Confusion reigns supreme in US politics. President Donald Trump threatens the right of his party, guilty of having scuttled health care reform. Revelations on the Russiagate front follow one another, i.e. the relations of Trump's staff with Putin's collaborators. The sensation, comments former Treasury secretary Lawrence Summers (Democrat), is that the president's belligerent intentions cannot be translated into concrete actions. This applies to the wall with Mexico (there is no money), the ban on immigration (blocked by the magistrates) and to the tax reform itself, scaled down due to budgetary needs.
The "war on the Vespa" fits into this framework, ie the threat of duties on Piaggio products, Roquefort and other symbolic products of Made in Europe. In reality, the administration limited itself to pulling measures already decided in the past in retaliation for the ban on American meat in the Old Continent. More a demonstrative gesture, yet another, than the launch of an unrealistic trade war.
The markets, taking into account the disappointment for the delay of the most welcome reforms (taxation and major works) are adapting to the new situation, that of a normal Trump, not endowed with superpowers. After the initial disappointment, the Stock Exchange thus started to rise again, but not to run, in line with the economy and raw materials. And the Fed, careful to prevent the locomotive, fueled by consumption, from overheating, has developed a strategy of gradual increases without pricing the "revolution" only on the paper announced by the White House. The pressure on Mario Draghi also drops: inflation is falling again, to the advantage of the ECB's expansionary policy.
“In short – writes Alessandro Fugnoli – the paradigm at the basis of all market action in recent months needs to be called into question and this does not necessarily have negative consequences for the markets. On the contrary".
US GDP REVISED UPWARDS, CONSUMPTIONS RUNNING
Yesterday the rise of the Nasdaq confirmed the good intonation of the markets: +0,28%, to a new all-time record at 5914,34 points. The technological list is now one step away from the barrier of 6 points. The Dow Jones (+0,33%) and the S&P 500 index (+0,29%) also advanced.
US GDP in the fourth quarter has been revised upwards and marks a growth of 2,1% from the +1,9% of the previous survey. Economists on average expected a +2% revision. The acceleration of the American economy in the fourth quarter is linked to consumption, which rose by 3,5%, more than the 3% initially estimated. Corporate profits jumped 9,3%, the biggest increase since 2012.
OIL SUPPORTS THE BULL: TENARIS +3,5%, CONOCO +8,9%
The stock markets in both America and Europe were supported by energy stocks, driven by the rise in oil prices. The WTI surpassed 50 dollars (50,35, a three-week high), in view of a renewal of the OPEC agreement on production cuts which, according to the Kuwaiti oil minister, could be signed as early as the May meeting in Vienna. Brent instead grew by 47 cents, to 52,389 dollars a barrel.
The breach of the $50 threshold coincided with Conoco Philips selling (up 8,9%) certain Canadian tar sands and natural gas assets. Canadian fields, the third largest in the world, only break even at a price of $50 a barrel.
The deal confirms the analysis of Paolo Rocca, CEO of Tenaris, yesterday the most effervescent stock on Piazza Affari with an increase of 3,5%. The manager revised up his forecast for growth in global demand for pipes for the oil industry in 2017.
Saipem also rose (+1,3%): on Tuesday the company successfully placed a 500 million euro bond issue with a five-year maturity. The fixed-rate and non-convertible bond will detach an annual coupon of 2,75%, identical to the yield.
Eni is also on the rise (+1,3%). CEO Claudio Descalzi said the oil company has received many expressions of interest in its Gas & Power Retail division, particularly from international funds and companies. A decision on whether to sell or not will be made within the year.
POSITIVE ASIA, THE SOUTH AFRICAN RAND COLLAPSES
Asian price lists were positive this morning. Tokyo advances (+0,6%), comforted by the increase in inflation: +0,2%, the highest increase in the last two years.
Shanghai also rose (+0,3%). The PMI indices signal a recovery on both the manufacturing and services fronts. Meanwhile, President Xi Jinping is preparing for the first meeting with Trump scheduled at the Mar-e-Lago resort in Florida. Yesterday Trump himself tweeted: “It will be a very tough match. The US is no longer willing to tolerate the loss of jobs due to the deficit with China".
Worth noting is the collapse of the South African rand: -0,9% against the dollar (-8% during the week) following President Zuma's decision to fire Finance Minister Previn Gordhan.
