Waiting for Godot, or rather the inflation that hasn't arrived yet, the financial markets are progressing serenely, ready to cash in on the good news expected from the quarterly reports, both in the USA and in Europe. Everything seems to be going well but uncertainty lurks. It was enough for the Wall Street Journal to anticipate the news that Mario Draghi will give a speech at the Jackson Hole bankers' summit, in exactly one month's time, to make the debt market tremble. The last time Draghi gave an official speech at the Wyoming summit was three years ago, when he announced the start of Quantitative Easing. This time, according to WSJ, it could on the contrary decree the start of the tapering and the start of the return to normality of the ECB's monetary policy.
Will it go like this? When in doubt, the markets took a step back. Also because Janet Yellen, in her second hearing before Congress, confessed that, with regard to inflation, the Fed is also treading a lot of caution: prices remain low for now, but, logically, they should rise given the recovery of the labor market and wages. Hence the decision to increase rates gradually, hoping that the turnaround will not jeopardize the recovery. This is the hit of the summer of 2017 which, barring geopolitical surprises, does not bring with it Greek tragedies or Chinese dramas.
TRUMP IN PARIS, WALL STREET BEWARE OF BANKS ACCOUNTS
The markets are thus preparing to celebrate July 14: Donald Trump, in Paris, tries to forget the familiar developments of Russiagate, Eall Street is concentrated on bank accounts, due out in a few hours. Asian stock markets barely moved but oriented towards a positive closure: traders appreciated Jent Yellen's caution on the rates front. Tokyo (+0,2%) consolidates the gains of the week (+1,1%). Hong Kong stable after a week of double-digit increases. The Chinese Stock Exchanges are weaker: the threats of American tariffs weigh on the steel giants Baudu Steel and Baoshan, falling by one percentage point.
From the Mediobanca Studies area survey on the 66 largest global banking groups it emerges that ICB of China has become the first world bank by assets (3.297 billion euro), overtaking JP Morgan Chase in second position (3.178 billion). In the top six positions, four banks are Chinese, two US, the seventh is Japanese (Mitsubishi). The first European is the British HSBC in eighth position.
Little move Wall Street waiting for the accounts of the financial sector (yesterday the best at +0,61%). The Dow Jones (+0,1%) retouched its all-time high at 21,553,09. The S&P index rises by 0,19%, Nasdaq +0,21%. The quarterly reports of Citigroup (+0,15%), JP Morgan (+0,64%) and Wells Fargo (+0,78%) are expected in the early afternoon (Italian time).
Delta Air Lines loses 1,8%. The airline saw profits drop 21% in the second quarter, but unit revenue rose 2,5% for the first time since 2014.
OIL, THE WEEK CLOSES UP
Oil closes the week up with WTI at 46,08 dollars and Brent at 48,36 dollars. The International Energy Agency (IEA) has raised its estimates on the growth of world demand for crude oil for 2017 which will amount to 98 million barrels per day, up 1,4 million barrels compared to the previous forecast.
In Piazza Affari Saipem rose by 0,8%: Goldman Sachs cut the target price to 5,1 euro from 5,3 euro, confirmed the Buy opinion. Tenaris +0,1%: Goldman Sachs cut the target price to 14,7 euros from 15 euros, Neutral recommendation. Eni +0,1%: JP Morgan lowered its target price to 11,5 euros from 13 euros, confirmed Underweight. Goldman Sachs lowered the target to 17 euros from 17,7 euros, confirmed Buy.
MILAN +0,4%. LONDON AGREE TO PAY THE COSTS OF BREXIT
Milan ended trading up 0,42%. Madrid (+0,93%) registers a consistent increase, Paris is more timid (+0,27%). Frankfurt moved little (+0,12%). Flat London (-0,05%).
Yesterday, for the first time, the British government admitted that it will have to pay a severance pay to Brussels to settle the Brexit accounts. It's a sensational about-face: a few days ago, Foreign Secretary Boris Johnson reiterated that the European Union "could stay cool" if he insisted on asking for compensation.
BTP SWINGS ON AUCTION DAY
Thwarted the debt market after the indiscretion of the Wall Street Journal on Mario Draghi. Italian government bonds recorded a nervous trend: the 2,24-year yields, after reaching a low of 2,32%, rose again to XNUMX%, close to the high of mid-May.
The management of the mid-month medium-long term offer contributed to making the BTPs heavier. Yesterday the Treasury allocated 7,25 billion, recording rising rates on 3- and 7-year maturities. A 15-year BTP was also assigned in September 2033 and a BTP with a residual life of 20 years. The spread with the similar maturity of the Bund widened to 179 basis points from 174, the highest since 9 June.
