Within the year, the Fed could start reducing its balance sheet, inflated by the purchases supported since 2009 to give oxygen to the economy. The proposal to cut the budget to $4,500 trillion (it was $900 billion before the crisis) that emerged from the minutes of the March 14-15 Federal Reserve meeting is confirmation that most board members are convinced that the emergency is behind us and rates can gradually move towards normality thanks to a series of increases. Barring twists and turns, this closes a long cycle of US monetary policy which will also have effects beyond the dollar area.
The turning point should take place around the end of the year, just when the ECB's purchase program will end. In this context, it will not be easy for Mario Draghi to get new extensions, even if Frankfurt's monetary policy will still remain expansive. Wall Street's reaction was immediate: the Dow Jones index, up until the time of publication, fell into negative territory. However, the markets' attention today will be absorbed by the arrival of Chinese president Xi Jingping, preceded by the surprise removal of Steven Bannon, already considered the strong man of the team.
LOW ASIAN PRICE LISTS, HOLDS SHANGHAI
The decline also affected Asian stock markets, held back by the prospect of a "hawkish" attitude from the US central bank. The Tokyo Stock Exchange falls by 1,6%, Sydney -0,6%. Hong Kong is also down. Chinese price lists, on the other hand, are on the rise, pending Xi's visit to the US.
Two-faced sitting yesterday on Wall Street. Rocketing start, thanks to the boost of the good data on employment in the private sector (263 new jobs against 187 expected), downward trend after the publication of the minutes of the Fed and the declarations of Paul Ryan: the timing of the tax reform, has said the Republican congressional leader, they will be longer and more opposed than health care reform.
The Dow Jones index, already up 198 points, closed with a fall of 0,2%, the S&P 500 went from +0,8% to -0,31% in the finale. Nasdq -0,58%. It was the sharpest change of course in the last 14 months.
STOP OIL. MORGAN NEGATIVE ON ENI
Oil prices also experienced a sharp course correction. Initial rise, favored by the stop of production in the North Sea. Final slowdown after the data, much higher than estimates, of US inventories. Brent trades just above 54 dollars a barrel, after exceeding 55 dollars during the day.
As a result, the prices of oil stocks have deflated. Chevron closed almost unchanged, Exxon +0,19% (gained 1%), Chevron almost unchanged (already +1,3%). At Piazza Affari Eni -0,5%, Morgan Stanley downgraded its rating to Underweight, from the previous Equalweight. Tenaris -1,1%, Saipem +0,2%.
AMAZON IN ORBIT. BEZOS PUT A BILLION INTO SPACE
Amazon's umpteenth record (+0,28%) should be noted, rising for the sixth consecutive day to $909,28, after a high above $910. Satisfied Jeff Bezos: yesterday the tycoon revealed that to support the growth of Blue Origin, his space company, he has sold securities worth one billion dollars a year.
FLAT IN THE EUROPEAN EXCHANGES. WEAK OPENING THIS MORNING
The thrust of the American occupation and the rise in oil prices was not sufficient to support the stock exchanges of the Old Continent. A declining start is expected this morning. In Milan, the Ftse Mib index, after reaching a low for the day of 20.215 points and a high of 20.401 points, closed the session with -0,02% at 20.253 points. The European Stock Exchanges moved little: Paris fell by 0,18%, Frankfurt -0,53%, while London closed with a positive 0,13%. Madrid +0,40%.
WEIDMANN INSISTS: QE MUST END
It would be desirable "that within a year there are no more bond purchases" by the ECB in the context of Quantitative Easing. This is the message that the president of the Bundesbank, Jens Weidman, entrusted to an interview with the weekly Die Zeit. “From my point of view, the moment is approaching to stop pushing the accelerator, but to take one's foot off the pedal”, underlined the number one of the Bundesbank with regard to the ECB's expansionary monetary policy. “From what we know at the moment, the eurozone economic recovery is robust and will continue. Hence, the risk of deflation has become even more unlikely."
TUSK: FRIDAY THE AGREEMENT BETWEEN GREECE AND BRUSSELS
The BTPs yield the rise of the morning to close the session not far from the levels of Tuesday. The spread on Germany is back just above 200 basis points. In the first part of the session, the BTPs had benefited from yesterday's French debate among the candidates for the Elysée which had reassured the markets, satisfied by the performance of the centrist Emmanuel Macron.
Athens placed 1,14 billion six-month bonds yesterday. Meanwhile, at the end of the meeting with premier Alexis Tsipras, the president of the European council Donald Tusk said that Greece and international creditors are about to reach an agreement on the review of the bailout plan, perhaps as early as Friday. Negotiations between Greece, the European Union and the International Monetary Fund have stalled for months due to differences between the parties over Greece's fiscal progress and labor and energy market reforms.
