Let's start again, with the hope that the medicine of the Bank of Japan's sub-zero rates will give the markets a jolt to re-emerge from the maelstroms of a horrible January, marked by the collapse of oil, the Chinese crisis and by the slowdown of the US locomotive (only +0,7% GDP in the last quarter of 2015).
The long wave of the measures decided on Friday allowed a positive start in Tokyo (+1,8% at mid-session) and in Sidney (+1%). But the crisis has created deep cracks, which will not be easy to repair with negative effects for many markets.
For the fifth consecutive month, the Chinese PMI index, now in full contraction (48,2), falls. Industrial production signals a new slowdown in demand, confirmed by the performance of the Japanese PMI (-0,1%). The figure nullified the rise in Hong Kong (-0,5%) and Chinese lists: Shanghai -1,3%, Shenzhen -0,5%.
The impact on South Korea is heavy: exports fell by 18,5% compared to January 2015, the most violent drop since August 2009. The Indian PMI is also down.
Oil prices fall again: Brent trades at 35,4 dollars (-1,4%). The decline in crude oil is putting producers' financial stability at risk. Yesterday evening Nigeria raised the white flag, forced to resort to a loan from the IMF and the World Bank as had happened in 2008/09. On Friday, the debt of Azerbaijan, a major natural gas producer, slipped into the junk bond bracket for the first time. The sovereign wealth fund of Baku has lost 16,8% since this summer.
The slowdown by China should not compromise the opening of European stocks, expected to rise after Friday's push. Futures report London +23 points to 6.107, Paris +1 bps to 4.418, Frankfurt +22 bps to 9,820.
THE AGENDA: DRAGONS, PMI INDEXES AND CAR DATA
The race for the White House comes alive this week with the Iowa caucus: between the Democrats head-to-head between Bernie Sanders and Hillary Clinton, in the Republican field Donald Trump commands Ted Cruz. The most significant US macro data concerns employment: 170.000 new jobs. Spotlights on today on Mario Draghi who will present the ECB's annual report to the European Parliament in the afternoon.
The Bank of England's top management will meet this week. The increase in interest rates seems excluded: the previous US has set the standard. A day full of macroeconomic data After the publication of the Asian PMI indices it will be Europe's turn in the morning. Also highlighted in Italy are the data on car registrations in January.
GOOGLE AT THE ATTACK OF APPLE'S RECORD
Data rain ahead for Corporate America. They present the accounts of more than one hundred companies, including Exxon, GM, Pfizer and Ralph Lauren. The most awaited data tonight is that of Alphabet (formerly Google) which could make a sensational overtaking of Apple: only 23 billion dollars separate the capitalization of the search engine (516 billion dollars) from that of Apple (539 billion) .
Google, like the other members of the "fang club", or "Fang" from the initials of the most dynamic titles of the new economy (Facebook, Amazon, Netflix and the same house of Mountain View), today enjoys the favors of the market. Apple (-19% in the last three months) instead discounts the slowdown in iPhone sales.
Warren Buffett goes on the Internet against the interests of Omaha hotels which are sold out every year on the occasion of the Berkshire Hathaway meeting (April 30), which attracts about 40 savers to the Nebraska city for three days. The financier, in addition to suggesting the use of Airbnb to avoid the high rates imposed by hoteliers, has decided to put the event online via webcast. It will also be possible for subscribers to book and ask questions remotely.
THE BMP-POPULAR WEDDING TO FORGET THE BLACK JANUARY
The five worst stocks on the Milan Stock Exchange in January are all banks: Monte Paschi -45%, Banco Popolare -35%, Unicredit -32%, Ubi Banca -30%. Similar script for the last week, when the black shirt fell to Mps (-11,6%), followed by Unicredit (-11,2%) and Bpm (-8,2%).
It is in this troubled setting that the credit sector is preparing to kick off the season of mergers, too many postponed. With the blessing of the governor of the Bank of Italy Ignazio Visco, who asked bankers for more capacity and internal resources to be allocated to the disposal of non-performing loans, as well as a rapid cost cut, necessary to restart interest margins.
On the launch pad are Bpm and Banco Popolare. The CEO of the Veneto group, Pier Francesco Saviotti, went so far as to say on the occasion of the Assiom Forex conference that the operation will be done within a month ("or it won't be done again"). More cautious Giuseppe Castagna, CEO of the Milanese Popolare, who will take over the leadership of the new group, the third largest in the system, given that the two banks have a similar capitalization (Bpm 3,1 billion, Banco 2,8 billion ), the operation takes the form of a 'merger-of equal'.
UBI BE CAREFUL ABOUT MPS. AND THE POST OFFICE DRAWS OUT
Ubi-Mps is also in the market spotlight. "There is no open dossier but we have no ruling on anyone," said the CEO of the Lombard group Victor Massiah, regarding the hypothesis of marriage with MPS. "The parameters we seek for an operation are the creation of value and the simplicity of governance – he added -, then we need to fully understand the government's guarantees on suffering that we are studying".
