Italy and Spain make no mistake: austerity can play tricks on you. And it doesn't get you far anyway. This is the concern that emerges from the New York Times today, May 24, which gives great prominence to a scoop on a background of the confidential summit of the 17 members of the eurozone on May 6 last. “The Greeks – reads the US newspaper – were resigned to being scolded by the usual Germans for delays and failures in the process of privatization and tax reform. But, to their surprise, the strictest were Italians and Spaniards, literally enraged by the behavior of Athens". According to the NYT source, present at the meeting, the "peripherals" (sic) "launched themselves against the Greeks, accusing them of transmitting the contagion in their countries with their shortcomings". The moral, concludes the newspaper, is that the conflict no longer opposes Southern Europe to the stronger areas of the North, but there is a Europe clinging to austerity which seeks to "close the door to the contagion of recession" and which responds more to dictatorship of the bond markets rather than the choices of politics or of the ECB itself. But it should be explained to Giulio Tremonti and the socialists of Madrid, concludes the New York Times, "that financial history teaches us that it is not possible to reduce the deficit with cuts in times of recession". Perhaps, however, it would also be necessary to explain it to the lords of the markets, i.e. the large Anglo-Saxon financial realities which, with the regularity of a farmer, move away from the share lists every May to speculate on BTPs, Bonos and the like. Calling for austerity, of course.
MOODY'S AX ON THE CITY
The news, anticipated by Sky news in the Australian edition, caused a slowdown in financial stocks in Sydney. The Moody's rating agency is preparing to make public a report dedicated to the British banking sector during the session. The result is the downgrading of 14 companies, including credit institutions and related real estate groups. A retrocession linked to the reduction of the public guarantee on the banks in question. It's easy to foresee another difficult day on the banks of the Thames.
BLACK MONDAY: TURNOVER?
Asian stocks reversed course in the second session of the week. With the exception of the Shanghai Stock Exchange (-0,68%), the eastern markets recorded positive closures: the Nikkei 225 (+0,01 at seven this morning, Italian time), the Hang Seng of Hong Kong (+ 0,50%) and the Korean Kospi (+0,2%). But the weight of the consequences of Black Monday will only be understood when the lists of the Old Continent, the real hotbed of the crisis, are opened. Just an episode or a turnaround? Yesterday evening, after closing Black Monday, many operators improvised flash polls to capture the mood of the square. Bear signals prevailed, while negative news from US stock exchanges followed one another. Too many indications, after all, went in that direction: S&P's warning on Italy, which yesterday evening let it be known that it could also soon revise the outlook of Enel and Terna, given that the revision of the opinion on the country could "have an negative on the creditworthiness of Italian utilities”; the ballet of spreads on BTPs and Bonos, not to mention Hellenic bonds; the rumors about the holes that the new administrators will find in the Spanish public accounts. Not to mention the macro indications arriving from China, which is slowing down the pace, and from the USA. And of the political vacuum of Europe: Zapatero almost unseated, France under the shock of Strauss Kahn, Italy engaged in scuffles of various kinds and Belgium, without the government for more than a year, destined to suffer the next warning, this time by by Fitch. In short, a difficult scenario that has given wings to the Swiss franc, the most effective "pill" to appease the anxieties of investors. Gradually the "catastrophist" party took over. Also because the fall in the price lists, starting from Piazza Affari (a clear decline also taking into account the effect of the detachment of the coupons) is one that leaves its mark. In this context, weighed down by Banca Intesa's capital increase, it is not difficult to predict that other “black” days will come. Especially between now and mid-June, unless the emergency pushes the countries of the Eurogroup to speed up the examination of the Greece dossier, which in any case took a big step forward yesterday evening with the passing of the law for the privatizations. It is by no means excluded, the optimists reply in this regard, that some elements of the market puzzle will fall into place in the coming weeks. Starting from the United States, which is already suffering from the effect of the end of quantitative easing up to Europe, "sentenced" once again to find a solution, albeit partial, to the Greek syndrome. The Stock Exchange landslide, which probably won't remain an isolated episode, could therefore prepare the ground for a sales season for those who know how to move in a timely manner. It is by no means excluded that, in July, the price list will not find sufficient oxygen to reverse course. Perhaps driven by the satisfactory outcome of the bank stress tests. Until then it's easy to dance.
AIG, THE US TREASURY RECEIVES 6 BILLION FROM THE MARKET
Despite the recovery in the final, both the Dow (-131 points) and the Nasdaq (-44 points) and the S&P 500 (+16) closed in negative territory. But, despite the negative tone of the price lists, the Treasury has decided to proceed anyway to fix the price of the mega placement of Aig, the insurance giant overwhelmed by the subprime crisis. Today, in fact, the terms of the operation will be communicated: the price should fluctuate between 29 and 30 dollars, below the initial expectations of the Treasury (which will in any case make a big deal). The operation, in fact, will involve a total value of 9 billion dollars for the 300 million securities offered (200 million by the US government, the rest by the company). The forecasts are positive; the whole package has already been optioned, and it is not excluded that the offer will be increased by another 45 million shares.
AND 7,5 BILLION FROM MARCHIONNE
The collapse of Fiat (-3,38%) and Industrial (-3,14%) saved Banca Intesa (-2,71%) from the burden of being the worst blue chip on the day of the debut of the increase in capital. But Sergio Marchionne was in such a good mood that he was in the mood to be courteous: this morning, anticipates the Wall Street Journal, Sergio Marchionne will officially announce the repayment of the 7,5 billion dollars received by Chrysler from the US and Canadian governments. The occasion will be a visit by Ron Bloom, the White House adviser for the auto sector, to the Sterling Height plant in Michigan, where the Chrysler 200 is assembled.
BREMBO, LUXOTTICA, EUROTECH: THE SHOPPING CONTINUES
The operation is not the most significant because the purchase of 75% of Argentina's Perdriel is worth only 3,3 million euros. But the Brembo-branded operation has a precise strategic value because it marks a new step in the growth strategy of the multinational brake company in the South American market, with an eye to the uninterrupted expansion of Brazilian demand. Luxottica also looks to South America, yesterday bringing forward the exercise of the call option for the purchase of 97% of Multiopticas, which owns 470 stores in Chile, Peru, Ecuador and Colombia. Eurotech, on the other hand, did targeted shopping in California, purchasing Dynatem. In short, even on a day of extraordinary pessimism in Piazza Affari, under the weight of the negative outlook of S&P, the strengthening of the fourth capitalism of our house continues, determined to consolidate its international bases. The Stock Exchange, for now, has not noticed it. Who knows tomorrow.
