MONTI AT THE CITY IS LOOKING FOR ANTI-BERLIN ALLIES. ON A MISSION IN THE LAIR OF THE RATING AGENCIES
Silence, Monti arrives. Today the City stops to listen the Italian premier who, during his visit to London, will stop at the most important stock exchange in the Old Continent. An abrupt transition from the siege of Roman taxi drivers at Palazzo Chigi to the attention that is usually reserved for the stars of the show. But, above all, an opportunity to reiterate the invitation to Germany to tighten the deadlines on Eurobonds and other measures that could bring down the level of Italian interest rates as soon as possible.
But from Germany, called into question by the Italian prime minister, comes a cold reaction. Says Wolfgang Franz, head of economic advisers to Chancellor Angela Merkel: "Italy can do the job by itself": the time for courtesies is over. Maybe that's not a bad thing.
After Mario Monti's appeal to Germany, launched with the interview with the Financial Times, are the numbers of the Economic Bulletin of the Bank of Italy to confirm, in figures, the need to reduce the cost of money. If government bond yields remain unchanged for two years at the levels of January, reads the via Nazionale report, the GDP will shrink by 1,5% average for this year and will remain unchanged for next year. If, on the other hand, things improve and the spread were to return to last summer's levels, the contraction in 2012 would stop at 1,2% and the product would return to growth by 0,8% in 2013.
However, political tensions, together with the offensive by the rating agencies, did not prevent the markets from experiencing a bull day. The Milan Stock Exchange rose by 0,6%, London gained 0,6%, Paris +1,1%, Frankfurt +1,6%.
The recovery of the euro also continued, rising to 1,275 against the dollar from 1,266 at the previous close. The improvement also continued for our BTPs: the 6,46-year yield fell to 13% (-468 basis points) and the spread with the Bund narrowed to 3,95 points. The two-year bond yield fell to 15% (-4 basis points): it is the first time since September that it has returned below XNUMX%. But the signs of the crisis are still being felt.
In the first ten months of 2011, foreign capital already invested in BOTs and BTPs for 22,1 billion left Italy, compared with net investments of 65,4 billion in 2010. Conversely, residents of Italy almost eliminated net purchases of foreign equities (equal to 3,8 billion, from 41 in the same period of 2010) and disinvested foreign bonds for 24,9 billion. The equity sector benefited from greater confidence, with non-resident investors making net purchases of Italian shares (for 7 billion against 0,7 billion in 2010). In short, the public debt is returning, slowly and with many sacrifices, to Italian hands. In the meantime, increasing portions of Piazza Affari pass into foreign hands. Here is the photograph that emerges from the Economic Bulletin of the Bank of Italy while rating fever is raging.
Yesterday, in fact, the Fitch agency anticipated that it will probably be within the month Italy's credit rating cut, despite the Monti government's action “certainly being useful, serious and credible, but as long as interest rates remain high, there is the problem of refinancing costs”. Yet, underlined yesterday in Parliament Maria Cannata, director general of the Treasury for debt, the situation of the Italian debt "is not explosive". On the contrary. “” We have to get through the next 3 months – she added – and then the appetite for Italian paper will come back. We have to show that the fears are excessive. We have to hold on even if it's a bit of a war against everyone”.
Always Fitch now takes for granted the Greek default. But just yesterday Greece placed 3-month bonds for 1,625 billion euros at a rate of 4,64%, slightly down on the previous auction. More music for medium-term bonds that show a spread of more than 3 points on the German Bund. In short, judging by the rates, default but only in late spring. Meanwhile, Citigroup has canceled Portuguese bonds from the European Bond Index after Standard & Poor's demoted the Lisbon bonds to the junk bond category: the default percentage of Portugal, judging by the CDS trend, is given at 65 percent.
More music on Wall Street, driven by the data arriving from the US economy (in New York the manufacturing index is at a nine-month high), by the improvement in the German confidence index and by the prospect of a drop in Chinese interest rates. Thanks to these factors, the S&P500 +0,4% rises to 1293,4, the highest since July, preceded by the Dow Jones +0,48% and the Nasdaq +0,64%. Treasury yields are just 19 bp off the all-time record. News in sight on the Yahoo! front: one of the founders, Jerry Yang, has resigned.
Since the beginning of 2010 employment in the United States (+2,9%) grew more than in any other G7 country. After all, the USA, together with Canada (+2,4%) and Germany (+1,9%) are the only nations in which employment has increased, contrary to what happened in Japan, the United Kingdom, France and Italy. But the US still lacks two million jobs compared to 2007.
