BUT ASIAN EXCHANGES SLOW DOWN
The recovery of world stock markets, according to some observers, is not the result of less tension on the sovereign debt front or the imminent expansionary measures by China. The real reason may lie in the East. According to advances in the China Securities Journal, the Chinese central bank is about to take the field to give new life to the economies and stave off the recession in the West which is threatening growth. To this end, the People Bank would be ready to launch a massive campaign to purchase securities or to cut the ceiling on reserves at the central bank. The maneuver could take effect immediately after the reassuring data on inflation will be announced tomorrow, 9 September. In the meantime, Asian stocks have lost much of the momentum of the previous session. The MSCI Asia Pacfic index recorded a drop of 0,1%, in Tokyo the Nikkei 225 signaled a rise of 0,2%. Hong Kong's Hang Seng was in the red – 0,75% while futures on the Standard & Poor's 500 are down slightly -0,3%.
THE BULL ROARS IN WALL STREET (+3%)
SPOTLIGHT ON OBAMA'S STIMULATES
The Bull returns to show up on the US markets. after four consecutive declines: Dow Jones +2,5%, S&P500 +2,9% and Nasdaq +3%. The banking sector index rose by 5%, partially limiting the damage of the crisis of recent months. Since mid-July, US banks have lost an average of 24% (against 13% for Standard & Poor's). The excellent layoffs also favored the recovery. Leading the race, in fact, are the shares of Bank of America +7%, in strong recovery after the dismissal of a couple of top managers. Even the ouster of Carol Bartz, CEO of Yahoo (+6,7%), dismissed with a simple phone call, has given wings to the Internet company. But the rebound naturally has other reasons. In part, the lesser tensions on European sovereign debt (after Italy's confidence in the maneuver is less fearful) . But also the expectation of new stimulus measures for the American economy. In fact, the signals in this direction are multiplying.
THE BEIGE BOOK CONFIRMS: US ECONOMY IN BRAKING
EVANS (FED) CALLS FOR A MORE AGGRESSIVE POLICY
The Federal Reserve should move aggressively to reduce unemployment, even at the cost of pushing inflation higher. This was declared by Charles Evans, president of the Chicago Fed, together with Sandy Pianalto, of the Cleveland Fed, the only governor with the right to vote in all meetings of the FOMC. Evans, the "dove" of the central bank, speaking in London did not use half measures: the Fed must do everything it can to lower the unemployment rate to 7 per cent from the current 9,1 even at the cost of raising the l inflation at 3 percent. "Given the poor results achieved so far - he said - I believe that another dose of liquidity is needed, even if a policy of this type will have unavoidable effects on prices".
Such a radical choice stems from a well-defined concern: if the current recessionary trend is not reversed, the American economy is destined "to run enormous risks in the future". "And I'm sure none of us want to be in the current situation a year from now." The American economy continues to slow down: in 7 of the 12 regions in which the Beige Book is drawn up, ie the most complete short-term indicator on the state of the economy, activity is clearly slowing down. And the response is coming from Atlanta, Boston, Chicago, Cleveland, New York, Philadelphia and Richmond.
The situation is better, but not too much, in Kansas City and Saint Louis, in the center of the agricultural region of the Midwest, Dallas, land of oil, Minneapolis and San Francisco, where the crisis has already hit hard (unemployment at 19 percent). The verdict of the Beige Book, released as usual two weeks before the meeting of the FOMC, the directorate on which the choices regarding the cost of money depend, among other things, leaves no room for doubt: the echo of the European crisis, the stock market crash, political tensions have contributed to seriously undermining consumer confidence. Thus the possibilities of a new extraordinary intervention by the central bank are growing even if Ben Bernanke, who will speak today in Minneapolis, pointed out in Jackson Hole that "the Fed cannot shoulder the destinies of 14 million Americans looking for work and they have big problems with their home loan”.
OBAMA'S CHALLENGE: CUTS AND STIMULUS FOR 300 BILLION
BUT FOOTBALL COMPETES HIS SPEECH
But the most eagerly awaited speech is the one that Barack Obama will give today (the night in Italy). Republican speaker Jihn Boehme scheduled the president's hearing at the same time as the start of the football championship, one of the most watched events nationwide. Obama, however, is convinced that his speech will still reach American homes. At stake is a 300 billion dollar plan to improve the labor market. The stimulus plan should be made up of about half by tax cuts and the remaining part by investments in infrastructure. According to the Bloomberg agency "more than half of the stimulus will come from tax cuts, equal to two points less on year-end salaries and a new discount for employers' charges". Fears of a recession diminished and the price of WTI oil rose to 88,4 dollars a barrel, up 2,7%. Some profit-taking pushes the price of gold down 3% to 1.815 dollars an ounce from yesterday's highs of 1.910 dollars.
