Good news opens the financial week. Yesterday night the United States and Canada reached an agreement on Nafta 2, the trade agreement which also includes Mexico. In short, Washington is waiving duties on cars and timber, while Ottawa in exchange opens its doors to milk arriving from the States.
The effects of the peace have already been felt: both the Canadian dollar (+0,5%) and the Mexican peso (+0,6%) are up and futures on the S&P index are positive (+0,5%). which give hope for an upward opening on Wall Street.
The Tokyo Stock Exchange (+0,6%) updates Friday's record: the Nikkei index has surpassed 1991 prices. The other Asian stock exchanges have seen little movement, discounting the start of the holiday week on the Chinese stock exchanges, which the lunar new year: Seoul -0,1%, Taipei +0,1%. Yesterday, however, the PMI indexes signaled the slowdown of Beijing's economy: the tightening of duties is starting to produce its effects.
The other relevant figure of the day concerns the surge in oil prices: Brent at 83,25 dollars one month after the entry into force of the US embargo on Iran.
GIORGETTI: THE MANEUVER COULD CHANGE
On the other hand, the euro was weak at 1,1608, held back by the uncertainties inaugurated by the manoeuvre. Italy will today be the special observation of the markets after the black Friday of Piazza Affari (-3,7%) and of the spread, which rose up to 280 points, to then fall back to area 265. A reaction triggered by the choice of the government to fix the deficit/GDP ratio at 2,4% in the next three years, which today Minister Giovanni Tria, who has remained in his post despite the disavowal of his line, will try to explain to his European colleagues in the Eurogroup meeting in Luxembourg.
Beyond the conciliatory tones used by both the minister and the main government leaders, as well as by the premier Giuseppe Conte, the markets await, after the first indications, the details of the measures, starting from the tables dedicated to the most important parameters in the eyes of the analysts and of the EU partners, from the primary surplus to the structural deficit.
In his long interview on Sunday with Sole 24 Ore, Minister Giovanni Tria anticipates strong growth in GDP for the next two years: +1,6% in 2019 and +1,7% for 2020. Thanks to this acceleration, which however it does not find confirmation in the predictions of economists, the debt should drop by one percentage point per year over the next three years.
The Northern League undersecretary to the Prime Minister, Giancarlo Giorgetti, also addressed the markets directly, and in an interview with Repubblica opens up the possibility of a revision: "If something doesn't work, we'll be ready to intervene even before the final draft of the maneuver and of its approval". Over the weekend, the League became the reference party of Confindustria, judging by the statements of the president Vincenzo Boccia.
NIELSEN (UNICREDIT): FRIDAY'S REACTION WAS EXCESSIVE
A downgrade by Moody's (the report card on Spain will be released next Friday) and Standard & Poor's, accompanied by a negative outlook, would bring Italian securities very close to the "non-investment grade" limit, i.e. securities that do not enjoy the umbrella of the ECB and in which many international investors cannot invest by statute. The prediction of analysts and Calo Cottarelli is that Friday's storm will give way today to a more cautious attitude, awaiting more precise indications.
Moreover, there are those who believe that the reaction on Friday was excessive. Unicredit chief economist Erik Nielsen, for example, notes that even with a primary surplus falling to 1,3 per cent, nominal GDP growth at 2,4 per cent and borrowing costs still falling due to the refinancing of the old maturing BTPs (which had been issued at higher rates), the debt/GDP ratio could still drop slightly. Which is why, while not appreciating the general stance on fiscal discipline, the movements seen on the markets on Friday may have been excessive.
TESLA, THE AFTER MUSK IS GETTING READY
Focus today also on the automotive world. Not only for the release of data on registrations for September or on the now imminent appointment of FCA's number one in the EMEA area to replace Alfredo Altavilla, but above all on the reaction to the foreseeable fall of Elon Musk, the pyrotechnic founder of Tesla, in a harsh punishment by the SEC for having fraudulently announced the delisting of the electric car giant.
Musk, in addition to having to pay a fine of 20 million dollars (Tesla will pay another 20), will have to give up the leadership of the company, which will be directed by independent managers from whom all communications from Musk will have to pass. At this point, it is not excluded that Tesla could pass into the hands of a great carmaker, perhaps a German one. The future of the leading electric car group, which for some time was the most capitalized stock in the sector, will be at the center of discussions at the Paris Motor Show from Thursday.
EUROPEAN AND US EMPLOYMENT PMI DATA ARRIVE
The macro data relating to the trend of the main manufacturers in the Eurozone and the American ISM index will be released today. The Japanese Tankan under braking this morning. The snapshot of the services situation in the Eurozone will be released on Wednesday. Even more important, Friday, the data on US employment in September.
On the Emerging Countries front, the spotlight is on Sunday's elections in Brazil. There will be nine candidates who will run for the succession of Djlma Roussef, declared forfeited by the judiciary for fraud on the Petrobras budgets. In doubt Jair Bolsonaro's run, the right-wing candidate already favored but victim of an assault from which it is difficult to recover.
