“Europe must learn to rely only on itself”. This is how Angela Merkel summed up yesterday, in an electoral demonstration in a Munich beer hall, the result of the confrontation with Donald Trump at the G7 in Taormina. "It is in our interest to have good relations with the United States, as well as with Great Britain and, if possible, with Russia - she added - but we must be aware that our destiny is only in our hands". In short, something has broken in the special relationship with Washington and the Chancellor has taken note of it.
The reaction of the American president was completely different. "The trip - he tweeted - was a great success: America is stronger today". But the contradiction is only apparent: America and Germany are on the verge of a tough confrontation. The US is preparing to denounce the Paris climate agreement and to oppose the import ("very bad") of "made in Germany", as well as presenting the bill for defense expenditure.
Angela Merkel, on the other hand, who today will sign important commercial agreements with the Indian president Modi, intends to speed up the pace and methods of European integration, leveraging on the new-found axis with Paris. News that, seen from Italy, hide more than one unknown factor in view of the next events, from banks to finance.
ASIA LITTLE MOVE: US, LONDON AND CHINA STOCK EXCHANGES CLOSED
In this climate, the markets are about to experience a half-opening. Wall Street is closed today for the Memorial Day holiday. Chinese markets are also on holiday. Finally, London is closed for the Bank Holiday.
Asian stock markets opened little moved this morning: both Tokyo and Hong Kong recorded slight increases, favored by the good closing of the US Stock Exchanges on Friday but held back by the weak performance of oil stocks. The Korean Stock Exchange is also in positive territory: the umpteenth launch of a missile by North Korea has not slowed the rise.
Despite the vacation in London, the spotlight is on the pound, which is falling sharply on the markets while Theresa May's lead in the polls is shrinking. On Friday 2 June, Moody's will update the rating of the United Kingdom, a highly anticipated report card after the slowdown in the economy in view of Brexit.
RUSSIAGATE, BRAZIL AND A ROCKET FOR ELON MUSK
During the week, Trump will still be in the crosshairs of Russiagate, which has now invested his son-in-law Jareed Kushner, who, according to the latest revelations, wanted to establish a confidential channel of communication with the Kremlin after the lessons. In this context, the financial markets suspect that Trump's reforms are destined to mark time. And it won't be easy to get the yes from the federal budget, which provides for drastic cuts in health care, either. The tension argues in favor of the old saying "Sell in May and go away", also because there is no lack of clues on the cooling of the economy. Much will depend on the response of the Beige Book, the thermometer on economic performance due out on Wednesday, and on the employment data to be announced on Friday.
Even on Wall Street, attention will be focused on Elon Musk's latest venture: Space X will be launched in the group stage, the new spacecraft designed by the founder of Tesla, a prototype which, in the tycoon's intentions, should make the commercial exploitation of space.
Also noteworthy was the meeting of the central bank of Brazil, which on Wednesday could raise rates to curb the bleeding of capital triggered by the new political crisis following developments in the investigations into corruption by President Michel Temer.
SPOTLIGHT ON DRAGONS, WAITING FOR BANKITALIA
Great expectations in the Eurozone today for Mario Draghi's speech in the European Parliament, a few days before the meeting of the ECB directorate. No substantial changes are foreseen for the occasion, but a change in the tone of communications in the face of signs of improvement in the European economic situation cannot be ruled out. In this regard, the forthcoming data on the trend in employment will be decisive: a drop in the number of unemployed is expected from the current 9,5%. On the macro front, the release of the PMI manufacturing indexes in Italy, Germany and France on Thursday should also be noted.
Spotlights on the traditional end of May event in via Nazionale. The meeting of 31 May this year is particularly awaited. Not only because they will be the last "reflections" of Ignazio Visco's first mandate, in view of his (not obvious) renewal. But above all, the governor will have to address the two hottest topics: the banking crisis and the public finance scenarios that are looming with the near end of Qe.
