Kim's missiles, for now, remain on the ground. Hurricane Irma has already surpassed Harvey's effects in terms of intensity and destructive force. But today the focus is on central banks, in view of a really hot autumn. The relationship between central banks and politics hadn't been so delicate for some time.
This applies to the European Central Bank, urged by German Finance Minister Wolfgang Schaeuble, "to return to a normal monetary policy" on the eve of today's directorate. Perhaps it is just pre-election rhetoric, but Mario Draghi's task is certainly not being facilitated, who today will have to show off his skills as a trapeze artist to prevent the market from taking the reduction in Qe for granted in October, without thereby favoring a further strengthening of the single currency.
This applies to the Fed, which yesterday had to record two news: the resignation of its number two, Stanley Fischer, a well-known monetary policy hawk, who decided to pack his bags nine months before the natural deadline. Officially "for personal reasons", but in a letter to Donald Trump, Fischer reiterates: "We have made the financial system stronger, more resilient and better able to provide credit so important for the prosperity of our country's families and businesses". defending the reforms that the President wants to dismantle.
Furthermore, Donald Trump's decision to accept the offer of the Democrats (defined as "catastrophic" by the Republican leader in Congress Paul Ryan) to merge aid to the victims of hurricanes and the three-month extension of the ceiling to the federal debt. No small detail: the new deadline, December 15, falls 48 hours after the last Fed board meeting in 2017, the one that should sanction the third rate hike of the year.
Will the central bank feel like making such a decision in the face of a possible default? What autonomy will the Fed have, now without 4 vacant positions plus Janet Yellen expiring in February? According to the Wall Street Journal, the next Fed chairman will not be Gary Cohn, who lost favor with the president due to harsh criticism of Trump's attitude after Charlottesville.
THE SINGLE CURRENCY BEYOND 1,19 WAITING FOR THE ECB. CHINESE CARS FLY TO HONG KONG
The strength of the euro is confirmed this morning, rising to 1,1925 against the dollar a few hours after the ECB's directorate. Among the currencies in evidence the Canadian dollar, at 1,1230 against the US currency, the highest since June 2013. The Central Bank on Tuesday raised rates by surprise.
Positive Asian stock exchanges thanks to the boost of energy stocks. Tokyo salt, +0,8%. In Hong Kong (+0,5%) Geely's star shines: the automotive group, which also controls Volvo, rose by 4,4% after announcing a 90% increase in sales in August. The Korean Kospi also recovered (+1%) while waiting for Kim's next moves. A new missile launch could take place over the weekend.
OIL SUPPORTS WALL STREET, SAIPEM STILL BOOMING IN THE BUSINESS PLACE
The agreement between Donald Trump and the Democrats on the postponement of the federal debt maturity and the recovery of oil stocks allowed Wall Street to close the session with a slight increase. The Dow Jones index rises by 0,25%, S&P 500 +0,31% to 2,465,54 points (just 15 bp from the all-time record). NASDAQ +0,28%.
The US economy continued to expand between “modest” and “moderate” between July and August. This was confirmed by the Federal Reserve in its Beige Book, the report published every six weeks on the state of health of the US economy. The text notes that consumer spending "grew in most of the districts in retail and tourism, but the results were mixed with regard to car sales".
The energy sector is recovering sharply (+1,6%): Brent at 54 dollars, Wti at 49,1 dollars. Improved refining margins and the reopening of plants along the coast of the Gulf of Mexico pushed up the prices of the companies. Exxon and Texaco post gains of around 2%.
Good rise in oil prices also in Piazza Affari: Eni +0,6%, Tenaris +0,9%. Saipem accelerates (+2,8%), among the protagonists of the meetings with the financial community in New York promoted by the Barclays CEO Energy Power Conference. From the meetings it emerged that the majority of managers of the companies that attended the conference indicated a positive outlook for the sector.
The early exit of Stanley Fischer, staunch defender of banking rules, is not displeased by the big names in the financial sector: Goldman Sachs +0,45%, Bank of America +0,5%, JP Morgan +0,8% .
FRANKFURT LEADS EUROPEAN STOCK MARKETS, MILAN +0,3%
Positive session for the main European stock exchanges on the eve of today's announcement on ECB rates. Piazza Affari acted as a hare in the morning while the other lists showed red. In the end, the Ftse Mib index advanced by 0,35%, to 21.823 points. Paris is also advancing (+0,29%) while Madrid (-0,48%) is in the red: the atmosphere is heating up in view of the dreaded referendum on the independence of Catalonia, judged illegal by the central government. The best price list, for the second day in a row, is Frankfurt (+0,75%). Outside the Eurozone, Zurich dropped by 0,11%.
