Chinese listings are closed for the New Year holidays. But bad news still arrives from the land of the Dragon: the PMI index on manufacturing activity signals the most massive drop in industrial production in the last six months at 50,5%, on the border between expansion and recession. The HSBC report is even more negative: in January the Chinese economy contracted. The slowdown complicates the problems of the system, grappling with the difficulties of "shadow finance" (6.000 trillion dollars).
The Tokyo stock exchange shows a drop of around 15%, followed by the Seoul list -1%. In addition to Shanghai, the stock exchanges of Hong Kong, Taiwan, Malaysia and Vietnam are also closed for the Chinese holiday. It is at this juncture that the reign of Janet Yellen begins, as of today at the helm of the Federal Reserve.
BANCA INTESA PUT THE BAD BANK INTO CONSTRUCTION
Revolution in sight in Banca Intesa. According to the Financial Times, the strategic plan that the CEO Carlo Messina will present on March 28 provides for the creation of an internal bad bank to allocate doubtful loans. The strategy should encourage greater attention from investors towards the potential of the institution which, underlines the British newspaper, is worth only two-thirds of book values on the Stock Exchange, much less than its competitors. The strategic plan will also include a road map for leaving Alitalia and Telecom.
BAGS, THE WORST JANUARY SINCE 2010
It was in fact the worst January of the last four years. The global stock market index fell by 4,1%, while bonds rose by 1,4 percent: the exact opposite of the forecasts at the end of 2013. For the first time since 2010, all the stock markets of the countries Advanced (USA, Eurozone, United Kingdom and Japan) closed the month of January in the red: the Standar & Poor's index falls in New York by 3,9%, Eurofirst loses 1,9%, the English Ftse 100 marks – 3, 5%. In Tokyo, the Nikkei index drops by 8,5%.
During the month, $12 billion came out of equity funds invested in Emerging Countries. The exodus was particularly accentuated in the last week: -6,3 billion, the most significant figure since August 2011. Disinvestments from bond funds were also massive: -4,6 billion in January, 2,7 billion in the last week.
BCE, WEAPONS IN THE HANDS OF DRAGONS
The most important appointment of the week fits into this framework: next Thursday's ECB meeting. The mix of deflation / rising unemployment now makes Mario Draghi's action urgent. But what room for maneuver does the president of the ECB have at his disposal? On Friday the market was showered with indiscretion by The Wall Street Journal according to which the Bundesbank would be in favor of interrupting the sterilization of the portfolio of government bonds in the hands of the ECB.
When the ECB launched the Securities Market Program in 2010, through which it ended up buying over 200 billion Greek, Portuguese, Irish and then Italian and Spanish bonds, the condition imposed by the Germans to consent was that these purchases be "sterilized". by draining through weekly reverse repos the quantities of liquidity used to make purchases. Currently the remaining portfolio amounts to just over 170 billion. The direct effect of the suspension would therefore be to increase excess liquidity in the system by a similar amount. A sort of mini-Ltro, which could bring monetary rates back in line with the ECB repo.
Other weapons in Draghi's hands are: a) rate cuts from 0,25% to 0,10% (improbable for now); 2) negative rate on deposits with the ECB (unlikely); 3) new Ltro, this time conditional on the disbursement of loans to businesses (an unprecedented move); 4) purchase of securitized bank loans, a hypothesis Davos suggested by Draghi himself.
BTP, TOWARDS NEW RECORDS
During February, issues of medium/long-term securities will range between 65 and 75 billion euro. The Italian auctions will be held between 12 and 14 February. Moody's verdict on Italy's rating (today Baa 2, two steps above the junk bond category) is scheduled for Valentine's Day. The level of interest rates suggests new record lows in yields, given the high demand for peripherals. Portuguese stocks returned 7,7% in January, followed by Spain (+3,2%), Ireland (+3%) and Italy (+2%). It should be noted that the tapering has not led, for now, to a surge in US T bonds, which have fallen to 2,66%. Goldman Sachs expects a yield of 2,25-2,5% for 5-year bonds and 3-3,35% for ten-year bonds by the end of the year.
TODAY THE ACCOUNTS OF ENEL GREEN POWER
Among the appointments of the week, the quarterly of Enel Green Power (today) and Enel (Tuesday) stand out. In the USA they give the accounts Walt Disney and Twitter (Wednesday), Aol, Linkedin and GM (Thursday). In Europe Credit Suisse, Daimler and Swisscom (Thursday).
MICROSOFT 2.0. NADELLA NEW CEO, THOMPSON IN PLACE OF GATES
The relay at Microsoft is scheduled for the week. After a long selection, the board of the Seattle giant decided to promote an internal manager as heir to CEO Steve Ballmer, i.e. Satya Nadella, 46, an Indian from Hyderabad, the current server manager and first manager of cloud migration of the services of the group. John Thompson, formerly of Symantec, will replace Bill Gates as president. The founder does not leave the company. Indeed, they assure from Seattle, he will participate closely in the research.
