SWITZERLAND PUT THE BRITLES ON THE FRANCO
EUROPEAN BAGS IN RED WAITING FOR WALL STREET
Thanks also to the unprecedented move by the Swiss central bank, the European stock exchanges are attempting a difficult recovery after the black Monday which involved the euro, sovereign debt and the main banks of the old continent. The Milan Stock Exchange, amid lusts and fluctuations, advances after yesterday's crash, but then sinks again: around 14 pm it lost 30%. The other European stock markets are also recovering, awaiting the reopening of Wall Street, they are in negative territory, waiting for Wall Street, closed yesterday for Labor Day.
The exception is Zurich (+5,1%) following the decision of the Swiss Central Bank to set a minimum value for the euro/franc exchange rate at 1,20. The Swiss National Bank has set the minimum exchange rate target of the Swiss currency at 1,20 francs per euro and will enforce it by buying foreign currency in unlimited quantities. “Effective immediately, the SNB will no longer tolerate a euro/franc exchange rate below the minimum threshold of 1,20 francs. The SNB will enforce this minimum with the greatest determination and is ready to buy foreign currency in unlimited quantities,” the central bank said in a statement.
The franc has risen against the euro and the dollar in recent months, almost reaching parity with the single currency, as predicted by the report edited by Goldman Sachs analyst Alan Brazil, who advised VIP clients to purchase products aimed at exploiting the speculative potential of the new exchange. After the announcement of the SNB, the euro jumped to 1,203 (+8,5%) francs against 1,1270, while the dollar rose to 0,8370 francs from around 0,8000. The euro rose against the dollar to 1,422 from 1,409 at the close.
THE BTP/BUND SPREAD LOWERED TO 359 BPS
BANKS RECOVERING, BPM LIVE
In the meantime, the tension on the debt market front is easing. The yield on the 10-year BTP falls to 5,44% (-9 basis points) and the yield on the German bund rises by 7 basis points to 1,92%: the spread is 359 from yesterday's highs of 371. Consequently, the banks recover in Piazza Affari, starting with Unicredit +2,7%. CEO Federico Ghizzoni said that Unicredit aims to have a Roe (return on assets) "at least higher than the cost of equity", on average with the banking sector, around 11%. Intesa rises by 1,1%, Ubi by 2%. B.Pop. Milan +0,4% is the most controversial due to rumors about a possible postponement of the capital increase.
A decision must be made within the week on the increase that the management spoke about yesterday with the Bank Supervisory Authority, which is asking for a capital injection of 1,2 billion euros. Mediobanca, leader of the guarantee syndicate, is pressing for a postponement of the operation, which is practically impossible in these market conditions. The alternative is a reduction of the offer to 900 million. “Every hesitation is to be read in a negative key”, argue the analysts of Intermonte who maintain the underperform recommendation on the BPM share and the target price at 1 euro.
But, given the current governance, risk-averse investors are unlikely to be found. The Sator hypothesis remains in the background: Matteo Arpe, already in contact with the internal trade unions, seems ready to take a risk as long as the bank provides for a managing director.
MOODY'S CUT CAR FORECASTS
ONLY THE LUXURY SECTOR SHINES
The big names in the industry are also recovering, yesterday down sharply: Fiat +0,7%, Finmeccanica +1,3%, Pirelli 0,4%. Fiat Industrial (-1,4%) is still moving against the trend. Moody's has lowered its forecasts for auto demand growth: from 5,1% to 3,5% for the current year and from 7,4% to 6,5% for 2012 due to the slowdown in GDP in mature markets and higher interest rates in emerging countries, especially China and India. Furthermore, according to Moody's Industry Outlook, the growth of raw materials will erode profit margins by 1%-1,5%, forcing manufacturers to cut costs on other fronts.
In Western Europe, demand will drop by 1% compared to the previous year, reaching 14,3 million units. In the USA, the forecast is 14,5 million units, ie 500.000 units less than the previous estimate, but still much higher than the 2011 data (12,5 million cars sold). Lottomatica +0,7% and Terna +1,4% are up. Luxury is back on track thanks to Tod's and Luxottica, +1,7% and +1,8% respectively. Parmalat (+1,5%) and Autogrill (+1%) were also positive. Mediolanum benefited + 0,6% from Mediobanca's positive recommendation (target reduced to 4 euros).
MACRO ALARMS/1. ZAPATERO TO THE UNIONS
“SPAIN WALKS ON THE EDGE OF THE ABYSS”
Last August 17, the Spanish premier, Jose Luis Rodriguez Zapatero, affirmed - in a meeting with the social partners - that Madrid was close to being forced to ask for a bailout plan like Greece, Portugal and Ireland. This was revealed by the leader of Ccoo, the largest Iberian trade union, Ignacio Fernandez Toxo, in an interview with public television. “He told us that the situation was really negative, that we were on the verge of the abyss, in the form of a rescue of the Spanish economy – explained Toxo-. I don't know what data he was based on, nor do I show us 'a letter from the ECB ”.
MACRO ALARMS/2. “CHINESE GDP WILL SLOW DOWN”
HUANG GUOBO (MINISTRY OF THE TREASURY) SAYS
Huang Guobo, authoritative chief economist of the State Administration which supervises the exchange rate of the yuan, said that China's growth will drop below the current level of 9 per cent as early as next year due to the recession in other economies. “China – he declared – is facing very serious challenges, despite the current level of growth. The weakening of global demand will soon make itself felt. Hang Guobo spoke at the Department Research Council conference in collaboration with the World Bank which has set itself an extremely ambitious goal: to define a path to shift the focus of Chinese growth from exports to the domestic market while respecting new environmental parameters. “
