Quantitative Easing is over, but it's not dead. Mario Draghi, emphasizing that by now the program is permanently part of the tools available to the ECB, yesterday proudly claimed the success of the purchase program (more than 2.500 billion euros in 4 years) which "in some moments was the only driver of the recovery”.
Meanwhile, in an interview with Fox, his favorite TV channel, Donald Trump reiterated his hope that "the Fed will no longer raise rates". It is easy for the US central bank to disappoint him next week, when it meets for the last time in 2019. But on the occasion, the Fed will release the new estimate, probably revised downwards, of the rate increases expected for 2019.
CHINA: GDP ONLY +5,4% IN NOVEMBER. FLAT TANKAN IN TOKYO
There is a growing sense that the slowdown in the economy is deeper than already anticipated. Confirmation arrived this morning from China. In November, Dragon growth was only 5,4% yoy, the weakest expansion in the last two years. Consumption is also losing strength, the +8,1% last month is the weakest positive change in the last fifteen years. China is saved only because the state program in infrastructure is going ahead: investments in capital goods are accelerating (+5,7%).
Japan is also slowing down, even though it is celebrating the longest post-war rally. But, notes the Nikkei Times, "growth is not based on the expansion of domestic consumption, as in the 60s and 70s, but only on the strength of exports thanks to the weak yen", a policy jeopardized by trade tensions.
Finally, the latest news on the dispute between China and the USA does not help. In obvious retaliation for the Huawei case, Beijing has arrested a second Canadian citizen, accused of having worked for a Chinese organization that violated the law on registration in the business register.
ONLY GENERAL ELECTRIC SHINES ON WALL STREET
The price lists this morning reflect the doubts about the economy. Shanghai loses 0,7%, Hong Kong 1,3%. The Tokyo Stock Exchange also falls (Nikkei -1,7%). Sydney also down -1,1%.
The slowdown in Asia follows a mixed session on Wall Street: Dow Jones +0,3%, S&P 500 -0,02%. NASDAQ -0,4%. Only the resurrection of General Electric (+7,3%) after the review of JP Morgan's rating to "neutral" should be noted. Since the beginning of the year the loss is 60%.
The decline in US inventories favored the rise in oil: 61,45 dollars a barrel.
THE ECB CONFIRMS: ECONOMY IN DECLINE, TODAY THE PMI INDEXES
A contested session also for the European stock exchanges, after the confirmation, albeit widely expected, of the end of Quantitative Easing. At the press conference, Mario Draghi underlined that monetary stimulus is still needed. Therefore, the ECB intends to continue to reinvest the principal repayments on maturing securities purchased during the program "after the conclusion of the net asset purchases and after the date of the first rate increase, and in any case for as long as necessary".
Meanwhile, the prospect of introducing liquidity with a new TLTRO is approaching: it was discussed during the meeting, revealed Draghi, also on this occasion. But, what depressed the markets were the estimates on the slowdown in future growth of the euro economy and the weakening of foreign demand: the euro fell to the lows of the session at 1,1328 dollars. This morning the PMI data will allow us to update the picture of the manufacturing industry situation. ALONE
MILAN (+0,54%) IN POSITIVE SOIL
Piazza Affari was the positive exception on a weak day for stock exchanges on the Old Continent: Milan +0,54%, rose above 19 (closing at 19.048 points).
It was the third consecutive session of increases: Since the beginning of 2018, the loss of our blue chips has been around -13,5%. The multiples of the blue chips listed on Piazza Affari currently offer attractive numbers: average P/E 10,4x, expected return in terms of gross dividend 4,35%, the highest among eurozone stock exchanges.
They stop below the Frankfurt parity, -0,04% (-15,5% since the beginning of the year). Metro fell 7,6% after forecasting lower profits amid difficulties in Russia.
Paris -0,26% and London -0,04%. Madrid instead stands out with an increase of 0,82%. Zurich -0,62%. Swiss asset manager GAM slumps 26% after taking a big loss and canceling its dividend.
THE SPREAD FALLS TO 261 THEN GOES UP
During the day, the yield differential between the 261-year Btp and the Bund went as low as 273 basis points, the lowest levels since XNUMX October, while after the press conference it reached the maximum for the session at XNUMX. However, the session remained marked by an upward trend, thanks to the new figures of the Italian maneuver relating to the deficit/GDP.
BANKS AND UTILITIES LEAD THE REBOUND
The decrease in tensions on Italian government bonds favored the recovery of some bank stocks: Unicredit + 1,24% Ubi +1,04% and Intesa Sanpaolo +0,94%. On the other hand, Bper (-0,4%) and Banco Bpm (-1,94% to 2,099 euros) were negative, on which Banca IMI lowered the target price from 3,1 to 2,8 euros. General Bank + 0,4%. Italian post + 0,1%.
Spread decline continues to support utilities rally, Enel + 1,7%. Italgas + 1,8% Snam + 1,3%.
Positive too Fiat Chrysler (+0,9%), grappling with the eco-tax promoted by Minister Luigi Di Maio, who has already mooted the hypothesis of a change to the measure. In November, the group's registrations in Europe fell by 8% in line with the sector. The market share is stable at 5,9%.
Still in red Ferragamo (-1,97%) after the 7,32% slide the day before. The Florentine fashion house has today appointed a new CFO, Alessandro Corsi.
COLLAPSE OF SALINI. FALLS OVS
Very troubled waters in the infrastructure sector. Closes with a minus sign Astaldi (-0,55%) which asked the Court yesterday for a two-month postponement for the presentation of the definitive bailout plan.
Salini Impregilo, one of the groups interested in an intervention, has in the meantime experienced a black day: the stock has lost 19,79% after the decision of the Arbitration Court of Miami which condemned the consortium of builders (ledger by the Italian group) which worked to the Panama Canal to pay nearly $848 million. Salini specified that "the part of the contractual advances guaranteed by the group on a pro-rata basis is, in terms of principal, 217 million dollars, which will be paid immediately with its own available cash". There remains an amount of $117 million in principal which will be the subject of a London court decision.
Precipitates Ovs (-36,03%) crushed by analysts after the publication of the quarterly report: Equita Sim cut its rating to hold, while Kepler Cheuvreux reduced its target price from 3,3 to 1,7 euro, with a buy rating. The guidance is "very weak". EPS estimates are lowered by 41,5% for 2018 and 44,8% for 2019.
Retouch the all-time low again sapphire (-7,5%): the conclusion of the capital increase (150 million) scheduled for December 17th is approaching.
