“The committee believes that the prospect of a rate hike is strengthening, but has decided to wait for further confirmation of progress to come”. That is, the Fed confirms that everything is ready for a rate hike, but, by a majority (two votes against), chose to wait for the meeting of 13-14 December, when the political framework will be clearer, to kick off the operation, justified by the trend of recovering inflation and the good performance of the labor market. Indeed, according to the hawks, the data justify a much more robust change of pace than a modest increase of a quarter of a point.
But the operation, although predictable and prepared with the utmost care, risks being untimely due to the possible political change in the United States at the end of a crazy election campaign in a crazy year, as evidenced by the victory of the Chicago Cubs in the baseball World Series: it hadn't happened for 108 years. In the last week, Hillary Clinton lost 10 percentage points in favor of American voters, effectively eliminating the advantage over her competitor, despite the intervention of Barack Obama who called the vote of black citizens to rally.
The result in the electoral challenge could have an immediate impact on the central bank. Paul Ashworth, of Capital Economics, does not rule out the short-term resignation of Janet Yellen, replaced by number two Stanley Fischer. Meanwhile, 370 economists including several Nobel laureates have signed an open letter claiming that Trump's victory would be "a catastrophe". Peter Navarro of Irving University, economic adviser to the Republican challenger, called the document "embarrassing for our corporation".
Hence the Black Wednesday of the Stock Exchanges, the result ofelectoral uncertainty which threatens to accompany the markets, not just the US ones, at least until the November 8 vote. Stress has spread almost everywhere, putting a strain on the most fragile stock exchanges, starting with Piazza Affari, also conditioned by the tensions over the referendum and the tug-of-war with the EU over the accounts, in turn made dramatic by the emergency earthquake. The BTP dam, overseen by Mario Draghi, holds the only positive note. But yes, here at the vote on December 4, the alarm is a must.
For now, they are not seen on the price lists after yesterday's flood. The closure of the Japanese markets, closed for holidays, limited the impact on Asian lists. The most relevant data is the decline of the dollar, down on all currencies. The Morgan Stanley Asia Pacific index fell by 0,3%. Shanghai is doing better (+1%), thanks to the comforting data from the PMI services. Hong Kong is up 0,1%. Seoul gains 0,3% and Mumbai 0,2%.
A Wall Street The S&P 500 index slipped below 2,100 points for the first time since July 7. US stocks closed down for the seventh consecutive session: Dow Jones -0,43%, S&P -0,65% and Nasdaq -0,93%.
Capital moved to safe-haven assets, starting fromgold, up 1,3% to 1.305 dollars an ounce: it is the fifth consecutive day of increase. The dollar fell against both the euro (1,1098) and the yen (103,30). Only the Mexican peso, victim of the Trump effect, loses another 0,9% against the US currency.
The decline in the dollar and the terrorist attacks in Nigeria allowed the rebound of the Petroleum: Brent trades this morning at 47,37 dollars a barrel (-3,3%) and Wti at 45,73, both slightly recovering after the 3% plunge following the publication of the weekly data on US crude inventories. The energy sector brings up the rear of the market: Chevron -1,1%. In Milan Eni lost 1,4%, Saipem -0,7%, Tenaris -2,4%.
To complete the black picture came the quarterly data of Facebook. Earnings tripled ($1.05 per stock versus a forecast of 0,97 cents) while revenues, thanks to mobile advertising, rose 56%. But these numbers did not satisfy the operators: after the Stock Exchange, the share fell by 8%. The absence of fourth quarter guidance in the corporate press release was not at all appreciated; analysts fear a sharp drop in traffic. The same fate for Alibaba: -3,3% despite the fact that the revenues for the quarter turned out to be more solid than expected.
Yesterday was also a day of declines for European price lists, starting with Italy. Business Square he closed the session updating the low at 16.475 points, down 2,5%, much worse than the other Stock Exchanges: Paris -1,2% Frankfurt -1,4% and London -1% (Bank of England meets today and no changes in monetary policy are expected).
