The crusade against inflation has begun. Yesterday, in a hearing in the Senate, Lael Brainard, President Powell's new deputy, anticipated the first rate hike in March, just after the end of the securities purchase program that was about to run out. Patrik Harker of the Philadelphia Fed and Thomas Barkin of the Richmond Fed are also in favor of an increase in the cost of money as soon as possible, therefore in March. Charles Evans of the Chicago Fed is less clear on the timing of the start of the rate hike cycle, even if he too, like everyone else, is in favor of at least three (but probably four) rate hikes in 2022. In the meantime, we are already the first signs on the money market are warning: sub-zero yield bonds have fallen below 10 trillion for the first time in twenty months. Even Japan lets it be known that, after nine years of negative rates, inflation is making itself felt again, expected like swallows in spring.
In this scenario, as is logical, tech stocks are losing ground, while the test of bank balance sheets is of great importance, starting today on parade on Wall Street (starting with JP Morgan, Citigroup and Wells Fargo): will the big credit companies succeed in convincing operators that the accounts are strong enough to withstand the rate hike?
TOKYO -1,4%, CHINESE EXPORTS WELL
The week is about to close in Asia Pacific with general declines. Tokyo's Nikkei is down 1,4%, the same change for the week. Hong Kong's Hang Seng -0,9% (+3% for the week). CSI 300 of the Shanghai and Shenzen lists -0,4% (-1,6% for the week). Taipei Taiex -0,6% (+0,9% the week). Kospi of Seoul -1,5% (-1,1%). The Indian Stock Exchange opened down by 0,4%: if it were to close at these prices, the weekly balance would be positive (+2%).
China's trade balance came out overnight: exports rose by 21% in December, down from +31% in November, but better than consensus expectations (+20%). Imports below forecasts, +19,5%.
SEOUL (-1,5%) RAISES RATES
The Central Bank of South Korea has raised interest rates by 25 basis points, bringing them to 1,25%, or on pre-pandemic levels. In the note describing the intervention, the Bank of Korea warns that inflation should remain around 3% for a considerable period of time, a change of tone and words compared to the November communiqué which suggests further increases. The decision comes two months before the political elections and the expiry of Governor Lee Ju-yeol's mandate.
TODAY THE NUMBERS OF JP MORGAN, CITIGROUP AND WELLS FARGO
Little moved futures on US markets. Yesterday, after a positive start to a less alarming than expected producer price data, Wall Street took the downward path after the words coming from the Fed: Dow Jones -0,49%, S&P 500 -1,42%. The Nasdaq is worse: -2,5%.
Fourth-quarter corporate earnings are expected to be down, but still positive, at a healthy 22,4%. It starts at 13 with the accounts of JP Morgan.
The dollar has also weakened in the last few hours against almost all its counterparts: the euro at 1,147. 1,72-year Treasury Notes nearly unchanged at 1.827%. Gold at 0,2 dollars, up by 1,7%: at these prices, the week ends with an increase of XNUMX%.
WTI oil weak at 81,9 dollars a barrel, the provisional weekly balance is +3,8%. New difficulties are looming on the gas front in Europe. Russia has made it known that it considers the progress of the talks in Geneva with the American counterpart on Ukraine "totally unsatisfactory".
THE ECB CONFIRMS: NEW STIMULUS AFTER THE PEPP
While awaiting the choices of the ECB, the debate on prices heats up. Vice President Luis De Guindos notes that "inflation will not be as transient as expected just a few months ago" and that price growth this year is likely to exceed projections. But the Economic Bulletin of the Central Bank takes sides with Madame Lagarde: inflation "will remain above 2% for most of 2022, but should decrease over the course of the year". The ECB will conduct government bond purchases under the Pandemic Emergency Program at a lower pace between now and March, when the PEPP is over. However, the reinvestments of bonds that mature will be extended "at least until the end of 2024" and "in the event of further market fragmentation related to the pandemic, the reinvestments of the PEPP can be adjusted flexibly over time".
BROYER (S&P): ON EU PRICES BETTER THAN US
S&P also sides with Lagarde, against the Bundesbank's theses. "There are signs that the bottlenecks are gradually being resolved and, although uncertainty remains high, it is likely that inflation will tend to decrease in the coming months". Sylvain Broyer, chief economist for Europe at S&P Global Ratings, thus supports the thesis according to which the ECB has no reason to raise rates in 2022. "We have gone from a phase in which there was a risk of a deflationary scenario to a phase where it is more probable that the medium-term inflation objective will be met”, says Broyer, noting that, unlike what happens in the USA, the European cost of living is above all linked to the energy cost, while wage growth appears contained . The ECB will not be forced to act, but "to make careful and effective use of communication".
