It is one of the few records that have so far escaped the Raging Bull. But for a little while longer. Already today the Msci Global index, built on the performance of 46 world stock markets, could exceed the record of 441,14 points established in May 2015, from which it is separated by a modest 0,35%. The data, of course, has a mere statistical value, but it serves to underline the general scope of the share price rally unleashed by Donald Trump. The general recovery that has infected Asia and Europe contributes to supporting the rally, as demonstrated by the upward revision of global growth estimates (from 2,5 to 2,7%).
No less important is the belief that the recovery of inflation and, consequently, of interest rates is just around the corner. Janet Yellen herself confirmed this yesterday before the Senate: "The Fed - she said - will consider raising interest rates 'during the next meetings' of the FOMC" because the economy "continues to expand at a moderate pace" and waiting too long “might be unwise”.
This diagnosis has the effect of keeping managers away from fixed income managers who are waiting for higher yields to get in on the action. Such euphoria overshadows the confusion in the president's foreign policy. After the Russian mess of the resigning Michael Flynn, Benjamin Netanyahu's visit to Washington is staged today: possible new surprises.
GOLDMAN SACHS AT HIGHEST SINCE 2007
Bull's run continues on US stock exchanges: the Dow Jones is up 0,45%, S&P +0,40%. The Nasdaq was also positive (+0,32%). Yesterday's was the fortieth session without a daily drop of more than 1% in the S&P500 index: it has never happened in history for such a long period.
The words of Janet Yellen and those of Richmond Fed President Jeffrey Lacker (more than three rate hikes may be needed this year) have added new fuel to the fire of the financial sector (+1,24% the index) by now convinced that the first move by the Central Bank will come on March 15th.
From the date of the presidential elections to today, the sectoral index of banks has gained 20% and is at a nine-year high after registering an increase of 5% in the last month alone.
Goldman Sachs gained 1,29% to $249,46, hitting its highest since 2007, before the subprime crisis erupted. Bank of America +2,82%.
IT TAKES $250 TO BE A MEMBER OF BUFFETT
New record also for Apple (+1,30% above $135). From the Berkshire Hathaway quarterly it emerges that Warren Buffett has purchased 57,4 million Apple shares in recent months. The category A stock of the financial passed the threshold of 250.000 dollars yesterday, the minimum threshold to enter the Omaha essay club.
The case of the day concerns Cynosure (+28%). The maker of cosmetic surgery lasers was bought by Hologic for $1,65 billion.
The increase in US oil stocks (+9,9 million barrels) slowed the rebound of crude below $56 (from a maximum of 56,46). The growth in shale oil production is limiting the effect of the OPEC production cut. Oil companies contrasted: Exxon -0,22%, Conoco Philips +0,89%. At Piazza Affari Eni +0,1%, Saipem -2,7%.
ASIAN EXCHANGES ALSO RUN: TOKYO +1%
Asian stock exchanges are also in great effervescence this morning, driven by the financial sector. Tokyo (+1,03%) absorbed the collapse of Toshiba (-13,2%) after new writedowns of 6,3 billion dollars linked to losses in US nuclear power.
Big coup this morning by Masayoshi Son: his Softbank bought the private US Fortress for 3,3 billion dollars. Sidney (+1,1%) and Hong Kong (+1,4%) did well. Samsung loses ground (-1,3% in Seoul): the judiciary has asked again for the arrest of the CEO and owner Lee-Jae-Yong.
THE GM-PEUGEOT NEGOTIATION ON OPEL REOPENS THE RISK: FCA +4,4%
The automotive sector is in great turmoil for the first major transaction of the Trump era: General Motors (+4,84%) could sell Opel and Vauxhall, i.e. all European activities to Peugeot, which confirmed the existence of the negotiations revealed by Bloomberg . The news had an immediate impact on Fiat Chrysler (+4,1% in Milan, +4,39% at the close on Wall Street) in the perspective of a forthcoming consolidation of the sector.