La productivity of work in Italy increased at an average annual rate of 0,3% between 1995 and 2015, against the 1,6% recorded by the EU. This was reported by Istat, underlining that the value is the synthesis of an average growth of 0,5% in added value and 0,2% in hours worked. Growth rates in line with the European average, explains Istat, “were recorded for Germany (+1,5%), France (+1,6%) and the United Kingdom (+1,5%). For Spain, the growth rate was lower (+0,6%) than the European average but higher than that of Italy”.
The positive note came yesterday from debt market, recovering after a very weak start which caused the Bund spread to rise to its highest level since June 27th. Then there was the recovery of Italian paper, with the spread narrowing by as much as 10 bps, to 146. The rate on the ten-year BTP came close to 1,70% in the morning (high since mid-February), retracing then down to a minimum of 1,59%, with a generalized flattening of the curve.
To explain the purchases, the operators indicate various competing factors: the rumor, later denied by Matteo Renzi himself, of a possible postponement of the constitutional referendum of 4 December; the cover-ups after the sharp drop in the previous session and a possible, but unconfirmed, robust intervention on the market by the ECB. Meanwhile, the Italy/Spain spread is confirmed at area 40, the highest since the end of October 2014. The Spanish paper takes advantage of the unblocking of the long political deadlock in Madrid sanctioned on Sunday by the vote of confidence in the new government of Mariano Rajoy.
Il Italian banking sector, writes Mediobanca Securities, is "hostage" due both to the pressure on non-performing loans, in the absence of a functioning non-performing loan market, and "to the risk of political instability linked to the Italian constitutional referendum which will probably put the market under pressure in the coming weeks". The analysis was confirmed by the heavy performance of the sector: -4,2%, worse than the rest of Europe (Stoxx -2,3%), where BnpParibas lost 3,4%, Deutsche Bank 2,8 % and the Spanish BBVA 3,7%.
In the Italian list Mount Paschi it lost 4,2%, while fears are growing about the success of the 5 billion capital increase in such a volatile market. CEO Marco Morelli is in the US to present the restructuring plan and the capital increase. The roadshow will stop next week in Asia. The board of directors, said the chairman Massimo Tononi, unanimously approved the response to Corrado Passera after the announcement of the withdrawal of his proposed intervention on the Sienese bank.
Particularly affected by sales also Pop Milan (-7,69%) and the Banco Popolare (-7,05%). Unicredit it lost 4,95%. Bucking Carige (+2%), which yesterday evening drafted the response letter to be sent to the ECB asking the Bank to reduce gross exposure to impaired loans to 5,5 billion euros by the end of 2017, a figure which then drops to 4,6, 2018 billion at the end of 3,7 and 2019 billion at the end of XNUMX. In its reply, Carige essentially asked for more time, emphasizing the ongoing efforts. In recent weeks, the disposal of a portfolio of problem loans for a gross gross amount of over one billion euros has entered the operational phase.
The whole Automotive sector came under pressure in Europe: BMW fell by 3,7%, Daimler -2,6%. Fiat Chrysler under fire (-6,2%) after the drop in sales in the USA (-10%) in October compared to the same month in 2015. The news of the alliance between Uber and Maven, General Motors' car sharing, also weighs heavily . Mediobanca Securities notes that it was thought that FCA "could be a candidate partner for Uber, especially for the development of self-driving cars".
I data on registrations in Italy, communicated yesterday after closed exchanges, are more comforting. Sales of the FCA group in Italy also exceeded the market in October with an increase of 12,4% on the year, to over 41.400 units, compared to the +9,75% of the market. In 2016, with 300.000 registrations more than in 2015, the Italian market confirmed its recovery. Brembo (-2,2%) and Cnh Industrial (-1,6%) were also down.
In the rest of the list, in decline Enel (-1,8%), Terna (-2,8%) And Snam (-2,7%). Telecom Italy, on the eve of the Board meeting, lost 2%. Mediaset -3,8%. Stefanel plummets down by 39% to 0,105 euros. The board of the clothing group will present an application for admission to the arrangement with creditors leaving open the possibility of appeal in case a debt restructuring agreement is found. According to the company, this decision is part of the initiatives aimed at restructuring the debt and strengthening the company's capital.
