“The only certainty is that the calm in summer is now behind us”. This is how the Financial Times presents the financial week that kicks off this morning, marked by the leaders of the central banks and by the growing hostility between the two sides of the Atlantic, divided by the fines inflicted on Apple and Deutsche Bank. Last but not least factor of instability, the duel for the White House in view of the vote of 8 November, on which moreover weighs the shadow of the bombs in Manhattan. But the most delicate aspect concerns the prospects of the Italian Stock Exchange, hit on Friday by a sort of perfect storm in which Italy's political uncertainty in view of the constitutional referendum, the disappointing data arriving from the real economy and the tensions on the bank front which caused, among other things, the umpteenth collapse of Monte Paschi.
CHINA REOPENS UPWARDS, TOKYO CLOSED. THE OIL RISES
AC start of financial week in Asia. Today and next Thursday the Japanese price lists are closed for holidays. Due to technical problems, the Sydney Stock Exchange (-0,3%) opened an hour and a half late. Chinese markets reopened after a four-day holiday for the early autumn holidays, Hong Kong climbed 0,6%. Shanghai (+0,5%) and Shenzhen (+0,8%) are also on positive ground.
Oil prices rose this morning: both Brent traded at 46,59 dollars a barrel and Wti, above 43 dollars, recorded gains of around 2% under the pressure of the declarations arriving from Venezuela: the price agreement, according to President Nicolas Maduro, it is a matter of days. The violent clashes in Libya, which made it impossible to resume exports, are weighing on the market.
THE FED DIVIDED ON RATES: 9 HAWKS AGAINST 8 DOVES
Will US rates rise? “Not before 2017,” Steven Seagal, the popular star of so many action movies, confidently replied in an interview in Moscow, while waiting to receive an award in Kyrgyzstan. The opinion of the actor, perhaps intending to follow in the footsteps of Schwarzenegger (and, why not?) of Ronald Reagan, coincides with the opinion of many financial reports on the eve of the most important appointment of the week, which is the Federal Reserve meeting: Wednesday evening it will be known whether the American Central Bank has decided to postpone the rate hike (the most popular forecast, supported by 85% of economists), or whether, also on the back of the increase in the inflation recorded on Friday evening, the board will have decided to break the delay.
Judging by the interventions in recent days, the Fed seems more divided than ever: 9 members declared themselves in favor of an increase, 8 consider such a decision premature and dangerous. Atlanta Fed President Dennis Lockhart, opposed to an increase in the cost of money, expects a "spirited discussion".
The words of Janet Yellen and the outlook that will accompany the press conference will count even more than the decision on rates: the markets want to understand if and with what conviction a rethinking of monetary policies is underway, including less attention to the performance of share prices . The feeling that the central banks want to gradually change course has already caused the increase in the yield of the German Bund last week, back in positive territory, of the US T bond, and put the Btp spread under pressure.
TOKYO DEFENDS NEGATIVE RATES, OSLO CUTS THE COST OF MONEY
Also on Wednesday, Haruhiko Kuroda's press conference will be held following the Bank of Japan meeting. The most authoritative Japanese newspapers forecast that the BoJ will reaffirm the validity of the negative interest rate policy, albeit with some corrections that could alleviate the problems of pension funds, hit hard by yields below zero. The expansive policy has produced some results (GDP +0,7%, unemployment at its lowest), but inflation is floating around zero.
The task of Oeystein Olsen, governor of the Norwegian central bank, is much less complicated. Yet, at next Thursday's meeting, he could be the only one to intervene on rates with a quarter point cut to curb the revaluation of the crown. In reality, however, Oslo has various options available, thanks to the enviable public finance situation (the sovereign wealth fund has assets of 890 billion dollars), the trend in inflation (+2,5%, in line with objectives) and an unemployment rate of 3,1%. Furthermore, Norway wants to avoid the fate of Sweden and Denmark, the country that has been practicing negative rates for 5 years (world record), a policy that has exploded mortgages and the real estate market with dangerous effects for the balance sheets targeted by Basel.
