“The euro is irrevocable”. Almost five years after the famous "whatever it takes", Mario Draghi is back on the field. Against internal enemies (see Marine Le Pen) and external enemies (Donald Trump's America), but also against the leaders of Euroland looking for shortcuts (the president of the ECB doesn't like a two-speed Europe very much) or launched at head down, like Wolfgang Schaeuble, against Quantitative Easing.
On the contrary, the very policy of the ECB has made possible a robust recovery of the European economy (better than the USA in the fourth quarter of 2016). From this point of view, the situation is better than in 2012, but the next European electoral season weighs on the spreads in the Eurozone (the BTP/Bund gap has risen to 200 basis points, the highest since 16 October 2014). In addition to two boulders: Greece (probably insoluble problem) and the crisis of our banks. And so the Italian financial market has once again become a playground for international speculation aiming at the weakening, or worse, the crumbling of Europe and its institutions.
WALL STREET FLAT, OIL DOWN: ENI -2%
Meteo Borsa, as it hasn't happened for some time, is once again focusing on the Eurozone. Donald Trump, busy fighting against the judges, gives up the cover titles for a day.
Weak Asian stock exchanges, prices rise (and yields fall) of bonds: the Japanese 0,085-year trades at 0,4% . The Tokyo Stock Exchange falls by 0,3% under pressure from energy stocks. Hong Kong and Shanghai were also down, both -XNUMX%.
Seat in pale red for the American lists, conditioned by the drop in crude oil. From today the quarterly campaign is back to life. The Dow Jones index fell by 0,09%, the S&P 500 by 0,21%. NASDAQ -0,06%.
Mario Draghi's words in support of a united Europe, with an implicit promise to continue the current expansionary monetary policy, pushed the dollar higher, reaching 1,074 against the euro last night. This morning the cross is 1,071.
The increase in political risk helps to lift gold, which reached its highs in the last three months last night, to $1.235.
IMMIGRANTS: APPLE AGAINST TRUMP
Spotlights turned on today on the San Francisco Court of Appeal, which will rule on the White House appeal against the suspension of the anti-immigrant decree. The big names in technology, starting with Apple (+1%) and Alphabet (+0,2%), have announced full financial and legal support against Donald Trump's decision.
Respect for civil rights does not imply similar attention for those of minority shareholders. Snap, the new economy company that is preparing to land on Wall Street with a 3 billion dollar IPO, intends to place securities without voting rights.
Crude oil prices are down: Brent at 55,7 dollars, Wti at 53,01. The increase in the production of US shale oil has canceled the effect of the new tensions between Iran and the US. Down ConocoPhillips (-0,67%), Chevron (-0,52%) and Exxon (-0,23%).
Net decrease for Eni in Piazza Affari (-2%). Saipem closed 1,5% down, eliminating the morning's gains after the American broker Jefferies had raised its judgment to Buy from Hold, with a target price of 0,6 euro from 0,43 euro.
THUD IN MILAN (-2,2%), THE SPREAD BEYOND 200 POINTS
The specter of the spread is once again hovering over Europe. The storm unleashed by Marine Le Pen's program spread from Paris to Spain, but the epicenter of the crisis was, as usual, the Italian market, weakened by the banks. The Milan Stock Exchange closed Monday's session with a marked drop of 2,2%, to 18.694 points, the worst performance in the Old Continent.
The tensions on the Italian market also made themselves felt on the other markets: Paris lost 0,98%. Negative session also for Frankfurt (-1,22%), despite the leap forward in industrial orders, which grew by 5,2% in December, up sharply compared to the +0,7% expected and clearly recovering after -3,6 .XNUMX% in November.
London closed trading at -0,22%. The weakening of the pound following the Brexit referendum weighed on Ryanair's net profit. The queen of low-cost airlines pays the bill for London's divorce from the Union seeing its profit drop by 8% in the third quarter of the 2016-2017 financial year despite the significant increase in traffic (+16% to 28,8 million of passengers in the last quarter).
Day of passion for the debt market. The differential between German public bonds and the Spanish Bonos rose to 141 basis points, while the spread with French bonds exceeded 76 basis points, the highest for 4 years now.
