The Japanese economy contracted by 7,8% in the second quarter, or 27,8 year on year. It is the largest drop since 1955, higher than the drop recorded in 2009 (-4,8%), the year of the Lehman Brothers crisis, and erased the expansive effects of Abenomics is not the only confirmation of the consequences of the pandemic in the southern hemisphere. Thailand's economy drops 12,2% in the quarter, New Zealand has postponed elections for a month. Far more disturbing for us is the increase in infections in neighboring France, over 3 new cases yesterday, and 17 new outbreaks discovered in one day.
The Japanese Stock Exchange fell -0,6% but, on the contrary, Shanghai +2,3% and Hong Kong +1,1% rose, supported by the intervention of the central bank. We can see the benefits of the largest injection of liquidity in the last six months by the People's Bank of China: today 700 billion yuan (101 billion dollars) were injected to meet two large debt issues by the government.
THE FED IS STUDYING THE INCREASE IN THE TARGET, THE EURO RISING
The expected videoconference on compliance with trade agreements between China and the US has been cancelled, the markets' interest has shifted to the resumption of central bank activity - The markets are looking closely at the minutes of the July Fed meeting and at the figure for the 'Empire State Manufacturing index on the US industrial situation to capture the intentions of Jerome Powell. It is not excluded that, on the occasion of the next meeting in Jackson Hole, the president of the US central bank may announce the upward modification of the inflation target. In the meantime, the yield of the t rises. Bond for the long term (plus 21 points on the 1,1856-year bond) while the dollar trades at XNUMX against the euro, which ended its eighth consecutive week of gains on Friday. Bullish leveraged positions on the euro reached their highest since March of last year.
GOLD DOWN, OIL RISES
However, the modest rebound in yields caused gold to fall slightly, trading at 1.943 per ounce. Oil rises: Brent at 45,13 dollars a barrel in anticipation of a recovery in Chinese demand. But the International Energy Agency (IEA) has estimated that global demand for crude oil will end 2020 with a record average decline equivalent to 8,1 million barrels per day, reaching 91,9 million barrels per day. 140.000 barrels per day less than estimates. The Opec Plus technical committee chaired by Saudi Arabia and Russia meets on Wednesday. Wall Street futures are up: on Friday the S&P500 index closed at parity.
THE DEMOCRATIC CONVENTION AT THE START. CLASH ON THE POST IN THE USA
The lighthouse of investors remains focused on the increase in new infections and the possible consequences for the economy, which has just laboriously restarted after the lockdown. Clubs closed in Italy, from Saturday the quarantine in the United Kingdom will be mandatory for those coming from France and the Netherlands. Paris has already announced a similar countermeasure.
Overseas, developments are awaited on the new maxi stimulus plan that the US government is preparing to launch, but on which there is still no agreement between Republicans and Democrats. Meanwhile, the "virtual" Democratic Convention opens in Milwaukee which will entrust the Joe Biden /Kamala Harris tandem with the task of beating Donald Trump on November 3rd. But there is already a tussle over the vote by mail, contested by the president. An internal audit this week will shed light on the cuts that have slowed the postal service, at the center of allegations by President Trump that he opposes mail-in voting. Speaker Nancy Pelosi could call the House back from the summer break for an urgent hearing of postal leaders.
THE RETURN OF MARIO DRAGHI IN THE SPOTLIGHTS
In Europe, pay attention to the publication of the minutes of the last ECB meeting in July on Thursday. The Brexit negotiation is once again topical: the delegations meet in Brussels to try to find an agreement in September. But attention is focused on Mario Draghi who tomorrow in Rimini will deliver the opening speech of the forty-first edition of the meeting of "Friendship among peoples". This will be the second time for the former president of the ECB, after his intervention at the 2009 meeting as governor of the Bank of Italy at the time. SuperMario's speech is particularly awaited after the analysis and the proposals presented in the now famous article in the Financial Times, since the publication of which, however, a few months have now passed.
BORSA SPA, ADVISORS AT WORK
The proposals for the purchase of Borsa Italiana must arrive on the table of the advisors, namely the American banks Goldman Sachs and Morgan Stanley, on Friday 21 August. Prime Minister Giuseppe Conte and Economy Minister Roberto Gualtieri are working on the operation, on a project implemented months ago by Mediobanca while the Euronext M&A group is operating in Paris with its own assessments. The operation envisages that 50% will be bought by Euronext, the group of stock exchanges promoted and controlled by France, but the other 50% will be bought by an entity set up by CDP and the major Italian banks, with Intesa Sanpaolo in the front row.
DEL VECCHIO/MEDIOBANCA: AROUND TIME X
Finally countdown to the increase in Leonardo Del Vecchio's stake in Mediobanca. The ECB will have to decide by the 24th whether or not to grant the authorization to the patron of Luxottica-Essilor. Yes is almost obvious. The content of the article was expelled from the August decree. 64-bis, which effectively armored Mediobanca: a battle is looming in the Senate over an amendment that in any case guarantees the possible intervention of Consob in the event of a takeover of Mediobanca. The Empire State Manufacturing index on the US industrial situation in the Northeast.
The corporate data calendar includes accounts from Wal Mart and Chinese giant Alibaba. Uber and Lyft could suspend operations in California after the ruling requiring them to hire drivers. An obligatory choice to reorganize the activity but also to put pressure on the citizens called to express themselves in a referendum on intermittent work in November. In Europe to follow the accounts of the Norwegian sovereign wealth fund, the largest investors on European lists.