MPS, THE SOLUTION IS NEAR. BANKS COME ON STAND BY
The most urgent dossier concerns the Veneto banks, an increasingly bitter chapter for the bondholders of Popolare Vicenza and Veneto Banca, despite the fact that Minister Pier Carlo Padoan has ruled out the bail-in. ABI statistics show that the bad debts of the system are returning "close to pre-crisis levels: the deterioration rate reached 2,3% at the end of 2016 (it was 3,3% at the end of 2015), falling to the level of 2008 and significantly departing from the negative peak (6%) reached during the recessions of 2009 and 2013”. But it is little consolation, while the hunt for the billion continues which, according to Frankfurt, private individuals will have to pay before the EU gives the go-ahead for the recapitalization of the two institutions. Banca Popolare di Vicenza and Veneto Banca have asked Atlante for a new recapitalization intervention.
Meanwhile, within the week, however, the green light should arrive for the capital increase of Monte dei Paschi, which will end up under the control of the Treasury. Alongside this operation, the securitization of non-performing loans for 27 billion will begin, which will be taken over, at about 20% of the value, by a vehicle participated by Atlante, by Fonspa and by the Fortress fund. The consortium will then be strengthened by the sale of a part of the Npl to Elliott partner (guarantor of the AC Milan purchase operation), while 3,3 billion Gacs, i.e. securities that enjoy the guarantee of the Treasury, will end up on the market.
GOVERNMENT BONDS: RECORD OFFER FOR ITALY, FRANCE AND SPAIN
In this context, the Treasury auctions at the end of May come alive today, in a crowded market (challenging issues from France and Spain are expected). 6 billion Bots will be assigned in six months against the same amount due. Last Friday, on the Mts gray market, bonds maturing on November 30, 2017 recorded a return of -0,351%, down from the -0,326% at the end of April, a new all-time low. But the key appointment will be Tuesday 30 May with the offer of between 6 and 7,5 billion Btp at 5 and 10 years and the Ccteu October 2024.
Last week, the yield on the 10-year BTP dropped to 2,08% from 2,12% the previous Friday. The Bund fell to 0,33% from 0,36%. Spread at 175 odds.
MINORITIES ON THE FOOT OF WAR AGAINST LACTALIS
Fiery meeting expected today in Parmalat. At the request of the Amber fund, with a 4% stake, and other minority shareholders, the meeting will have to rule on the request for liability action against the Board of Directors in office from 2010 to 2012 for the damages caused by the decision to entrust the management of liquidity in cash pooling to the controlling shareholder Lactalis. The two main proxy advisors, Glass Lewis and Iss, have ruled in favor of the request which, easy to predict, will not be approved, given that Lactalis controls just under 90% of the capital despite having missed the threshold that would have allowed the delisting.
BREMBO SHARES SPLIT, EXOR AT SHAREHOLDERS' MEETING TOMORROW
The Piazza Affari calendar also includes today's split of Brembo shares: 5 new shares will be issued for every one outstanding.
On Tuesday 30, however, the meeting of Exor, the holding company of the Agnelli group, will be held. Meanwhile, the dividends of Astm (0,25 euros), Beni Stabili (0,033), El.en (0,4), Nice (0,1), Sabaf (0,48) and Tamburi (0,069) are being paid. The quarterly publications of: Chl, Itway, Axelero are out.
During the week, the "handle" arrives in the Chamber for the vote (it will then be passed to the Senate). The government is likely to raise the question of trust.
The final word should also be written on the Ilva chapter on Tuesday. After the commissioners have expressed their preference for the Arcelor Mittal-Marcegaglia bid, the Minister of Economic Development is expected to proceed with the official award. The game seems closed but the rival consortium, Jindal-Arvedi-Cdp and Del Vecchio, would have made a last minute offer, with the willingness to put 600 million more on the plate than the original proposal.
The Milan Stock Exchange closed a negative week, with the FtseMib index losing 1,7% in five sessions, weighed down by the decline of the banks and Eni which, under the pressure of the drop in oil (-3,3% Brent), left 3,8% on the ground. The worst stock was Salvatore Ferragamo (-12,8%), ahead of Generali (-5,8%) and Intesa (-3,9%), which however detached rich dividends.