CREDIT SUISSE: IT'S TIME FOR TLC
"We believe the telecommunications sector is the most attractive defensive sector and should outperform equities overall." This can be read in the monthly report of Crédit Suisse. “The telecommunications sector – continues the analysis – has a defensive nature at attractive valuations and allows for a more neutral assessment of the rates in our portfolio”.
The analysts' opinion was supported by the trend of yesterday's session, marked by purchase flows on telecommunications (Stoxx sector index +1,8%). Among others, Orange (+2%) and BT Group (+3,5%) advanced.
SUPERSTAR TELECOM. BUT THE SHADOW OF GENISH LIES
Telecom Italia is also making progress (+2,5%), driven by several factors. S&P Global Ratings, first of all, improved the outlook to positive thanks to the improvement of operating performance and cash generation. "We welcome the revision of the outlook by S&P - commented Mediobanca Securities - which is in line with our vision and could pave the way for a rating upgrade in the coming months". “Furthermore, we hope – continued the analysts – that this update will enable the financial community to refocus on fundamentals, after days of tension on the governance front and in view of a good set of results, the publication of which is scheduled for July 27".
The wish will probably be rejected. Vivendi, Telecom Italia's principal shareholder, is working on appointing Amos Genish to a key position in the telephone group (probably general manager) so that he can exert greater influence at the top of the company. It is not clear what position Genish could be offered in Tim nor if Cattaneo would agree with the appointment. The current CEO is expected in Paris for a decisive meeting with Vincent Bolloré.
FIAT CHRYSLER IN FLIGHT: AIR OF AGREEMENT ON THE DIESELGATE
After the opening of Wall Street there was a rain of purchases on Fiat Chrysler which gained 3,87% to 10,47 euros. Mediobanca confirmed the outperform rating on the stock, with a target price of 14 euros. The stock, which trades at an expected 2017 price-to-earnings ratio of 4,2 times and at 42% discount to peers, has been pressured by concerns over the risk of high recall costs, the broker said. . Once the Italian-American giant finds a mediation with the EPA, analysts expect a potential rebound of 20%.
The dieselgate troubles also hit Daimler yesterday (-0,5%), after recovering the heavy initial losses: the manufacturer is accused by the Stuttgart public prosecutor's office for installing a system that controls the nitrogen oxide content in the exhaust gases of the engines.
Also suffering is CNH Industrial, the worst stock on the list with a decline of 1,9%. The company is suffering from the difficulties of the agricultural sector after the estimates on the drop in demand made by the FAO and the OECD.
FINANCE: GENERALI SHINES, DO BANK DEBUT TODAY
Yesterday the eggheads of Mediobanca were in the mood to develop strategies beyond the limits of the daily news. Analysts have simulated a scenario assuming a reduction in the cost of equity, an improvement in GDP growth and a possible increase in short-term rates and have come to the conclusion that these factors could lead to an increase in the banking sector of around 30%. compared to current levels.
Meanwhile, yesterday the banking sector dropped 0,14%. Unicredit has lost half a point. Intesa -0,3%, Banco Bpm +0,1%, Ubi -0,1%: Mediobanca restarted coverage with an Outperform recommendation. A day of realizations also for managed savings. In particular Finecobank lost 2,05%, closely followed by Azimut (-1,29%). Poste Italiane -0,49%. This morning JP Morgan announced that it had started hedging with a Neutral rating and a target price of 6,62 euros.
The news that the company would put 44 billion euros of German life insurance portfolios up for sale boosted Generali's +1,6% which hit new highs since May. The insurance group would have appointed Morgan Stanley to evaluate the operation.
Today, the non-performing loan management company DoBank will make its debut in Piazza Affari. The initial capitalization is 704 million euros. One hundred and ten Italian and foreign investors requested 132.5 million shares.
ENEL TOWARDS THE HIGHEST. CUCINELLI IS GROWING BY DOUBLE FIGURES
Enel strengthened on the rise and ended the session at 4,948 euros, just a whisker from the record price of 2017 euros in 4,988. Societe Generale announced that it has started hedging with a Buy judgment and a target price of 5,60 euros. On 24 July it will issue a partial dividend of 9 eurocents (yield 1,9%).
Brunello Cucinelli (+0,94%) closed the first half with revenues up by 10,7% to 243,3 million (+9,7% at constant exchange rates) and confirmed the objective of closing the year with a double-digit increase in turnover and margins.
