progressive improvement, supported by purchases by central banks and by cutting rates to 1%: the November 25, the worst day, all 6-month to 10-year yields shot above the 7% threshold. Yesterday, not only were yields all below that threshold, but the curve is normalizing with lower yields for shorter-maturity bonds. A timid signal that awaits confirmation in tomorrow's trial by fire, 14 December, when the Treasury will place 3 billion five-year BTPs (maturity 2016). The day, however, was really awful. In Milan, the FtseMib index closed with a loss of 3,7%, by far the worst European stock exchange. The yield on the ten-year BTP rose by 20 basis points to 6,49% and the spread with the Bund widened to 452 points.
INTEL BENT BY THE FLOOD. The coup de grace on Wall Street, as usual conditioned by the trend in Europe, comes from Thailand. Intel, world leader in chips, announced a sharp drop in turnover in the fourth quarter (13,4 billion against the forecast of 14,2) due to the non-arrival of components from Thailand hit by the floods. The stock loses 4,5%. For financials -3%, the bad weather, as usual, comes from the other side of the Atlantic: the Standard & Poor's 500 loses 1.49%, the Dow Jones industrial 1.34%, the Nasdaq 1,31%. On the contrary, the purchases continue to reward US Treasury Bonds, guaranteed by the "tap" purchases by the Fed, the 6-year yield falls by 2 basis points to 1,3%. The Shanghai index fell 27% for the fourth day in a row on the slowdown in the declining housing market in 35 cities out of 225 monitored. Both the Nikkei 0,87 -0,84% and the Hang Seng -XNUMX% fell towards the close.
CHINA, STOP FREIGHTS. USA STOP AT PORTS GS. Ubs expects zero growth for Chinese naval traffic in 2012. This is the latest alarm signal on the braking of the Dragon which has secured control of Piraeus. The cause of the blockade of the ports of the American west coast, from San Diego to Portland, is of a different tenor. Occupy Wall Street protesters have blocked the airports which are controlled by Goldman Sachs.
ING, ALLIANZ AND AXA IN THE CLUTCHES OF THE BEAR. FONSAI, LIGRESTI RESISTS BUT THE INCREASE IS CLOSING
On the Stock Exchange, thanks to the warning from Standard & Poor's, the insurance sector is the one that has lost the most today, with the Stoxx index for the sector down by 4,5%. French Axa fell by 6%, German Allianz by 6,5%, Dutch Ing -7,5%. In Milan Generali -3,9%, Unipol -5,5%.
Decisive days for the fate of Fondiaria-Sai -8,9% and of the subsidiary Milano -9,2%. The company's board of directors has mandated CEO Emanuele Erbetta and general manager Piergiorgio Peluso "to investigate possible initiatives to propose to the board in terms of capitalisation, including structural, in the short term" with the help of Goldman Sachs. Day X is set for December 21, when a new summit meeting will be held. That day the team of the US investment bank, led by Massimo Della Ragione and the advisory committee made up of 5 non-executive directors, in charge of supporting Goldman with a verification and comparison action, will present the updated picture of the company's capitalization at the end of the year , therefore also of the effective need for strengthening.
Among the solutions, the most probable remains that of the capital increase unwelcome to the Ligresti group but supported by Mediobanca (exposed for 1,1 billion through a subordinated loan) and by Unicredit (which is also a shareholder with 6,6% over what a creditor). Also on the table is the hypothesis of a convertible into shares of the subsidiary Milano Assicurazioni and of the newco in which to bring together the strategic investments controlled by Fonsai with Credit Suisse as a minority shareholder.
BASEL 3 ADJUSTS THE LIQUIDITY CRITERIA. THE EBA EFFECT ON BANKS CONTINUES
A meeting of capital importance for the banking system is in sight. The supervisory authorities who are part of the Basel Committee of Banking Supervision will address the issue of liquidity within the week. Accuses Monika Mars of PricewaterhouseCoopers: "At the moment there is no correlation between the economic reality of liquidity and what should be counted as such according to the principles of Basel 3". The goal is to move in harmony with the decisions of the ECB, rather than those of the EBA.
Meanwhile in Europe, apart from insurance, the most harassed sector was that of the banks. The three European giants, Deutsche Bank, BnpParibas and Credit Suisse are down more than 4%. In Milan Intesa lost 5,7%, Unicredit -5,8%, MontePaschi -8,8%, Ubi -7%, Pop.Emilia -9,4%.
Consob has obliged Banco Popolare -7,7% regarding the early conversion of the "Soft mandatory" convertible bond issued in 2010 and maturing in 2014. Meanwhile, a pool of funds has put together a stake of around 20% to vote against the board if in the meeting of bondholders, convened for Friday, there will be no specific resolution on the early conversion, a hypothesis that has caused Banco's bond prices to rise. But the top management does not want to make a definitive commitment: yes to the delegation to have the new potential capital recognized by the EBA, no to the actual conversion too penalizing for the shareholders.
FIAT CONTRACT. FOR THE LINGOT TODAY IS SIGNED. BUT UILM HOLDS BACK ON THE CONSTRAINTS TO ABSENTEEISM
The appointment is for this morning at 10 at the Industrial Union of Turin. Where Fiat will have to sign the new definitive agreement of the Italian Lingotto plants. The unions, however, do not seem to think the same way: this evening the Industrial Union of Turin was missing Uilm, held in Rome for an internal summit. The company announced in the evening that it "deems the negotiation concluded on the basis of the drafting of the final text of the specific collective agreement of 29 December 2010 as agreed on 9 December". "Tomorrow morning we will present ourselves and evaluate on the basis of the documents, some agreed and others to be verified". The nodes of absenteeism and the economic repercussions on 2012 remain open. Yesterday Fiat fell by 4,9%, Fiat Industrial -5,4%.
Terna lost 5,7% after the document from the Energy Authority on the new tariffs, much lower than the company's requests: Chevreux lowered the outlook from "utperform" to "underperform". Barring course corrections, it will be difficult to guarantee the 2013 dividend.