WEATHERBAG. GOOD WEATHER FROM THE EAST, FIRST CLOUDS FROM THE CITY. Wall Street's trend was confirmed by the Asian Stock Exchanges. In Tokyo, the Nikkei 225 index rose by 1,31%, Hong Kong's Hang Seng by 0,30%. The rally was favored by the reassurances of Saudi Arabia on the crude front: the kingdom will guarantee Europe additional supplies after the embargo on Iran. But the push coming from non-European markets may not be enough; after two days of increases, European futures signal a slight decline at the start.
VISCO TO BANKS: MORE FLEXIBILITY ON CAPITAL BY JUNE. On the Stock Exchange, banks, which in theory are the securities most sensitive to changes in the rating of government bonds, did not suffer. Just yesterday the first meeting was held between the heads of the institutes and the Bank of Italy of the Visco era. The capital increases requested by the EBA are on the table. The plans will be regularly presented on January 20, but many things could change between now and June, the date by which the operations must be completed: government bond yields could fall after the full launch of the State bailout fund, and the European council it will take note of this by limiting the requests for the banks.
UNICREDIT, DISCOUNT PRICE. ABU DHABI RISES TO 6,5%. Unicredit rose by 2,8%, supported by the news that Abu Dhabi will increase attendance from 4,99% to 6,5%. In a note, the fund explains that the subsidiary Aabar Luxembourg has launched a series of operations to increase its stake, now at 4,99%. "We intend to participate in the capital increase and will actively support Unicredit's management," said chairman Khadem Al Qubaisi.
Unicredit thus confirms itself as the preferred bank in Europe by Arab investors, representing the main shareholders. Today the first single shareholder of the bank is the Libyan state which through the Central Bank of Libya has 4,6%, to which is added another 2,6% held by the Libyan Investment Authority fund, for a total of 7,2%).
Intesa also recovered, gaining 0,7%. Sales on Ubi -0,7%, downgraded by Santander to underweight from hold. PopMilano is down: -2%.
In Europe, the best sector was the automotive sector (Stoxx +2,4%) despite the 5,8% drop in sales in December. Pirelli goes up +1,4%, Fiat even more +1,9. which also reduced its share in Europe to 6,2% (-15.6% sales for the month). Continue the effect of Goldman report which, for 2012, recommends focusing on the premium sector and on Fiat which, thanks to the merger with Chrysler, is now judged as the third largest US manufacturer.
S&P CUTS ARE COMING: ENI AND GENERALI AFFECTED. In the evening, Standard and Poor's cut Eni's long-term rating (+1,7%) to A, with a negative outlook. Yesterday, the stock recorded a sharp rise both due to the rise in crude oil above 100 dollars a barrel (+1,5%), and due to the re-emergence of the separation from Snam, which leaving Eni's consolidation area would significantly reduce the debt of the six-legged dog. Snam rose by 0,4%. Saipem +0,7%. Utilities were positive: Enel +2,3%, Terna +1,7%.
Standard and Poor's cuts the ratings of Generali, Cattolica and Unipol by one notch, keeping them on negative creditwatch. For Generali the reduction of the credit counterparty rating is to A+ from AA-. For Unipol Assicurazioni the valuation drops to BBB+ from A- and for Unipol Gruppo Finanziario to BBB- from BBB and S&P also mentions the operation on Fonsai-Premafin. Also for Cattolica the rating passes to BBB+ from A-.
In Piazza Affari, Generali moved slightly +0,1%. Falling prices for the protagonists of the nascent Unipol-Fondiaria cluster: Unipol fell by 2,4%, Fondiaria-Sai -4,5%, Milano Assicurazioni -3,9%. Premafin, the Ligresti holding company, fell by 3,1%. Among the mid caps, Indesit (IND.MI) +4,1% and Piaggio (PIA.MI) +2,7% rose.
BANK OF AMERICA LUXURY WARNING: BETTER SELLING. “Selling before the slowdown becomes more evident”. This is the advice that Bank of America today gives its customers on the luxury sector in general. The judgment on the sector is lowered to underperform from neutral, and the recommendation on Tod's -1,3% is similarly lowered. Together with the company from the Marches, Bank of America has lowered the judgment of the Swiss Richemont, world leader in jewellery, from buy to underperform, has lowered Swatch and Lvmh from buy to neutral. These three stocks recorded declines of between 0,5% and 1%.
Seat Pagine Gialle's board of directors ended, but with black smoke, lacking the numbers to reach a definitive restructuring agreement. The company's board will meet again at the end of the month, on 30 January, with the aim of taking stock of the consensual agreement for the financial and shareholding reorganization of the Turin group burdened by 2,7 billion in debt: the agreement restructuring plan will have to be approved by bank credit holders, Lighthouse bondholders and shareholders but also by holders of the 700 million Senior secured bond formally admitted to the negotiation from today. If a restructuring agreement is not signed, in compliance with article 67 of the bankruptcy law, the company's road is marked, with the direction towards the Marzano law.