Thomson, on the Microsoft board since 2012, has been the most outspoken critic of Ballmer's management. The new team has the task of relaunching Microsoft's image as a leading company in the tech world. Today the group, although solid and very rich, trades at 13 times profits, 25 percent less than the average for the tech sector.
TELECOM, NEW HIGH VOLTAGE BODY
Telecom Italia closes the week with a flattering +14,1%, largely linked to the renewed interest of Naguib Sawiris in the former Italian incumbent. The spotlights are now concentrated on the board meeting of 6 February which will have to respond to the concerns of Prime Minister Enrico Letta who, with regard to the network, presenting the "Caio Report" on broadband, warned that the spin-off hypothesis is a "extrema ratio if broadband development objectives are not achieved".
Marco Fossati, leader of the minorities, said in an interview that he intends to collaborate with Telco on amending the statute to change the voting mechanisms. Currently four-fifths are nominated from the majority list, which has so far been the Telco list. “We have made our lawyers available to find a consensus (on the statute), we want to have a collaborative function, criticism alone is useless,” added Fossati. Fossati, who said he is skeptical of Sawiris' intentions, agrees with him on one point: Tim Brasil has nothing to sell.
BANKS UNDER THE AX OF INCREASES
The star of Intesa (+9,1% during the week) and Ubi (+7%) shines on the market, institutions sheltered from the risk of having to ask for large capital injections from shareholders. Difficult week instead for Banco Popolare (-9.9% in the week) punished by a sharp drop of 15% after the announcement of the capital increase. But, after the initial dismay, the bank has reduced the damage thanks to Moody's. The rating agency changed its outlook from negative to positive, confirming the Ba3 rating.
"The positive outlook reflects the measures taken by the bank to strengthen capital adequacy," a note. “The higher levels of capital increase the bank's resilience in view of the ECB review – it continues – The strengthening of capital will also increase the bank's flexibility to deal with the effects of the weak economic environment in Italy”.
Monte Paschi is also under fire -5,5% waiting for a possible buyer of the 20-22,5% stake put up for sale by the Foundation to appear, perhaps during the week.
Among the worst financial stocks there are also UnipolSai -5,4% and Generali -6,7%. It is probable that Fondo Strategico Italiano has started the sale of the package (4,5% in all) of the company from Trieste which will have to be disposed of by 2015.
AIR OF AMERICA. 1/ FIAT REGISTERED USA
Fiat is the best stock of the month on the Stoxx 600 with a gain of 23%, compared to 1,5% of the FtseMib. The wedding with Chrysler from which the seventh world manufacturer was born overshadowed the disappointing results: the Lingotto closed the fourth quarter with a trading profit of 931 million euros, lower than the 1,15 billion estimated by the average analysts. For all of 2013, revenues amounted to 87 billion euros. The indications on debt are positive, forecast at 9,8/10,3 billion at the end of 2014 against the 11 billion expected by analysts and up from 6,6 billion at the end of 2013. The increase in debt is linked to the purchase of 100 %Chrysler. The group estimates that it will close the year with a trading profit of between 600 and 800 million euros, below the 1,4 billion expected by the consensus of analysts, on revenues of 93 billion euros. According to union sources, the small Jeep-branded SUV, produced at the Melfi plant, will be presented at the Geneva Motor Show in March, and the 500X at the Paris Motor Show in October.
AIR OF AMERICA . 2/ FINMECCANICA HOPES IN WASHINGTON
Finmeccanica is also running +18,1%: the share has reached a new high since July 6,7 at 2011 euro. Several factors have contributed to pushing the share: 1) the multiple exits from the transport sector, i.e. the sale of Ansaldo Breda and by Ansaldo Sts. 2) The good results of ATR, the 50-50 joint venture with EADS, the world leader in medium-range turboprop aircraft. The order book at the end of 2013 stood at 221 aircraft, with an estimated value of 5,3 billion dollars and represents approximately three years of production. 3) The possibility of winning important new orders in the USA: the first indications should come from the National Security Agency (Homeland Security) by March for the 1,1 billion dollar tender for the construction of the new border control system of the United States (Integrated Fixed Towers) in which Finmeccanica participates.
LUXURY, SALES DON'T END
The luxury landslide continues, accentuated by quarterly earnings, as in the case of Tod's, down 45% from its August high (-17,8% during the week). Ferragamo's quarterly, unlike that of Diego Della Valle's company, did not disappoint thanks to the better geographical diversification of revenues, while for Tod's. Despite this, the week closed with a negative balance of 17,1%: investors preferred to sell the stock and today's 3,7% rebound can do little on the results. The black list of luxury goods does not end here because in third from last place is Yoox which lost around 14% after an unstoppable run during 2013 which had led it to achieve the best performance on an annual basis with a +170%.
