Much ado about nothing. Fears about an imminent rate hike were dispelled yesterday evening when at 19.15 (Italian time) Lael Brainard, a voting member of the Fed board, considered the closest collaborator of the chairwoman Janet Yellen, took the floor. “We need prudence in normalizing the monetary policy of the US central bank – he said -. I believe this approach has worked in recent months, helping to sustain continued gains in employment and progress on the inflation front."
Furthermore, Ms Brainard added, “monetary policy must prevent downside risks, rather than raising rates prematurely to defeat upside risks”. Markets immediately recognized that the feared rate hike will not happen. The feeling of fragility offered by the Stock Exchanges remains, in Europe more than in the USA, entirely dependent on the choices of the US Central Bank, which is itself at a very delicate moment.
Yesterday Donald Trump attacked the Fed's policy, accusing Yellen of having bowed to the wishes of the White House by practicing a policy of "too low" rates. The effect of the pneumonia that affected Hillary Clinton should not be overlooked either. The Mexican peso fell to a two-and-a-half-month low. The Mexican currency, down 10% in 2016, has for months been inversely linked to the electoral fortunes of Trump, who wants to build a wall between the two countries.
WELL APPLE, GOOD NEWS FROM CHINA
The reactions on the Asian markets were modest. Tokyo +0,8% despite Brainard's words favoring the strengthening of the yen against the dollar (-0,3%). The other lists rose: from Australia (+1,3%) to Korea (+0,5%) and Hong Kong (+0,8%, after -3,4% in Monday's session). Positive macro data from China: industrial production rose by 6,3% in August. Japanese government bond yields fall again; the thirty-year closed at 0,530%. The US T-Bond 10 rebounded to 1,697% (from 1,643%).
The rebound on Wall Street was robust, but still insufficient to undo the losses suffered on Friday: the Dow Jones index rose by 1,32%, S&P500 + 1,42%. Better Nasdaq, +1,68% thanks to the push of biotech stocks. Supporting the recovery of the price list was above all Apple, which rose by 2,24%. Wal-Mart (+2,3%) and Goldman Sachs (+2,3%) also stood out.
Weak oil: Brent at 48 dollars (-0,6), under the pressure of the recovery of activity of the wells of American shale oil.
EUROPE TOWARDS A REBOUND: MILAN -1,8% YESTERDAY, BTP AUCTION TODAY
Yesterday's session was complex for the European stock exchanges, held in check by investors' fears about the news coming from the USA. This morning futures signals recovery on the wave of Miss Brainard's words. Frankfurt and Paris should open with an increase of just under a percentage point. Milan, the worst exchange together with Madrid, closed yesterday at 16.840 points, down 1,8%.
The drop on the markets of the Old Continent was less severe: Paris -1,3%, Frankfurt -1,5%, London -1,2%. The Treasury yesterday placed 6,50 billion BOTs per year. The yield recovered to -0,17% from -0,19% in mid-August, to its maximum in mid-June. Turbulent day for the debt market. At the end of the morning, the yield on the Italian 1,29-year bond rose to 1,25% from XNUMX%, the highest since the end of June. The phenomenon partially reappeared in the final session.
After so many fluctuations, the response of the markets to today's auction of medium-long term bonds remains to be verified. Today the Treasury will offer up to 8 billion of new paper at 3, 7, 20 and 30 years. Yesterday the new October 2023 BTP traded on the "grey market" at a yield in the 0,78% area, against 0,63% of the last placement in mid-July, an all-time low but after the words coming from Brainard, the yields are downhill.
TARGET SHOOTING ON UNICREDIT AND MPS
In Piazza Affari the day was very heavy for the banks. The Eurostoxx Banks index lost 3%. Unicredit closes down by 3,7%. According to Reuters, Poste, Anima and Cdp are preparing to present an offer on Pioneer. The rush to purchase Pionieer from the bank in Piazza Cordusio has been reduced to five. The CEO Jean-Pierre Mustier has instructed the adviser JP Morgan to continue contacts only with Allianz, Banca Generali, Poste, Amundi and Macquarie. The deadline is September 19th.
Monte Paschi -3,4%. The appointment of the new CEO of Mps, "from what I understand - said the Minister of Economy, Pier Carlo Padoan - will be the subject of the meeting of the board of directors on Wednesday". On that date, Marco Morelli should be designated as Fabrizio Viola's successor. The timing of the capital increase? “They will depend on the market. The question does not arise within the year”. In the meantime, a meeting at the ECB is scheduled for today, during which the president Massimo Tononi and the number one of the nomination committee Alessandro Falciai will formalize Morelli's candidacy (who in any case would have already received the informal go-ahead over the weekend from the Eurotower) and above all they will re-discuss the complex recovery plan put in place by the Bank.
CASTAGNA (BPM) TRY TO MAKE PEACE WITH MEMBERS-PENSIONERS
Bpm -1,95%. The managing director Giuseppe Castagna has scheduled a meeting with the retired shareholders, the component of the shareholder base that has expressed the greatest perplexity regarding the merger, for Thursday 22 September. Last week one of the most representative associations of retired members, the "Patto per la Bpm", sent to the presidents of the supervisory board and the management board of the Bpm, Nicola Rossi and Mario Anolli, a letter with two requests: to put the stand-alone option to votes in the meeting, and to allow shareholders to express themselves by secret ballot. Banco Popolare -2,9%.
The ECB is trying to push institutions, especially in weaker economies such as Italy, to reduce the amount of their non-performing loans, which hinder economic growth by holding back the ability to disburse new credit. Banks in the euro area will have to set their own targets to reduce the 900 billion euro of non-performing loans, a legacy of the financial crisis that is holding back growth, and only significant shortcomings will be sanctioned, according to new guidelines released yesterday by the European Central Bank.
The general negative climate weighed on insurance companies, despite the fact that the rate increase should be considered positive for the business. Generali lost 2,6%, Unipol -4%, UnipolSai -3,2%. In asset management, Azimut drops by 2,9%, Anima -1,3%. Poste Italiane left 2,4% on the ground: according to Mediobanca Securities (outperfom , target 7,7 euro) the company is able to buy Pioneer, financing the operation partly with cash, partly with debt.
MONCLER'S STAR SHINES, SNAM RESISTS
In such a contrasted price list, Moncler's performance stands out (+1,1%). The title, among the best of 2016, benefits from the favorable judgments coming from analysts. Cucinelli also did well (+0,3%). Utilities were down, hit by fears of a rate hike. Enel left 2% on the ground. Better Snam, supported by the news that OMV's decision on the sale of 21% of Gas Connect Austria will arrive on 49 September. Equita considers the Snam-Allianz joint venture to be the favourite, in consideration of the potential synergies with the management of the Tag. Mediobanca Securities confirmed the outperform recommendation on the stock and the target price of 5,5 euro per share.
Among industrialists, Buzzi resists (-0,84% to 17,8 euros), confirmed as one of the top picks in the European cement sector by JP Morgan. Slight drop also for Prysmian (-0,7%). The rest of the sector was heavy: StM-1,4%, Leonardo -0,6%, Fiat Chrysler -2,4%, Exor-2,7%.