Fabrizio Viola, CEO of Monte Paschi, replied that a marriage with Ubi "from an industrial point of view is an operation that can be considered and studied". However not "there was no contact".
Speaking of Mps, the dry denial of Poste Italiane should be noted: we are not interested in a merger. In the meantime, Bper reiterated that it was looking carefully at a merger with Credito Valtellinese and Popolare di Sondrio.
Meanwhile, Federico Ghizzoni has not ruled out that Unicredit may use the mechanism for the disposal of bank non-performing loans developed by the Italian government in agreement with Brussels. Capital increase? "Nothing for now. You will see the 2015 accounts”.
WORLD STOCK EXCHANGES, THE WORST MONTH SINCE 2009
The financial markets closed a catastrophic month without regrets, barely softened by the final upturn favored by the Japanese measures. In January, the overall index of the MSCI Global stock exchanges dropped 7,8%. To find a worse data, it is necessary to go back to January 2009 when, five months after the bankruptcy of Lehman Brothers, the lists retreated by an average of 8,8%.
Even then, as indeed happened last month, there was a sudden shortage of freshmen: not even an IPO on US lists while Coima Res (Manfredi Catella) and Idea Re in Piazza Affari postponed the road show dedicated to investors. Looking at the precedents, it is not legitimate to have hopes of a speedy recovery.
February 2009 was even worse (-10,5%), but laid the foundations before the formidable recovery that started on 9 March of that year: the S&P index, from the lows to 666, began the long upward march marked by the interventions by central banks, led by the Fed, which made it possible to achieve a streak of increases equal to 137% until the summer of 2015.
BUSINESS SQUARE IN JANUARY WORSE THAN BRAZIL
Will history repeat itself? While waiting for the ECB to take the measures already promised in March and, above all, for the Fed to give up on new hikes at least until the autumn, the markets are trying to put an end to the January of horrors.
In Piazza Affari, despite the 2,5% rise on Friday, the FtseMib index closed the week with a drop of 1,95%, the fifth consecutive week of decline. The loss since the beginning of the year is -12,5%.
To underline the negative performance of Milan, conditioned by the decline in banks, a comparison with the emerging markets is sufficient: the Brazilian stock exchange, the expression of a country in recession, moreover affected by the epidemic, has lost only 10% since January (in EUR).
However, the worst stock exchange is Shanghai (-22%) ahead of Hong Kong (-19,3%). It went better but not too much for the other European Stock Exchanges: Frankfurt fell by 9%. On Wall Street there is -9% of the Nasdaq and -6% of the S&P500 and Dow Jones.
OIL, SIGNS OF RECOVERY
The trend of oil is stormy. In the first 20 days, crude oil, conditioned also by Iran's return to the market, fell to a minimum of 27,8 dollars a barrel (-25% from the beginning of the year), to then recover in the last week on the rumors of a possible change of orientation of Saudi Arabia.
Prices recovered and the month closed with Brent at 34,3 dollars, down 8% from the beginning of the year. But volatility remains skyrocketing. And there are new victims among the producer countries: Azerbaijan's debt has slipped into the junk bond category for the first time.
Government bonds are solid under the umbrella of the ECB. The ten-year BTP closed the month with a yield of 1,41%, after starting it at 1,59%. Gold goes up but not too much: only +5,30%, despite the shocks to price lists and raw materials.
LUXOTTICA, A TEST FOR THE OLD EVERGREEN
Great excitement around Luxottica after the third top management reorganization in 18 months, sanctioned surprisingly by the Board of Directors on Friday. Leonardo Del Vecchio, 80, returns to assume operational leadership by absorbing the powers for the markets area already under the responsibility of Adil Khan, the manager who is leaving the group with a liquidation of 7 million euros.
Massimo Vian maintains the role of AD Product and Operations. The new turnaround was motivated by the founder with the need for a "simplification of the organizational model".
“Leonardo Del Vecchio is certainly realistic on the fact that he cannot imagine a ten-year presence at Luxottica, but he certainly wants to return to lead the company in the next two or three years,” concluded Adil. The fact remains that the structure of the leading Italian manufacturing group takes another step backwards.
GENERALI, THIS WEEK THE CHOICE OF THE NEW CEO
The decision of Generali's large shareholders for the post-Greek period is expected this week. The internal solution was favored: Philippe Donnet, current CEO of Generali Italia, or the CFO Alberto Mignali. In his farewell letter, Mario Greco thanks Caltagirone and Del Vecchio, without mentioning the other great partners.
However, the patron of Luxottica was lapidary. "There have never been conflicts" between the manager and the shareholders in Trieste, he said before the Luxottica board of directors. “I can tell you this as I know the other shareholders very well”, he underlined: “It is his choice which, combination, coincides with the fact that he had left Zurich as number two and now returns as number one. I too would have done what he did, but I wouldn't have said the nonsense he said, like saying they wanted to kick him out because it's absolutely not true. He had a contract on the table for two months and if he wanted he would have signed it ”.
