Today will be the most bitter day, perhaps the most difficult for Janet Yellen. The president of the Fed will testify before the joint committee of Congress, in front of a republic majority who will accuse him of the low interest rate policy which should have favored Hillary Clinton. Today, on the contrary, there are not a few hawks who hope that she will step aside. Willingly or not. What will Yellen the dove do? Will you take note of the changed political-economic scenario and sanction the December hike which the market now discounts at 94%, or will you emphasize the tightening of financial conditions following the volatility on interest rates, and find other excuses to postpone the decision? The first is good, probably even if there is never a shortage of surprises in this leap year.
CHINA CHALLENGES TRUMP.YUAN AT THE LOWEST SINCE 2008
The advance of the dollar (109,76 against the yen, 1,0698 against the euro) and the T bond supported the performance of the Asian markets this morning despite the weak closure of the US Stock Exchange. In Tokyo, the Nikkei index rose by 0,1%, similar to the change in the Seoul Stock Exchange, Sydney +0,2%.
The yield of Treasury bills ten-year rose yesterday to 2,26%, from 2,22% at the close, a new high since December 2015, this morning it is at 2,20%.
La Bank of Japan announced tonight, surprisingly, a special program of bond purchases, a response to the sharp increase in yields recorded in recent days.
Japanese Prime Minister Shinzo Abe meets with Donald Trump. A first contact between the two leaders divided by the fate of the TPP, the trade agreement between Asia and the United States that the new president does not intend to sign.
The first real challenge for the new US leader comes from China, accused by Trump of unfair competition for foreign exchange manipulation. Pet in response Beijing continues to depreciate the fixing of the yuan, down for ten days- The Chinese currency slipped this morning to 6,8692 against the dollar, the lowest since 2008.
DOW JONES STOP AFTER SEVEN RAISES
They closed Wall Street indexes in red: the Dow Jones (-0,29%) broke a streak of seven consecutive sessions of gains, Down the S&P 500 (-0,16%). On the other hand, the recovery of the Times Square index, the Nasdaq, continues, up 0,36% thanks to the recovery of tech stocks.
After the electoral euphoria, the markets are becoming more cautious also due to the confusion that seems to reign in the formation of the new president's staff. He disappoints the data on industrial production. There was zero growth in October, against a forecast of +0,2%. In September, the final figure shows a drop of 0,2%, against an initial figure of +0,1%. These latest numbers make the reference framework for investors even more confusing: the economic situation does not seem to justify an increase, but, on the contrary, the fear is taking shape that the Fed is aiming for an acceleration on the road to rate hikes, to counter the inflationary effect of the new US president's plans to increase public spending.
Still accelerating the dollar, trading at 1,0670 against the euro (from 1,072 the day before), the highest since December 2015.
Government bond rates have started to rise again. The yield on the 2,26-year Trasury Bill rose to 2,22% from 2015% on Tuesday also to a new high since December XNUMX.
Meanwhile, the diversification of equity portfolios continues: the technology sector, which fell by 3,6% in the days following the elections (the risk of duties on products manufactured abroad weighs heavily) yesterday recovered 0,92%.
The financial performance is the opposite. But despite yesterday's slowdown (JP Morgan -2,5%) the sector still recorded an increase of 9,3% compared to 8 November. In addition to interest rate expectations, the forecast of much less stringent rules on finance contributes to supporting prices. Thus the distance with Europe, increasingly restrictive, widens.
MOSCOW OPENS TO THE OIL AGREEMENT
Oil prices did not move much: Brent at 46,93 (-2 cents compared to the day before) Wti at 45,88 (+0,2%), driven by contrasting factors: on the one hand there are American stocks that have grown more than expected, on the other the efforts to reach an agreement by November 30, the date of the Opec meeting in Vienna. Yesterday the Russian Energy Minister, Alexander Novak, said that Moscow is ready to support the OPEC decision to freeze crude oil production and sees a great chance that an agreement on the issue can be reached by November 30th. The minister added that there is the possibility of him meeting with Saudi Arabia's energy minister, Khalid al-Falih, at a gas conference in Doha this weekend.
Weak energy stocks: Eni -0,6% Saipem -1,3%, unchanged Tenaris.
MILAN IN RED. STANDARD & POOR'S: ITALY WILL START AGAIN IN 2025
European stocks in the red in Wednesday's session.
Milan closed down by 0,71% at 16.560 points, after reaching a maximum for the day of 16 points and a minimum of 803. The tensions in view of the referendum on 16 December contribute to the volatility of the index. '
The performances of the other price lists of the Old Continent are online. Paris lost 0,69%, Frankfurt 0,58%. London 0,56% and Madrid 0,64%.
Lo BTP/Bund spread it returned to above 170 basis points, closing at 173,658 with a yield of 2,034% again above the 2% barrier. The spread with the Spanish 41,5-year bond fluctuated between 46,9 and 43 basis points during the session, closing in the area of XNUMX basis points.
The 50-year Italian issue is among the securities most affected by the downpour of bond sales following Trump's victory: since the placement at the beginning of October (5 billion against a market demand of 18 billion) the loss amounts to 14 %.