BUSINESS PLACE +0,4%. INFLATION IN EUROPE SLOWS DOWN
The good news from the USA on GDP and consumption gave a boost to the European markets. Piazza Affari closed the session positively, more or less in line with the performance of the European Stock Exchanges. The Ftse Mib index continued to consolidate its position above the 20 thousand mark, with a +0,45%, at 20.367 points.
Positive ground also for the other stock exchanges in the Eurozone: Frankfurt +0,44%, Paris +0,4%, Madrid +0,36%. On the other hand, London (-0,06%) is in negative ground. Curbs inflation again in Europe. In Spain the price index slows down to +2,3% (from 2,6%). But the most important data comes from Germany. Analysts expected +1.9%, in line with the ECB's target. On the contrary, the increase stopped at 1,5% y-on-y, after marking the maximum for four and a half years (2,2%) in February.
The drop in the cost of living, combined with the signals coming from the ECB, have led investors to be more cautious about a rapid repositioning of the European Central Bank on a less expansive line.
BTP, YIELDS FALL AFTER THE AUCTION
However, the large offer at yesterday's auction weighed on the BTPs. The Treasury has placed 9 billion euros, the maximum amount made available, in medium-long term securities, including the first reopening of the 50-year BTP since its launch via syndicate last October. The Italian 2,30-year rate stood at 2,34%, after a peak of 198% after the auction. The spread with the similar German maturity ended the session at 195 basis points from 0,32 points at yesterday's close. The yield on the XNUMX-year Bund fell as low as XNUMX%, its lowest in three weeks.
With the medium-long term placement, the Treasury covered around 32% of this year's refinancing needs.
THE ECB: RATES WILL NOT GO UP
Meanwhile, the debate on the duration of Qe (down this month to 60 billion) within the ECB is rising. The Austrian Ewald Nowotny yesterday triggered the fall of the euro against the dollar to 1,072 by stating that the Central Bank does not intend to raise rates for now. The Dutchman, Klaas Knot, in an interview with the Wall Street Journal, on the contrary said that the ECB could gradually abandon its accommodating monetary policy and proceed in parallel with a rate hike. The chief economist of the ECB, Peter Praet, reiterated that "we are not yet sufficiently confident that inflation will converge to levels consistent with our objective: the dynamics of consumer prices still remain dependent on monetary accommodation".
PIAGGIO RESISTS DUTIES, FINCANTIERI FINDS A PROFIT
Spotlights turned on yesterday on Piaggio, involved in the war of duties. The stock ended the day on the stock market down 0,5% after starting the session down 1,5% and then extending the losses up to 3%. The news "is not positive - Mediobanca analysts commented - but we remain cautious". The report recalls that "Piaggio's sales in the US amount to about 5% of its annual turnover" and that they are "all represented by imports, as the company has no factories in the United States". Banca Akros analysts consider the news "potentially negative", but recall that "it is not the first time that similar rumors have circulated".
Day of glory instead for Fincantieri (+3,05%). The data at the end of 2016 signal an increase in revenues (+5,3%) and a strong improvement in the gross operating margin, which went from a loss of 26 million to a positive result of 267 million.
Among the other industrialists, Leonardo +1,2%. The group's US subsidiary will build a new plant in Alabama for the production of T-100s if the aircraft is chosen by the US Air Force. Fiat Chrysler -0,5%, Prysmian +1%.
AXA: "GENERALI IS NOT INTERESTED"
Telecom Italia goes up +0,4%: the company is preparing to launch Kena, its low-cost brand for mobile telephony. According to Barclays (equalweight, Tp 0,9 euro) the company presents a more attractive valuation after having underperformed its competitors since the beginning of the year. The president Giuseppe Recchi will join the board of directors of the subsidiary Inwit.
Generals -0,2%. Axa is not interested in a takeover of Generali or Zurich Insurance. This was reiterated by the CEO of the French company Thomas Buberl in an interview with the Swiss magazine Bilanz. “We are old enough. I don't need Zurich. I don't need Generals. Many groups are only big in two or three markets. We belong to the category of top players in 8-10 markets,” said the manager.
Weak banks: Unicredit -0,1%, Intesa +0,2%, Banco Bpm +0,8%.