The effect on BTPs is no less serious. To find a value of the spread between 202,5-year BTPs/Bunds higher than the current levels (2014 basis points yesterday's peak) we need to go back to October 2,40. The rise in yields continues in parallel with the widening of the spread, causing the ten-year up to 2015% (new high since July 3,50) and thirty-year over XNUMX%.
In this context, the forthcoming revision of the Italy rating by Moody's, scheduled for next Friday, is worrying.
BUT MACRON IS LEADING IN THE POLLS IN PARIS
In addition to Mario Draghi, the governor of the Bank of France, Villeroy de Gallliau, took the field against the possibility of France leaving the single currency. “The idea of abandoning the euro and devaluing one of our currencies to be free to run more deficits – he wrote in an article in Le Figaro – overlooks the fact that France's debt financing would become significantly more expensive: more than 30 billion euros a year”.
According to polls for the April elections, Marine Le Pen leads the first round with 25,5% ahead of former minister Emmanuel Macron. But Macron should win the ballot with 63% against 37%.
SALES ARE RAINING AT UNICREDIT, BUT BROOKERS ARE POSITIVE
"Does Italy's financial future rest on Unicredit?" asked the Financial Times this morning, underlining the stakes: "The 13 billion increase could restore confidence both in the bank and in the whole country". In truth, the start was not brilliant, also due to the unfortunate coincidence with the turbulence in the European financial sector. Unicredit thus lost 6,8% on the day the capital increase was launched. The stock closed at 12,21 euros, the law did worse (-18,85% to 10,59 euros). Savings shares marked a final price of 40,98 euros (+9,87%) but on very modest trading: only 876 shares changed hands.
Meanwhile, the price reviews of the brokers are arriving. Equita Sim, for example, adjusted the target price to 16,4 from 34,9 euros, confirming the buy rating, to consider precisely the detachment of the rights to the increase. Experts recall that the bank has reached an agreement with trade unions, which could increase the visibility of cost cutting. Buy also from Icbpi and Banca Akros. The first corrects the previous target from 29 to 14,5 euros. Akros has risen to 18,8 from 32 euros.
The other stocks in the sector are in negative territory. Intesa -2,4%, even if Natixis strengthened the Buy rating, readjusting the target price to 2,80 euros from 2.70 euros. Heavy losses of the former Popolari: Ubi -5,4%, Banco Bpm -5,8%, Pop.Emilia -5,7%.
Generali fell by 2,3%. Other insurance companies also lost share: Unipol -4,9%, UnipolSai -3,8%.
RAIN OF BUY FOR TELECOM ITALIA AND VOLA CNH
The day in Piazza Affari was not all to be thrown away, as it also held pleasant surprises, starting with the Telecom Italia conference call (+1,4%), dedicated both to the results and to the business plan up to 2019. The group of the telecommunications companies closed 2016 with a double-digit increase in Ebitda, after having achieved in just nine months of 2016 all the 600 million cost cuts expected for 2018.
Positive response from brokers. New Street Research raised the target to 1,25 euros, confirmed the Buy. Mediobanca brought the target price to 1,34 euro from 1,23 euro, confirming the Outperform rating. Deutsche Bank brought the target to 1,25 euros. Bloomberg's updated consensus sees 22 buy suggestions out of a total of 37 analysts. Average target at 1,01 euro: at the beginning of the year it was 0,97 euro. Jefferies' judgment also rises to buy.
Even more brilliant Cnh Industrial (+3,1%). The stock was driven by rumors about the possible sale of the construction machinery division, a move that would allow the Agnelli family group to focus on tractors and agricultural machinery. Exor fell by 1,5%, FCA -2,4%. Better than the Ferrari market (-1,39%). Banca Imi raised its target price to 72,1 euros, confirming the buy recommendation.
CITIGROUP RAISES FERRAGAMO'S TARGET
The other industrialists were weak: Leonardo lost 3,2%, StM -0,9%, Prysmian -2,9%. Reductions also widespread among Luxury stocks. Ferragamo -1,9%: Citigroup adjusted its target price to 30 euros from 26,50 euros, while Kepler-Cheuvreux pushed it to 29 euros from 27,50 euros. Luxottica-2,2%, Yoox -2,3%.