They are increasingly complicated relations between Italy and the EU Commission. According to Brussels, Italy's 2017 maneuver risks not complying with the European budgetary requirements, therefore the final judgment whose accounts has been postponed to the first part of 2017. The commission did not formally enter into the merits of the Italian request to separate the expenditure envisaged in the 2017 for the migrant emergency (0,2% of GDP) and for post-earthquake reconstruction (another 0,2%). But Commissioner for Economic and Monetary Affairs Pierre Moscovici acknowledged that "a significant part" of the overrun is attributable to these factors", adding that the Commission will take them into account.
Italy will not return to its pre-crisis levels before the middle of the next decade. This is the forecast of Jean-Michel Six, chief economist for the EMEA area of S&P Global Ratings, who added that the weakness of productivity weighs heavily on the country's economic performance, the only EU country to have not recorded any increase since 2000 For this reason, estimated by Standard & Poor's, the Italian GDP is destined not to exceed +1% per year in the period 2016-2018. in the third quarter of this year above their pre-financial crisis peaks, “a modest figure compared to +4/15% of some Euroland partners”.
GENERALI, THE MEDIOBANCA FEE WILL BE REDUCED TO 10%
Featured today Generali -1,19% also because, with the conversion of the bonds held in MPS, he could come to hold 7-9% of the Sienese bank's capital, "an interesting opportunity" according to Mediobanca Securities.
But the bombshell news is linked to the business plan announced this morning by Mediobanca: the institution, according to the Financial Times, is ready to sell part of its stake in the company to finance its growth plans in new business areas in management activities savings and wealth. Today Mediobanca has 13% of Generali, according to two sources interviewed by the English financial newspaper, this share could be reduced to around 10%, but in the case of large operations, it could decide to go down to just over 5%.
PIAZZZETTA CUCCIA RISES TO 100% IN BANCA ESPERIA
Mediobanca in fact, this Thursday morning it announced an industrial plan to focus on managed savings which provides for the purchase of the stake not yet owned in Banca Esperia: 50% of the company specialized in the management of large estates was paid 141 million euro. The 2016-2019 plan announced this morning expects to reach an operating profit of one billion euros in 2019, +43% from current levels. Return on tangible Equity at 10%. Common Equity Tier 1 at 14%. Mediobanca closed the first quarter of its fiscal year with a net profit of 270,7 million euros, up 10,8% year-on-year also due to the sale of a stake in Atlantia, a sale that generated 110 million euros of capital gain. The consensus expected 155 million euros. Operating profit rose to 314 million euros from 310 million a year earlier, better than expected. Common Equity Tier 1 is 12,53%.
MPS, THE CONVERSION OF THE BONDS WILL START ON THE 28TH
In the banking sector, the spotlights are still on also on the voluntary conversion plan of the bonds Mount Paschi (-2,34%) which the bank intends to launch by the 28th.
There will be two separate offers, one for the public, the other for institutions, but the only difference will be that retail will be able to take a step back from membership in the event of the publication of a supplement to the prospectus. If the offer on subordinated bonds - an operation from which analysts estimate that the bank will raise 1-1,5 billion - were to fail, "it will not be possible to ignore the bail-in" as confirmed by Elke Koenig, number one of the Single Resolution Board, referring to European Union rules imposing losses on bondholders and other creditors in bank bailouts.
Marzotto Sim comments that in the current state of affairs it is impossible for potential participants to quantify the convenience of the offer, as the terms have not been disclosed. It is evident anomaly of a request for exchange in the dark. The most logical and rational behavior of the individual investor would therefore be to wait until the last minute to decide whether to join or not, an attitude which if adopted by the majority could cause harm to everyone. In this contradiction, in our opinion, lies the peculiarity (and in a certain sense the weakness) of the offer”.
Unicredit -4,1%: HSBC confirmed the Buy rating, target price at 2,85 euros. The plan that the bank will present on 13 December should also include the conversion of a portion of the outstanding bonds and a provision of 9 billion euros against non-performing loans. The issue of bonds with underlying doubtful and non-performing loans should be carried out by a company open to the participation of minority shareholders.
Popular Bank -4,2% Pop Bank. Milan -4,7%: Barclays cut the target prices of both banks.
FCA LANCIA STELVIO. TOMORROW AGREEMENT WITH AMAZON
Reacts Fiat Chrysler (+2,21%) after selling triggered by news of a lawsuit against FCA US and Cummins over emissions from certain Ram vehicles, allegations vehemently denied by the group, The stock's rally coincided with two news positive. First of all, the debut at the Los Angeles Motor Show of the Stelvio, the first Alfa Romeo-branded SUV, developed in Cassino on the same platform as the Giulia and which has the same propulsion. It's a new move to snatch US market shares from the big Germans, BMW and Mercedes in the lead. Meanwhile, the production of differentials for the new SUV moments has begun in China,
Much attention has also raised the news that tomorrow FCA will announce a commercial agreement in Italy with Amazon.
THE FERRAGAMO AND TREVI LANDSLIDE CONTINUES
Terna +0,7%: Citigroup has raised its judgment to Buy, target price raised to 4,60 euros. Enel unchanged: Barclays has started hedging with an Overweight assessment, target price at 5,0 euro. Ferragamo -2%: second day of decline after the disappointing quarterly. Trevi -11%, after -19% the previous day.
