“Proceeding along the path of development these days is like steering a ship against the current with appropriate manoeuvres”. It is the image used by Premier Li Kequiang at the Party Congress last weekend. Metaphor aside, it is a question of countering the slowdown in the economy with anti-cyclical manoeuvres, without however compromising the financial balance.
In figures, according to the government's objectives, growth in 2017 will not exceed 6,5% while the deficit will rise to 3%, as it has never happened since 1979. "There will not be a sudden slowdown in the economy" summarized Xu Shaoshi , chairman of the Development and Reform Commission.
The latest news fits into this framework: producer prices (-4,9% in February) closed down, but inflation rose by 1,8%.
Also awaited for the intervention of the governor of the Bank of Japan Haruhiko Kuroda. The data on GDP (-0,4% forecast for the last quarter of 2015, -1,6% the annual figure) could suggest a turnaround in Abenomics: negative rates are not having the desired effect.
The week of the ECB has finally arrived. On Thursday, Mario Draghi will illustrate the institute's decisions to counter the fall in inflation and the economic situation. Judging by the forecasts, Frankfurt's moves should be: a) an increase in purchases of securities on the market for a further 10 billion a month; b) extension of the program from March to September 2017; c) new cut in yields on bank deposits with the central bank up to -0,40-50%. Other changes could concern the type of securities admitted among Qe purchases.
The Bank for International Settlements has tried to curb the enthusiasm. The head of the monetary department of the BRI Claudio Borio, illustrating the quarterly report, said: “Despite exceptionally expansive monetary conditions, growth has been disappointing and inflation has remained low. Market participants have taken note and their faith in the healing powers of central banks is for the first time faltering.
Another warning, this time addressed to Italy and Spain, will come today from the Eurogroup meeting in Brussels. Under accusation is the structural deficit which, thanks to the slowdown in prices, is growing beyond the guard levels (from 0,7% to 1%). However, to avoid excessive debt proceedings, the government must limit the deviation from the path towards a balanced budget. “We will find a solution” was Minister Pier Carlo Padoan's comment on the eve.
The S&P 500 index, which has been rallying for three weeks, has not only wiped out the losses at the start of the year but, at 1999, has come close to the absolute record (2.109 points, set in November). For the third time in a row, on Friday, Wall Street accelerated in the final part of the session, to close at the highs. “A behavior – argues the Anthilia strategist Giuseppe Sersale – which indicates a very defensive and unloaded positioning of investors, which forces them to chase a market that has recently been stingy with corrections. It is no coincidence that the Survey carried out by Bank of America reports the allocation in American equities at an 8-year low, and the average cash available in the managers' portfolios at its highest since 2001”.
The rebound has also started in Italy, as demonstrated by the numbers of the Ftse Mib of Piazza Affari, which had come to lose more than 25% from the values of the beginning of 2016, at 15,773, and which has already recovered almost 16% from that level , reducing the deficit since the beginning of the year to 14,6% (Friday 4 closed at 18.278) thanks to the progress of the last five sessions: +4,55%. Today, however, the main index of the Milan Stock Exchange got off to a terrible start, losing almost 2% towards the end of the morning.
Tonight the Treasury will communicate the amount of the Bot auction offer scheduled for Thursday 10 March.
FIAT CHRYSLER
The best performance of the week was that of FiatChrysler (+15,3%), with a strong recovery also thanks to the boom in car sales in Western Europe in February (+13,8%) and in the USA, up by 71 th consecutive month. The only negative figure concerns the Brazilian market: -5,5% in February, production down by 12,5%.
TELECOM
Telecom Italia is also on the rise (+11,35%). It was the best week since last October. Various factors favored the rally. The sale of the controlling stake in Telecom Argentina by Telecom Italia to the Fintech investment company will be finalized in these days. The sale of Inwit, the tower company disputed by F2i, is also approaching. Added to these changes, which will allow debt to be brought under control (the debt/EBITDA ratio has risen to 3,9 times), is the wait for the close of negotiations for Metroweb. The parties could set up a newco which will have the task of investing in the ultra-broadband network with FTTH (fiber to the home) technology.
However, the rumors of conflict between the top management of the company and Vivendi, now one step away from 24% of the Italian company would like to count more, have contributed to pushing the stock. For now, the French shareholder's intention is not to change the managing director but he expects more cuts and the reopening of the Tim Brasil dossier. Today, however, the stock falls below the euro per share, losing about 4%.
Utilities such as Terna (-1,45%) and Snam (-0,69%) suffered during the week. Attention this morning to the A2A share: the agreement was signed on Friday evening which provides for the transfer of 51% of Linea Group, with the sale of shares in the municipal companies of Pavia, Cremona, Lodi, Cogeme and Crema. The price will be 113 million, 58% paid in cash, 42% in shares of A2A itself. This is how the model of the "multi-utility of the territories" takes off.
The worst performance was that of Luxottica (-7,80%), which widens the losses since the beginning of the year (-20%), after Leonardo Del Vecchio's decision to assume executive powers again, alongside the CEO Massimo Vian. On Tuesday, the world leader in eyewear presented the final data for the fourth quarter of 2015 and forecasts for the current year, which are less brilliant than consensus expectations.
High voltage banking sector after the severe judgment of the ECB on Carige, which fell by 10% on Friday. Frankfurt has asked to rectify the results and to proceed with further write-downs of assets. As a result of this revision, 2015 closes with a red double that communicated in February, 102 million euros instead of 45 million euros. The bank also signaled that the letter from the European Supervisory Authority requests the presentation of a new business plan by May 31, which will have to take into consideration a much more negative market scenario.