TREASURY YIELDS RISE AT AUCTION
In this context, tensions on BTPs are not slowing down much, much stronger, notes the ECB bulletin, than on Spanish and Portuguese bonds. The spread between the Italian and German 135-year bonds is confirmed at 0,59 basis points (-1,21%) with slightly decreasing yields: +0,13% and -XNUMX% respectively.
However, rates on the primary on three- and seven-year bonds assigned at auction by the Treasury are on the rise. For the third tranche of the 3-year BTP expiring on 15/12/2024, the yield rose by 24 cents, returning to positive for the first time since 2020 and settling at 0,14%. As regards the third tranche of the 7-year BTP expiring on 15/02/2029, the yield is up by 29 cents on last month's auction, to 0,89%.
BUSINESS PLACE +0,47%, INDUSTRIAL PRODUCTION HOLDS BACK
In Europe, the lists shut down at the end of the session: the EuroStoxx 50 index closed at +0,3%. In Milan, Piazza Affari appreciated by 0,47% to 27.844 points.
Prometeia sees a weakening of Italian industrial production after the strong rebound recorded in November. The institute estimates production down by 0,9% in December and 0,4% in January and up by 0,1% in February. Istat photographed yesterday in November a rise of 1,9% on month and 6,3% on year, well beyond expectations.
LUXURY AT FIRE IN PARIS
Paris closes in the red (-0,5%). Just above parity are Frankfurt (+0,06%), Amsterdam (+0,11%) and London (+0,15%). Better Madrid (+0,54%).
Renault flies, but Paris is crippled by the fall of the fleet of luxury stocks.
STELLANTIS, A HAPPY BIRTHDAY THANKS TO JEFFERIES
In Milan, on the occasion of the first birthday of the birth of Stellantis, the titles of the Agnelli house take off. Stellantis itself achieved an increase of 2,9% on the wave of the buy by Jefferies, which raised the target price to 25 from 22 euros, confirming the buy rating. “Stellantis has not yet captured the imagination of investors – reads the report – the shares have followed the sector, but the multiples are 45-60% lower than Ford and General Motors. But we want to see this as an anomaly that the company will be able to correct by continuing to implement its strategy and specifying its 2030 objectives”, as envisaged in the plan which will be illustrated at the beginning of March.
Meanwhile, the race of Iveco (+4,9%) and Cnh Industrial (+2,3%) continues. Banca Akros notes that data on tractor registrations in December were released yesterday, well above the broker's expectations for the fourth quarter in North America: "Moderately positive and not obvious news". Only Ferrari slows down: -1,94%.
CREDIT SUISSE LAUNCHES STM, UNICREDIT RECOVERS
Stm accelerates (+2,5%): Crédit Suisse has started hedging the stock with an "outperform" rating and a target price of 60 euros from 49,50, "with the consensus appearing to underestimate growth and the potential linked to profits ”.
Among the banks, Unicredit recovers (+0,6%) following the stop (-3,2%) in a market skeptical about the opportunity of a possible acquisition of Otkritie Bank due to the uncertainties in terms of visibility, execution and risks geopolitical implications of a deal on the Russian market, despite the attractive expected returns.
Little move Intesa Sanpaolo as well as Pop. Sondrio after the break on the eve: Bper rises by 1,9%.
DOWN DIASORIN: LESS SWAB-BUFFERS IN THE FUTURE
Diasorin was down sharply (-3,34% to 149 euros), regardless of the news of the launch of a new test to identify the Omicron variant in the field of research, with investors now betting on the end of the virus, and therefore on a progressive lack of use of tampons.
Brunello Cucinelli (-2,45%) and Moncler (-1,63%) also fall back.
EDITION, ALL POWERS TO ALESSANDRO
Edizione, the holding company of the Benetton family, turns into a Spa and indicates as president Alessandro Benetton and as CEO Enrico Laghi. The extraordinary shareholders' meeting approved a new statute which confirms Edizione's mission as a pure holding company of investments (Atlantia, Autogrill and Benetton Group). The new statute envisages the appointment of a BoD made up of four directors directly representing the Benetton family (which has risen to 33,4% of the share capital) and up to five independent directors, one of whom will be the CEO.
ENTER WATERWHEEL, FLY TO VALUE
Snags Dovalue (+10,25%) after the company announced the arrival of a new investor, Waterwheel Capital Management, in its client portfolio through the completion of Project Mexico, a 3,2 billion euro securitization in Greece . The volumes traded on the stock were intense, equal to more than six times the 30-day average.