FLY THE MANAGED SAVINGS BEHIND THE PIR: AZIMUT SUPERSTAR
“If we stopped at 2 billion in PIR collection, I would be very disappointed”. With these words, the president of Banca Mediolanum (+0,22%), Ennio Doris, speaking on the sidelines of the shareholders' meeting, underlined the effect that the new instrument is having on the asset management industry. Mediolanum, it emerged at the meeting, expects to distribute a dividend of 0,40 euro also for the 2017 financial year.
However, yesterday the real star of managed savings was Azimut (+4,4%) thanks also to the repurchase of convertible bonds. The company announced that first-quarter net profit will be between 57 and 67 million euros, with revenues between 198 and 215 million. Azimut expects net inflows in the first quarter to exceed 1,7 billion, to which must be added foreign inflows in March. Insurance companies down: Generali -0,7%, Unipol -1,1%.
In Milan, the final challenged for the banks. However, the sector index closed at +0,15%. Unicredit advances (+0,9%), confirmed in Goldman Sachs' Conviction Buy List. The market has received an excellent reception for the unsecured bond launched yesterday morning. Claims already exceed $6 billion. The bond is in two tranches at a fixed rate of 5 and 10 years, intended for institutional investors in the United States.
THE RECOVERY OF CEREALS GIVES CNH A CHARM
Among industrial stocks, Cnh Industrial stood out (+2,8%), thanks to a positive report by Deutsche Bank on the entire “capital goods” sector. In New York Caterpillar , after having achieved a gain of 2% fell back in line with the rest of the list, closing at +0,12%.
The rebound in grain prices is helping to support the rally in the sector. The benchmark future for corn rose by 0,5%, that of wheat by 0,6%, that of palm oil by 3%. The price of soybeans, which dropped yesterday to its lowest level for the year, is up 1%.
The rise in the prices of agricultural commodities comes on the day of the green light for the purchase of Syngenta by ChemChina: the United States and Europe have authorized the largest foreign purchase of a Chinese company, it is an operation capable of influence the dynamics of the agricultural market in the medium-long term. Authorization for the merger between Bayer and Monsanto should also arrive in the next few days.
EXOR: NAV UP, PROFIT DOWN
Prysmian (+2,6%) and Stm (+0,9%) also performed well among the manufacturers. Oddo Seydler increased the target price on the share from 10 to 16,5 euro, confirming the buy rating.
On the other hand, Fiat Chrysler decreased (-1,8%). Goldman Sachs confirmed the stock in its Conviction List Buy with a target price set at 20 euros. Exor -1,1%. The Agnelli family financial company announced a 2016 net profit of 588,6 million euros, down from 744,5 million the previous year (down 20%). Shareholders will receive a dividend of 0,35 euro per share.
In Piazza Affari, the company led by the president and CEO John Elkann reached an all-time high on Tuesday at 48,53 euros, corresponding to a capitalization of 11,6 billion euros. The stock is up 17% year-to-date. At the end of 2016, the net worth of investments (NAV) was $14,64 billion, up from $13,35 billion a year earlier.
TELECOM: VIVENDI NOTIFIES THE CONTROL TO THE EU
Telecom Italia recovers (+0,7%) after the words of Flavio Cattaneo: "I'm in Tim to carry out a large project and I will remain whatever the president and the shareholders want to indicate as I am sure they will put me in a position to work well" .
Meanwhile, Vivendi has notified the European Commission that after the May meeting it could have control of Telecom Italia (Tim), while it is preparing to present a majority list for the renewal of the board. This was announced by Reuters citing a document sent to the EU antitrust authority by Vivendi, dated March 31, in which it says that the proposed transaction involves the acquisition of Vivendi's "exclusive de facto control" of Telecom Italia.
THUD OF TOD'S, PARMALAT RUNS
Tod's falls in luxury (-4%), downgraded by Equita Sim. Analysts cut the judgment to Reduce da Hold, with a target price rising to 62,5 euros from the previous 60 euros. The new target price implies a potential drop of 14%.
Yoox falls (-1,3%), Moncler rises (+1,5%). Campari falls (-1,4%) after yesterday's new all-time high. Parmalat is running (+3,87%) after the Lactalis takeover bid did not reach the threshold of 90% of the capital, with analysts who think that the battle between the activist funds and Lactalis will continue in the coming months.
Terni Energia extends up by 6,3% in the final and closes at 1,0840 euros. It's one of today's best titles. The smart energy company announced that it has signed an energy efficiency contract worth around 4,3 million euros on behalf of Copernico Srl, a leading property management and smartworking company.
Falck Renewables rose by more than one point, going against the market trend. The company active in the renewable energy sector has announced that it has commissioned the Auchrobert wind farm in Scotland.