EU IN LONDON: DON'T TOUCH PARMESAN AND CHAMPAGNE
London (-0,25%) is in negative ground. Britain is planning measures to limit immigration from the European Union ahead of Brexit. The government's plans, revealed by a confidential document held by the Guardian, provide for work permits of 3 to 5 years for the most highly qualified European citizens. For other workers, the document speaks instead of a two-year limit to reduce "the number of EU citizens authorized to travel to the United Kingdom".
The EU has formally asked London to guarantee the protection of typical products, in particular champagne, Parmesan and Beaufort cheese.
After the latest Istat data, the Ministry of the Economy sees GDP accelerating to +1,4/1,5% in both 2017 and 2018. According to government sources familiar with the situation, the half percentage point discount requested last spring Europe was in fact "acquired" and therefore net borrowing is expected to rise next year from the 1,2 expected in the Def to 1,7/1,8% of GDP.
BTP DOWN, TODAY THE "ROLL" OF SECURITIES. MASSIVE OFFERS FROM FRANCE
On the Italian secondary, pending the ECB, the minus sign decisively dominated: the Btp/Bund spread on ten-year bonds rose to 168 basis points. Together with rates and 'forward guidance', today's appointment in Frankfurt will also be an opportunity to learn about the quarterly update of the ECB staff's estimates on growth and inflation in the three-year period 2017/2019.
Any downward revision of price projections due to exchange rate strength could result in a postponement of the timetable for the end of the Qe purchase programme, which on paper closes at the end of the year. The substantial offer calendar also calls for prudence and adjustment of positions, which sees up to 14,25 billion of new French and German medium-long term paper available to investors tomorrow morning.
The French offer is particularly heavy and concentrated on the extra-long stretch: between 8 and 9 billion Oat at ten, 19, 24 and 43 years. To complete the picture, the technical detail of the 'roll' (or rotation) on ten-year Bund and Btp futures expected for today around mid-session.
CAR GP ON THE LISTS: A POLE POSITION FCA AND DAIMLER
In Europe, gains were again concentrated on the Auto sector (+1,8% the Stoxx index) under the push of Daimler, up 3,1%, pushed by Goldman Sachs, which raised the rating to Buy and of the other big names across the Rhine: Volkswagen +2,1% and BMW +2%.
Unlike the day before, the rally involved Fiat Chrysler: +4,2% to 13,84 euros, a new all-time high thanks to the promotion of Barclays to Overweight from Equal Weight, target price from 13 to 18 euros. “We appreciate both the strategic options and the operational history of Fiat Chrysler – the analysts explained – the only one with a real momentum of earnings and full of catalysts in terms of strategic options in the sector”. Good news also from the Brazilian market. Thanks to two more working days and the recovery in consumption, car production grew by 15,4% in August and sales by 17,2% compared to July. The estimates come from the national producers' association.
Ferrari +0,05% closing at 97,75 euros after setting yet another historical record at 99,20 euros in the session. Eleven out of nineteen analysts still recommend buying the stock (+78% since the beginning of the year) with an average target of 105 euros. Yesterday, however, Ferrari received two discordant voices. SocGen reiterated the Sell judgment with a target price of 80 euros. Bernstein confirmed the Underperform rating and the target of 77,30 euros.
TESTS OF PEACE WITH VIVENDI: FLY MEDIASET
Mediaset's rebound continues: +2,7%, above 3 euros, after ten consecutive downward sessions. The actions of Fininvest's parent company were driven by rumors that Vivendi could offer Alfa a role in the joint venture in the media sector between Tim and Canal+, a move that would bring the contribution of Premium, the Mediaset group's pay TV, within the new society. Telecom Italia, on the other hand, is still down (-0,3%).
BANKS, EXTEND CARIGE
After a quiet start, the banks recovered. Unicredit +0,1% closed with a slight recovery, weaker Intesa and Banco Bpm, both -0,1%. On the other hand, Carige strengthened, gaining 5,2% in the wake of the proposal of the first shareholder Malacalza to carry out the capital increase exclusively with option rights. Contained declines also for insurance companies: Generali falls by 0,3%, Unipol -0,4%.
THUD OF UNIEURO, THE ACCOUNTS GIVE ISAGRO CHARGE
Caltagirone Editore is slowing down: -5,17% to 1,30 euro, still above the price (1 euro) envisaged by the tender offer. The CEO Albino Majore sold 15.000 securities on the market at an aggregate price of 1,4882 euros (in a range between 1,45 and 1,52 euros).
Unieuro also fell sharply (-5,58% to 16,25 euro) after the placement by Italian Electronics Holdings, the reference shareholder, of 17,5% of the capital to institutional investors at a price of 16 euro per share, at minimum of the price range.
Isagro, on the other hand, stands out among the best stocks, +5,5% after the accounts.
