The first real test by fire for the new president's economic policy arrives 15 days after Donald Trump's inauguration in the White House: the data on the labor market which will be announced today. Strongly growing numbers could convince the Fed to raise rates earlier than expected, as already anticipated by the Central Bank's minutes. But yesterday's statistics did not offer much light, with the result favoring the sharpest drop of the dollar in recent months (from 1,048 to 1,060) accompanied by other side effects: gold (+1,7%) marks largest one-day gain since September; the sharp rise in the yield on the T-bond (from 2,35 to 2,41%) which was also reflected in European government bonds and Eurozone spreads (Bund/Btp up to 171 points).
But these movements take a back seat to the prospect of a currency war. Mexico, under the fire of Trump's provocations (after pressure on Ford and GM, yesterday it was Toyota's turn, strongly advised not to build a new plant in the country) went on the offensive yesterday. Mexico's central bank sold at least $1 billion in US currency during morning trading.
The central bank's director of domestic operations, Juan Garcia, confirmed the selling, adding that it would continue throughout the day but did not specify the amount. Thus began a dangerous game, the fruit of rampant protectionism. What will happen if Beijing, another target of Trump's attacks, follows the example of the Bank of Mexico, among other things led by Agustìn Carstens, one of the most respected bankers who will pass the presidency of the Basel BRI in July? It will be, predicts Martin Wolf, chief economist of the Financial Times, the beginning of the end of Western leadership of the global economy.
CHINA DEFENDS THE YUAN AGAINST THE ENEMY TRUMP
Muted departure, this morning, for the markets. But forecast Stock Exchange predicts great excitement starting at 14, when the US data will come out. The dollar slows down, the Tokyo Stock Exchange slows down (-0,4%). Conversely, the yuan rose to 6,7833, following the intervention of the Central Bank on the Hong Kong interbank market which discouraged speculation on the Chinese currency: Beijing wants to prevent the exchange rate from exceeding 7 before January 20, the date of inauguration of the enemy Trump in the White House.
AMAZON ROUTES OLD TRADE: MACY'S -13,9%
Contrasted session of the US markets: the Nasdaq rose by 0,2%, to 5,487.94, less than one point from the all-time record. The Dow Jones (-0,21%) fell to 19,899.29 points, slightly down the S&P 500 (-0,08%).
New jobless claims fell to an eight-week low at 235.000, but new private sector jobs (153) came in less than expected.
On Wall Street the overtaking of electronic commerce took place: Macy's (-13,89%) and Kohl's (-19,02%) collapsed after the disappointing balance of Christmas sales; Amazon triumphs (+3,07%).
OIL, ARABIA KICKS OFF THE CUTS. ENI STRONGER IN EGYPT
Oil ups and downs. Brent is traded this morning at 56,89 dollars (-0,8%, +3,1% weekly change) after the sharp increase in US inventories.
Saudi Arabia cut production by at least 486 barrels a day to 10,06 million barrels in January, adhering to the limits set by the producers' agreement.
At Piazza Affari Eni -0,3%. Wednesday's meeting in Cairo between the president of Egypt and the CEO of the six-legged dog Claudio Descalzi, for Banca Imi (rating buy, target price at 17,4 euros) represents confirmation of the group's 2017 production objectives . For Equita, the company could announce in the first part of the year the disposal of a share of Area 4 in Mozambique for 1,7 billion euro. Tenaris -0,17% despite Bernstein increasing the target from 18 to 20 euros (outperform).
EUROPE: FLAT BAGS, RAIN OF DEBT SECURITIES
There is a climate of anticipation for European equities, which put a little eventful session in the safe pending the data on US jobs. Milan closed at 19.643 points, up 0,08%, positive like Madrid (+0,18%). Just below parity Frankfurt (-0,1%), Paris (-0,13%) and London (-0,03%).
Eventful day on the Italian secondary market, conditioned by the abundant supply of new securities in the euro area. The spread between the BTP and the Bund stood at 169 points (with a peak of 171, the highest since mid-December) and the ten-year rate at 1,94% from 1,88% at the last closing (during the session the gap widened to 1,99%).
The yield gap between Italy and Spain widened to 47 points: yesterday Madrid placed medium-long term bonds for 4,1 billion at rising rates. France has offered four OATs, including a 50-year bond, for an amount of 9,5 billion. The Italian mid-month auctions will also start next week: on 11 January the Treasury will offer 7 billion 12-month BOTs against 7 maturing.
BPM BENCH, THE RACE RESUMES. NORGES BANK HAS 3,64%
The banking sector is still lively in Piazza Affari (+0,7% the sector index). Banco Bpm rises again, with a leap of 3,75% which brings the overall increase of the first four sessions of 23 to almost 2017%, in which more than 10% of the capital was traded. Many investors are repositioning themselves by betting on the forthcoming new control structures of the third largest Italian banking group.
Among institutional investors, Norges Bank controls 3,64% of the capital. BofA Merrill Lynch started hedging the stock with a buy (confirming the previous recommendation of the two stand-alone banks) with a target price of 3,4 euros citing the potential synergies of the new banking entity and capital flexibility.
Good increase also for Finecobank (+2,2%) while the big Intesa and Unicredit limit the increases to 0,7% and 0,4% respectively. Weak Generali (-0,6%): Ubs raised its target price on the stock from 14,4 to 15,7 euros (rating buy), while JP Morgan confirmed its overweight recommendation. S&P Global Market Intelligence instead reduced the judgment from buy to hold.
MEDIOBANCA: “IT'S AN OPPORTUNITY FOR FCA TRUMP”. THE TARGET RISES TO 12 EUROS
The automotive sector is in the spotlight. Cnh scores a 3% increase. Brembo also rose (+1,2%). Fiat Chrysler limits the increase to 0,7%, easily absorbing the drop in sales in the USA (-10% in December, third consecutive decline). On the other hand, the situation on the Brazilian market is improving: growth of 2017% is forecast for 4, to 2,13 million vehicles against 2,05 million last year (-20,2%).
Mediobanca Securities rewarded the stock by erasing the uncertainties related to the nomination of Donald Trump to the White House. The beginning of the new presidency does not represent a danger, if anything an opportunity for the group controlled by Exor: M&A scenarios could reopen in the United States, without forgetting that "the sector is on the verge of an epochal change from a technological”, an element that “could lead to a separation between the brands aimed at the mass market and the premium ones in the FCA portfolio”, including Alfa and Maserati.
Despite the recent rise, the shares trade at a multiple of 5,1 times the price/earnings estimated by the consensus and 4 times that assumed by Piazzetta Cuccia. "Should the group reach average levels compared to those indicated in the 2018 guidelines, the p/e multiple at which the stock would be traded would be equal to 2,8 times", calculated the investment bank which raised the rating on the stock from neutral to outperform, with the target price rising from 7 to 12 euros (+71%).
PARMALAT RISES TO 3 EUROS: TAKEOVER OFFER MORE DIFFICULT
The Mediaset meeting will be held on January 18 in London. Strong sales on Telecom Italia (-1,4%). At the bottom of the Luxottica list (-2,9%), down for the third consecutive session. Parmalat rose by 0,33%, to 3 euros, well above the price of the tender offer of 2,8 euros announced by Lactalis.
Fincantieri advanced by 3,5%, expanding the gains of the last few days, pending new developments on the supply front for STX France and the outcome of the takeover bid on Vard. Boom of Cti Biopharma (+18,1%), after the lifting of the clinical suspension already ordered by the Food and Drug Administration on all clinical studies conducted as part of the application for approval of an experimental new drug presented for Pacritin.