USA AND BRUSSELS COMPARISON ON DUTIES AND FINES
In a New York sealed off after Saturday's attacks in the Chelsea district, the annual UN assembly opens today, in the presence of Barack Obama, dedicated this year to the theme of refugees (21 million) around the planet . US Treasury Secretary Jack Lew and EU Competition Commissioner Margrethe Verstager meet today. Many themes on the table (including Apple). The informal summit of the Foreign Affairs Council will be held in Bratislava on Thursday on Ttip and Ceta.
The ECB's economic bulletin will be released on the same day. Mario Draghi chairs the Esrb conference in Frankfurt. Italy's economic data for 2015 will be announced on Friday. The PMI manufacturing and services indices for the euro area are also on the agenda.
TODAY THE DIVIDEND OF ENI AND STM. MEDIOBANCA QUARTERLY COMING SOON
On the corporate front, it should be noted that Eni and Stm have released their dividend today. Bologna Airport and Technogym enter the FTSEMib Mid Cap Index. The Mediobanca quarterly is scheduled for Wednesday. On Wall Street, however, an appointment with the accounts of Fedex, the shipping giant that has absorbed the Dutch TNT.
APPLE SUPERSTAR SAVES WALL STREET, MILAN -5,6%
The past week was dominated by Apple's rally. The Apple stock, galvanized by the extraordinary success of the iPhone 7 (on sale since Friday) scored an increase of 11% to 115,57 dollars, the highest increase since October 2011. Even Europe, where the smartphone it will be sold within days (but deliveries will be slowed down by the absence of pieces, because the boom has also caught the Cupertino-based company off guard) and is recording a record number of bookings.
Apple's run allowed US stocks to close last week with a modest gain: S&P 500 +0,5%, Dow Jones +0,21%. Better the Nasdaq (+2,3%). Negative, also due to the collapse of Deutsche Bank (-8,5% after the request for 14 billion dollars from the US Department of Justice) the balance of European lists, down by 2,2% during the week.
Things went much worse in Milan, which restarts today after a drop of 5,6% in the last five sessions (-2,4% on Friday). To find a worse week, you have to go back to the end of June, to the week of the British referendum, when the index lost 7,2%. In addition to the banks, heavy losses were recorded by Saipem (-13,1%), Unipol (-10%) and Generali (-9,3%).
THE AUCTION ON PIONEER (UNICREDIT), POSTE AND CDP UNDERWAY TODAY
The worst title of the week was Unicredit (-15,3%) ahead of other institutions with double-digit losses: Monte Paschi -13%, Ubi Banca -12,6% and Mediobanca -10,1%. Today the suitors to buy Pioneer will have to present their offers. Envelopes are expected from Aberdeen, Allianz, Amundi, Axa, Franklyn and Australia's Macquarie.
But in pole position should be the consortium between Poste Italiane, the associated Anima Holding and Cassa Depositi e Prestiti (large shareholder of Pt), ready to participate in the auction with a company set up ad hoc. The intervention of the Post Office could avoid the risk that one of the major Italian asset management companies, with a portfolio of 230 billion (including the second concentration of government bonds in the euro area, led by Italy) ending up in foreign hands on the eve of a stormy season.
Unicredit CEO Jean Pierre Mustier intends to obtain no less than 3 billion from the operation, essential to significantly reduce the capital increase. According to analysts, Poste Italiane can afford the operation without compromising its current rating.
MPS: GREEK SOLUTION ON BONDS, A BRIDGE LOAN FOR NPLs
The week of the changing of the guard at the top of MPS ended with a disastrous ending: the stock, under fire for the entire session on Friday, closed with a drop of 9%, for a market capitalization that had fallen below 600 million. In collapse, partly to be linked to the bad day of the European banking sector, it was partly due to the rumors about the voluntary bond-share swap, an operation that will be proposed again to the holders of Monte Paschi subordinated bonds which total a total of 5 billion euros.
A similar manoeuvre, which could significantly reduce the amount of the increase, was implemented in 2015 on the Greek Eurobank under the direction of Mediobanca. Meanwhile, the organization of the bridging loan managed by JP Morgan, Citigroup and Mediobanca itself continues for the securitization vehicle of non-performing loans, as confirmed by the CEO of Quaestio Paolo Petrignani.
