The Fed left the door open for an interest rate hike in June. Indeed, as the headline of the New York Times states, the institute "is seriously considering the increase" in the cost of money. This is what emerged from the minutes of the central bank's April meeting.
A significant number of board members argued on that occasion that a hike in June would be "appropriate" if employment continues to grow (the positions are distant on this point) and inflation approaches the 2 percent ceiling . Another "party" of the monetary committee, no less strong, had instead said they were worried about an increase in June, in the belief that the economic situation was still too weak to support the change of course.
WALL STREET AT EQUAL BONDS, HOLDS OIL
The reaction of the markets, now in alarm, was not long in coming. The probability of a rate hike in June jumped from 15 to 34%. The dollar rose to 110 against the yen (from 109,7), the cross with the euro closed at 1,1230 (from 1,1317). The yield on the 1,85-year T bond rose to 0,02%. Dow Jones (-0,02% at the end of the session) and S&P (+0,5%) practically canceled the previous increases. The Nasdaq closed up +1,5%, trailed by Apple +XNUMX%.
Oil resists close to 50 dollars a barrel, despite the surprise increase in inventories: Brent is traded at 49,7 dollars (+0,9%), Wti at 48,8 dollars (+1,1%) . Chevron loses 0,5%. In Milan Eni rises by 0,2%, Tenaris +0,3%.
Checked the reaction of Asian lists this morning, Tokyo is down by 0,1%, Hong Kong - 0,6%, Sydney -0,7%. On the other hand, Shanghai +0,7% and Shenzhen +1,8% rose.
TODAY THE "DOOVE" YELLEN AND THE "HAWK" FISCHER SPEAK
But is the prospect of the rise really concrete? A report by Nomura claims that the increase will take place, but only in September. "In other words - we read - the Fed only wanted to remind us that the option of a hike in June is still alive, just to cool the excessive confidence of the markets". In the April meeting, only Esther George of the Kansas City Fed had voted for the hike.
But in recent days John Williams (San Francisco) and Dennis Lockhart (Atlanta) have lined up in this direction to follow other Fed members. Hence the attention with which the markets today will follow the words of the most important US central bankers: the Vice President Stanley Fischer and New York Fed Governor William Dudley. A speech by President Janet Yellen will close in the evening.
CREDIT IS GOOD IN THE USA, CONSUMPTION SUFFERS
The air of rate hikes favored the rally of banks and financial institutions: Goldman Sachs +2,4%, JP Morgan +3%, Morgan Stanley +2,6%, Citigroup +3,5%, Bank of America +3 %. Tesla leap forward, up 4%: Goldman Sachs has raised the recommendation to Buy from Hold. The company announced in the evening the issue of securities for 2 billion dollars to be allocated to Model 3, the latest addition to the stable of Elon Musk's stable.
Consumer societies, on the other hand, are in great pain. Wal-Mart, which will report quarterly results today, was the worst blue-chip down 3%, low in 4 months. Target, another leading name in large-scale distribution, announced that in the February-April period, sales fell by 5,4% to 16,2 billion dollars. The stock lost 7%.
FIRST REFUNDS FOR MADOFF VICTIMS. AFTER ALMOST EIGHT YEARS
Let the Italian victims of crack, insolvencies, bail-outs and bail-ins console themselves. It took seven and a half years to come close to repaying Madoff's crack victims. The head of the "Victims of Madoff" fund, Richard Breeden, has announced that the positions of 25.280 "swindled" customers will soon be settled for a total of 4 billion dollars. The figures are very far from the initial requests: 63.580 complaints for a total of 67,8 billion dollars. Better than nothing, but the epilogue is really bitter.
BUSINESS PLACE THE BEST STOCK EXCHANGE THANKS TO THE BANKS
Also in Europe, the possible increase in US rates has galvanized the Banks (Stoxx of the sector +1,9%) and the Insurance Companies (+1,3%). Piazza Affari in particular benefited from this, yesterday the best stock exchange in the Old Continent: the Ftse Mib index grew by 1,2% to 17.713 points, not far from the highs of the session (17.725). Frankfurt and Paris limited the increase to half a percentage point. London -0,03%.
THE TREASURY PLACES 3 BILLION OF THE NEW 5-YEAR BTPEI
Italy "has made very serious commitments to be complied with in an imperative way" said EU Commissioner Pierre Moscovici illustrating the flexibility granted to the 2016 Italian accounts. But he added that "there will therefore be an appointment in October/November for a new analysis on the compliance with the debt rule”.
The both positive and obvious outcome of the negotiations with Brussels (much more resentful and critical of Spain, saved only to avoid a dangerous pitch invasion before the June elections), as well as the new decline in inflation in the negative Eurozone, did not have a particular impact on the debt market.
