“We have the means to do it, but it will be a tough battle.” This is how the Chinese premier Li Kequiang defined the situation of the Chinese economy but what words of his, which suggest forthcoming interventions to stimulate demand, could also be referred to the bankers of the Fed and to Mario Draghi. Yesterday the governor of the ECB did not limit himself to reiterating that "a significant degree of monetary accommodation is still needed", but added that, if necessary, the institution will reflect on measures capable of preserving the positive effects on the economy of interest rates below zero, while mitigating the side effects on banks.
In short, Super Mario's latest magic could be to reconcile the negative rates, necessary to combat the slowdown in the economy, with measures to prevent the collapse of the financial industry, led by banks. The umpteenth squaring of the circle could lead to a revision of the deposit rate system, now at -0,40% for everyone, regardless of the amount deposited. A staggering could be introduced, that is, the rates would be modulated according to the sum deposited with the ECB: the more you deposit, the more you pay. The Central Bank would seem to want to move from a flat tax system to a progressive tax system, such as personal income tax. Currently, the ECB has €615 billion on deposit.
While waiting for the wizards of the central banks to kick in, the markets are waiting patiently for the resumption of US-China negotiations and are looking at the interminable Brexit saga with some disgust. Neither Theresa May's promise of resignation seems to have unlocked the no of the irreducible.
RECESSION IN THE AIR, THE YEN FLYING
In this context, the markets move very cautiously. In Asia, Japan's stocks fell 1,5% in late session this morning, while the yen, a risk aversion indicator, strengthened to 110,3 against the dollar. China's stock markets are down slightly, those of Australia and India are up.
The sword of Damocles of yield curve inversion continues to weigh on Wall Street. The Treasury Bill is at its lowest since the end of 2017 this morning at 2,35%. The market is betting increasingly heavily on the Federal Reserve's change of course in the short term, it doesn't see any rate hikes in the long term. The interest rate curve, on maturities of three months and ten years, is increasingly inverted: the spread widens to nine basis points.
OIL STABLE, EURO WEAK
As a consequence, share prices were weak: Dow Jones -0,13%, S&P 500 -0,46%. NASDAQ -0,63%.
The euro dollar fell by 0,2% yesterday, this morning it is at 1,125.
Oil moves little, Brent at 67,6 dollars a barrel, down 0,2%, closing yesterday -0,3%.
In the wake of Wall Street's weakness, European markets lost almost all gains in the early afternoon, despite the positive momentum of the banks (the sector index +2%).
BUSINESS PLACE ADVANCE OF 0,26%, FLAT LONDON
Piazza Affari, after various ups and downs, achieved a gain of 0,26%, reaching 21.194 points.
Frankfurt unchanged; Paris loses 0,12%; Madrid +0,53%; London -0,01%.
After turning into negative territory during the morning, the Italian bond market closed the session with a plus sign, ahead of today's medium/long-term auction.
THE SPREAD RISES UP, THE NEW BTP 5 AT AUCTION TODAY
In closing, the spread rose to 252 basis points from 249 yesterday. During the session it reached 262.
The ten-year rate stood at 2,439%, after closing at 2,425% the previous session.
Today the Treasury offers a total of between 6 and 7,5 billion euros between Btp and CctEu; the auction sees the debut of the new 5-year Btp.
ITALY RUNS TOWARDS ZERO GROWTH
The bleak prospects for growth weighed on the Italian bond market in the first part of the session: the government, according to rumours, is preparing to reduce the GDP estimate to 0,1% from the 1% seen in December.
Also Confindustria e the Prometeia economic research institute have revised downwards their growth estimates for the current year. Furthermore, the indices relating to the confidence of consumers and manufacturing companies in March showed a new decline.
ESSILOR-LUXOTTICA, THE REFEREES ARE HERE
In this climate, the duel between Italy and France is once again ignited. The latest episode concerns Essilor-Luxottica. Leonardo Del Vecchio filed an application with the International Chamber of Commerce to ascertain any violations of the 2017 agreement that led to the birth of the eyewear giant.
TIM, THERE IS NO PEACE (YET)
Telecom Italia +0,75%: Cassa depositi e prestiti has in the meantime denied the existence of talks underway with Vivendi “or other Tim shareholders”. This can be read in a note from the CDP, after Reuters wrote that the company controlled by the Mef is talking to Vivendi and is trying to favor a truce in the dispute that the French shareholder has been going on for over a year with the activist fund Elliott and which paralyzed the telephone group.
FCA, IN RENAULT'S SIGHTS
In great evidence Fiat Chrysler, in the wake of the scoop from the Financial Times: once the governance of Renault-Nissan has been defined, writes the British newspaper, the operation will begin in approaching FCA to add another 5 million vehicles to the 14 million that the group aims to sell in 2021.
The industrialists are weak, the banks are recovering in line with the indications coming from the ECB and from the economic situation.
THUD OF STM, NEXI PUSHES THE BANKS
Stm fell sharply (-6,45%) held back by the profit warning on Infineon. In red Leonardo (-1,27%) and Pirelli (-1,26%).
Credit titles were positive: Unicredit shines (+2,74%), Nexi's next IPO pushes Banco Bpm (+2,65%) and Ubi (+1,55%). Agreement of San Paolo +0,77%.
Profits taken on Campari (-1,2%), Amplifon falls (-2%).
