Rapidly growing oil on the wave of the possible agreement between Iran and the other major producers. Firm rates, not only in March but at least until the summer. The good news has finally taken possession of the markets, after the big landslide at the beginning of 2016 which, however, promises to be a good buying opportunity.
All markets are rallying. On Wall Street, the Dow Jones (+1,59%) and S&P 500 (+1,65%) rose. Even better is the Nasdaq (+2,21%). The rebound in the oil sector (+2,9%) but also the good data coming from industrial production (+0,9% against a forecast of +0,4%) gave the boost.
Asian price lists are galloping, driven by Tokyo (+2,7%), despite the slowdown in commercial data. Hong Kong advances (+2%) together with Sydney. But the most positive news comes from China: inflation is rising again (+1,8% from 1,6%), confirming the revival of the economy.
Same script yesterday for the European price lists, the first to take off. In Milan, the FtseMib index closed up 2,4%, the Paris Stock Exchange up 2,9%, Frankfurt up 2,7%.
THE FED BRAKES: RATES STILL UNTIL JUNE
Can we talk about a trend reversal? Better to be cautious, judging by the numbers. The S&P index is still down by 5,7% compared to the beginning of the year, while Piazza Affari is slightly less than 20% behind. But the rally is supported by a shower of signals almost symmetrical to the "perfect storm" of the past few weeks.
After Mario Draghi and the Bank of Japan, the Fed took the field. A reading of the minutes of the meeting of the Central Bank on 26/27 January reveals concern over the reaction to the albeit modest increase in rates. Hence the decision to underline that “the timing and pace of the cost of money adjustments will be determined by economic developments”. That is, barring a violent turnaround in the markets, between now and mid-2016 there will be no new increases in the cost of money.
The confirmation comes from James Bullard, president of the Fed of Saint Louis, already an authoritative representative of the hawks. “Given the situation – he said yesterday – a new increase in the axes would not be wise”.
OIL, IRAN OPENS TO AGREEMENT
The news coming from the oil market is even more important. Yesterday the increase was triggered by the words of Bijah Zanganeh, Iranian energy minister, after the meeting in Tehran with colleagues from Iraq, Qatar and Venezuela: "Iran is ready to support all initiatives useful for stabilizing the market and to support crude oil prices”. The reaction of quotations was immediate: Brent achieved a rise of 7,2% above 34 dollars, +5,6% for WTI crude which continues its run this morning (+2,9% to 31 dollars) on the markets asian.
The securities of the sector also rebounded. In Piazza Affari Eni achieved an increase of 3,2%, Tenaris +6,06%. Leap of Saipem (+9,2%) after the assignment of the option rights on the capital increase. To shine on Wall Street Chevron, up 4,1%.
In reality, the negotiations to overcome the big cold between the producers have just begun. Tehran's minister defined it as only a first step, others will be necessary to reconcile the needs of Tehran which claims shares equal to the pre-embargo ones with those of the other Bigs both inside Opec (Saudi Arabia) and outside (see Russia ). But the market, for now, is content: the situation is so dramatic that it has prompted enemy powers, one step away from military confrontation in Syria, to seek a compromise. The world of oil, after all, is now one step away from catastrophe, as confirmed by the downgrade of Brazil. Meanwhile Mexico, surprisingly, yesterday raised the cost of borrowing to defend the peso from the run of the dollar.
BIG HIT OF BERKSHIRE HATHAWAY IN THE OIL WORLD
And so, after the great scare, buying opportunities are looming. And the usual old marpioni are the first to take advantage of it. Warren Buffett yesterday announced the purchase for just under 400 million dollars of 12,8% of Kinder Morgan, an oil infrastructure giant which, due to the collapse of shale oil, has lost about 70% of its value in the last year . The stock, boosted by the magic touch of the Oracle of Omaha, jumped by 11%.
Berkshire Hathaway, the Omaha essay finance company that will stream its budget meeting this year, has landed a great deal: Based in Houston, Texas, Kinder Morgan owns the largest network of United States gas and oil pipelines: put together its pipes go three times the circumference of the Earth.
SOROS INVESTS IN FERRARI (AT DISCOUNT)
Less spectacular but equally symptomatic is the move by George Soros. The financier/philosopher has announced that he has purchased 850.000 Ferrari shares, equal to 0,45% of the capital with an investment of approximately 28 million dollars. An excellent deal, given that the news coincided with the best session since the Rossa was listed on Piazza Affari: +10,6%, at 34,53 euros. The opinion of Mediobanca Securities contributed to push the stock, which still suffers a drop of 17% from the beginning of the year: the target of the stock was brought to 55,86 euros from the previous 55,33 euros, the Outperform opinion confirmed.
THE AGRICULTURAL CREDIT REVOLUTION EXCITES THE BANKS
The revolution of Crédit Agricole, the Parisian "green bank" with a strong presence in Italy, contributed to shaking up banking stocks: the stock scored a rise of 13,9% after the announcement of the simplification plan of the mutual-type ownership structure, already indicated as a model (at least in theory) of the Italian reform of the CCBs.
In particular, the plan envisages the repurchase by the 39 regional banks of the 25% stake held by Crédit Agricole SA in an 18 billion euro transaction. The restructuring should also allow for the payment of a cash dividend already this year with a payout ratio of 50%, whereas until now the parent banks had only received dividends in shares.
The news gave wings to the European banking sector: Société Générale gained 6,5%, Deutsche Bank +6,3%, Santander +4,3%.
MANAGED SAVINGS FLY. EQUITA PROMOTES ITALIAN POSTAL
Italian banks also continued on the road to recovery: Unicredit +2,4%, Intesa +2,3%, Monte Paschi +2,3%, Ubi +1,4%, Pop. Emilia +0,4%. Banco Popolare (+2,4%) and Pop also advanced. Milan (+0,4%) in view of the wedding. Berenberg's analysts cut the Verona bank's target price to 7,50 euros from the previous 12 euros, Hold judgment confirmed. The target price of the Popolare di Milano "promessa" was also cut to 0,64 euro from the previous 0,83 euro, Hold judgment confirmed.
Asset management was also highlighted: Anima +8,92%, Azimut +8,48%. Poste Italiane rises by 4,04%. This morning Equita announced that it has started coverage of the stock with a Buy recommendation. Insurance companies also showed good growth: Generali +2,3%, UnipolSai +3,1%.
CARS IN RALLY, SCHNEIDER ELECTRIES INDUSTRIALS
A day of glory also for manufacturing, starting with four wheels. In addition to the Ferrari rally, the Agnelli group can celebrate the Fiat Chrysler rally (+5,1%). Good increases also for Cnh Industrial (+4,3%) and Exor (+4,3%). StM (+3,7%), Prysmian (+4%) and Finmeccanica (+1,3%) also rose.
The news coming from Schneider Electric contributed to the good mood, +9,2% after the French group leader in electrical equipment and automation announced growing results and a 1,5 billion euro buyback plan.
IT ALSO RECOVERS TELECOM ITALIA
Partial redemption also for Telecom Italia (+3,9%), which recovered part of the heavy loss (-6,5%) suffered after the disappointment of the accounts and the news that ordinary shareholders will not receive the dividend again this year . Deutsche Bank confirmed the Buy judgment, reducing the target price to 1,20 euro from 1,25 euro. Nomura, on the other hand, reiterated the Reduce judgment, cutting the target price sharply to 0,74 euro from the previous 1,02 euro (approximately -28%).