EUROPE ON THE RISE AWAITS THE ECB SUMMIT
MARKET PLACE LEADS THE REBOUND. +4,24%
The German Constitutional Court's rejection of the appeals on Germany's participation in the Greek bailout was met with relief from European markets. However, the High Court has asked the government to involve Parliament more. Spotlights today on the directorate of the ECB focused on the data arriving from Greece and on the balance of the purchases of Btp and Bonos by the central bank. The German Dax closed the session with an increase of 4,07% reaching 5.405,53 points, +3,63% for the Cac40 at 3.073,18, +3,14% for the Ftse100 at 5.318,59 and +2,77 .8.156,6% of the Ibex, with the Spanish index rising to 1.000. For once, politics helped the Milan Stock Exchange. The new measures of the Finance Act have finally received the appreciation of the EU Commission, expressed by Commissioner Ollie Rehn.So Piazza Affari takes a breath of fresh air and comes out of a three-session apnea which cost the Ftse Mib index 9,8 points. or 4,24%, a drain partly attributable to the troubled march of the manoeuvre. The Ftse Mib closed the session with an increase of 14.645% to 3,61 points. The Ftse All Share with a +15.460% to XNUMX points.
ITHE VOTE ON THE MANEUVER PUSHES THE BTP
FIAT RISES UP BUT HAS LOSED 51% SINCE JANUARY
Confirming the calmer climate, the spread between the 10-year BTP and the German Bund of the same duration narrowed again, down by just under 334 percentage points to 30 basis points. Confidence in the maneuver was greatly appreciated by the debt markets. This is demonstrated by the fact that the recovery of Italian bonds, in the order of 24 cents of spread, was much more sensitive than the 'piigs' companions Spain (22), Greece (14), Ireland (7) and Portugal (8,55) . The plus signs prevailed on the Milan stock exchange, with important rebounds especially for cyclical stocks, those that had paid the most duty on sales in recent days. Leading the increases among industrialists were Fiat (+3,986% to 7,36 euros), Pirelli (+5,4% to 7,14 euros), Saipem (+29,88% to 6,26 euros) and Tenaris (+11,21% to 25 euros). The auto sector led the recovery of stock markets throughout Europe. From 51 July to yesterday Fiat halved its stock market value (-42%) and since the beginning of the year the loss is 24%, on par with the loss of Renault. Today President John Philip Elkan will visit the Quirinale to illustrate the Lingotto plans to President Giorgio Napolitano. Meanwhile, Sergio Marchionne has become not only CEO but also president of Chrysler. The European Stoxx index of the sector has fallen by XNUMX% since January XNUMX to today.
NO REFERRAL FOR BPM INCREASE
BANKS KNOCKING IN FRANKFURT
Banks also partially recovered their losses, led by Banco Popolare (+6,96% to 1,137 euros), Banca Mps (+5,78% to 0,395 euros), Ubi (+4,44% to 2,352 euros). In the meantime, however, the statistics indicate the anomalous situation on the credit front. The numbers released yesterday by the Bank of Italy signal a sharp increase in requests for loans from the ECB, demonstrating the difficulties that Italian institutions encounter on the interbank market: from 43 billion in June it rose to 80 billion (July) up to 85 billion in August. Banca Popolare Milano also closed higher (+4,68%) on the day of the meeting between the top management and the supervisory authorities of the Bank of Italy, summarized in a press release from the at least synthetic institute. There is talk of "a fruitful meeting of an institutional nature which follows other previous contacts, on issues relating to the problems that emerged during the inspections". Basically, the Bank of Italy has not granted any postponements: on Tuesday, therefore, the Bank's board of directors should kick off the capital operation which should start on 19 September. There was, it seems, some opening on the amount of the operation: given the market conditions, the request could drop from 1,2 billion to 900 million, a binding amount in any case. Campari, on the other hand, closed down, dropping 1,73% to 5,405 euros, in the wake of a downgrade by Goldman Sachs which reduced the recommendation on the stock from neutral to sell.