The Btp/Bund spread narrows to 131 points, the ten-year yield is stable at 1,460%. The Treasury yesterday placed via syndicate a new 5-year BTP benchmark indexed to euro zone inflation for an amount of 3 billion euros, collecting orders for over 5,7 billion. The operation partly took the market by surprise at a time when expectations for Italy are mainly concentrated on a possible 50-year government bond (perhaps displaced by the offer from Spain) and when, in general, the low rates push investors into longer maturities in search of higher yields.
BPER AND UBI FLY, UNICREDIT TOWARDS CHANGE OF TOP MANAGEMENT
Good day for credit. Bper leads the race (+7% to 4,6120 euros), the best blue chip of the session on the wave of speculation on banking risk. The institute of Modena, together with Ubi (+3,7%) could be interested in buying Veneto Banca, news already denied in the afternoon. But the purchases on the Emilian bank also have more solid reasons: a Mediobanca report revised the target price upwards to 5,60 euros, 0,30 euros more than the previous target price, confirming the Outperform recommendation. The stock trades at 7,1 times 2017 earnings, against 8,6 times for the Stoxx index of European banks.
Unicredit (+0,7%) reacted from the lows of the last four years, moving from -2% in the morning to positive ground: the balance of the top management is increasingly uncertain. The main shareholders are ready to support a radical restructuring of the institute after having kicked off the process that should lead to the appointment of a new CEO within a month.
However, with various nuances, they are reluctant to support the idea of a recapitalization, a circumstance that complicates the choice of the bank's number one. The president Giuseppe Vita is identifying a head hunter who will select a shortlist of names. "The government has nothing to do with the bank's governance issues, it has other concerns," said vice president Luca di Montezemolo.
According to Equita, Alberto Nagel CEO of Mediobanca is also among the candidates to succeed Federico Ghizzoni: in that case, the broker (chaired by Alessandro Profumo) hypothesizes that the Mediobanca-Unicredit merger would once again become topical.
The rest of the sector was up: Intesa +2,6%, MontePaschi +1,9%. Mediobanca is up too (+1,8%). Pop also bounces. Milan (+2,2%). Banco Popolare was less lively (+0,4%). The exception is Carige (-2,7%). Insurance companies are also supporting the rate hike: Generali +2,2%, UnipolSai +1%, Cattolica +1,9%.
FCA IN SWING BEHIND THE CHINESE SHADOWS
A day of strong excursions for Fiat Chrysler, moved in the morning by rumors, later denied, that the Chinese Gac is interested in buying a share, perhaps control. After a morning rise of almost 4% (to 6,565 euros), the stock fell sharply in the middle of the session, losing 1,8% (6,18 euros). The closing was at 6,305 euros, with a modest increase of 0,1%. On the other hand, it keeps the rise after the Exor denial (+3,7%). Cnh Industrial +0,2%.
VOLA STM: WILL DEVELOP SENSORS FOR THE CAR OF THE FUTURE
The real protagonist of the automotive market of the future was Stm (+6,2%). The Italian-French group, European leader in chips, has announced two major agreements: together with Mobileye it will develop the fifth generation of Mobileye's SoC (System on Chip), EyeQ®5, which will be used as the central computer for sensor fusion in fully autonomous driving systems (FAD), installed in automobiles starting from 2020. The system, capable of performing more than 12 Tera operations per second, thanks to its low power consumption, will make it possible to use passive cooling systems and achieve exceptional performance for driverless cars from 2020.
The other agreement was reached with the Israeli Autotalks for a technology that makes it possible to recognize and locate vehicles in order to have precise information on their position, especially in tunnels and parking lots.
RCS STILL ABOVE THE BID PRICE. CAIRO ALSO SALTS
The Rcs share closed again slightly above the price of the Bonomi tender offer (0,7 euro) reaching 0,716 euro and up by 0,14%. Cairo Communications also rose by 0,45% to 4,42 euros, thus expressing a price for Rcs of 0,53 euros (0,12 the proposed exchange rate). For Intermonte, Investindustrial's offer is much better than that of the publisher of La7, from which a relaunch "is rather unlikely and in any case would still be 'paper'". On the contrary, in the Repubblica interview given to Ezio Mauro, the former president of Intesa Sanpaolo Giovanni Bazoli said he had a different opinion: “Am I defeated by the takeover bid on Corriere? I left my posts. And then I would recommend waiting a moment. I really don't know how it's going to end today."
At Consob's request, Rcs specified that it expected the green light from the banks to refinance the debt by 7 June. The new agreement for a total of 352 million will expire at the end of 2019 and will be tied to the plan targets. In the event of breach of the covenants, procedures for 'repairing' the loan (equity cure) will be envisaged. However, commitments or constraints relating to the exercise of the delegation on the capital increase of up to 200 million euros are excluded, such as obligations to dispose of assets.
LUXURY UNDER BRAKING: CHINA FREEZES BURBERRY
Burberry's disappointing accounts (-3,4% in London), under the pressure of sales, equally disappointing in China, weighed on the luxury sector. Ferragamo drops by 0,98%, Moncler -0,6%, Tod's -0,3%. Yoox goes against the trend (+1%).