To complicate the outcome of the operation could be the hostility of politics. The merger with a European partner, in fact, will have a significant impact on the employment of Opel, moreover a few months before the German elections. But GM's decision can be explained by the losses of its European subsidiary: 257 million dollars in 2016 after 813 million in 2015. In the last seven years, the loss has been 8 billion dollars, enough to convince the Detroit giant to throw in the towel. PSA, on the contrary, has long been looking for a merger that would increase the critical mass of the French-Chinese group.
Fiat Chrysler (+4,1%) has long been a candidate for the deal, but both Sergio Marchionne and John Elkann have rejected the advances, aspiring to a merger with GM. Analysts argue that if the US auto giant were to get rid of Opel and Vauxhall, the game could reopen, because there would no longer be problems of product overlap in Europe to hinder the merger. In any case, the Gm-Psa negotiation signals that the consolidation of the sector foreseen for some time by Marchionne has begun.
Ford also rose yesterday +0,72%.
MILAN GOES UP, TODAY THE OECD REPORT ON ITALY
Wall Street's euphoria, good news from the European economy, the fall of the euro against the dollar below 1,06. Here is the blend that favored a positive day for the price lists of the Old Continent. While waiting for Janet Yellen's second hearing (this time in Congress) the European stock markets are set to rise. Today, the presentation of the annual OECD report on Italy should be noted. The Secretary General Angel Gurria and the Italian Treasury Minister Pier Carlo Padoan were present.
No yielding of the Milanese share, in the lead among the European markets: with a rise of 0,65% it closed at 19.188 points. The other main European markets are further behind: Paris +0,15%, Frankfurt -0,01%, London -0,16% and Madrid +0,25%.
Istat data on GDP for the fourth quarter showed that economic growth in Italy remains modest, especially if compared with the major European economies. But the overall figure for the year (+0,9% on an unadjusted basis) is one that hasn't been seen for some time. In the Eurozone, growth is 1,7%.
YELLEN HOLDS BACK THE BTP AND THE BUND
Weak closure for BTPs after a positive morning. Stocks were pushed lower by dovish comments from Fed Chair Janet Yellen. Bonds in Europe are also moving: the yield on the Bund rises to 0,38%, from 0,32% yesterday. BTPs at 2,23%.
The spread between US and German ten-year yields widens to 211 basis points. At the end of 2016, the highest level in the last 30 years was reached at 235 basis points. The Treasury placed a total of 1,388 billion of the five BTPs at auction yesterday, i.e. the entire expected supplementary offer.
BANKS FLY. BANCA GENERALI TOWARDS THE MAIN BASKET
Automotive aside, banking stocks were also the driving force behind the rise in Milan. The sector index rose by 1,5%. The former Popolari led the race, in the wake of Banco Bpm (+5%). Pop. Emilia +3,5%, Ubi Banca +3,9%. Unicredit rises by 1%. Next Friday will be the last available day to trade the option rights.
In contrast Carige (-5%), yesterday's worst share: the hypothesis of a capital increase to which Generali could contribute with the conversion into capital of 80 million euros of subordinated loans into capital returns.
Asset management is brilliant. Banca Mediolanum+1,3%. Banca Generali is up 6%. There is a rumor that Credit Suisse has an interest in the asset management company. More concrete is the possibility that the institute could take the place of Mps in the Ftse Mib index in the event that the Tuscan bank is not readmitted to trade by the end of February.
Insurance companies are also tonic. Unipol, already strong in the previous session, gains 3,6%. Spotlight on Generali (+1,6%) awaiting news regarding a possible Intesa Sanpaolo operation. Today the Board of Directors of the insurance group meets.
FUSION TESTS BETWEEN FNM +10%, TRENORD AND ATM
Promotion for Recordati (+0,9%): Mediobanca raises the target price to €30 from €24, Neutral rating confirmed. Utilities, which are inversely correlated to interest rate trends, suffer. Enel -0,3% and Telecom Italia -1,3%, Snam -0,4%.
Ferrovie Nord Milano flies (+10%) after the company confirmed the merger project with Trenord and Atm, but both Trenitalia and the mayor of Milan Giuseppe Sala judged the news "premature".
