“In the long term, indeed in the medium term, I strongly advise against betting against the US economy, which is set to improve in the third quarter. Of course, full recovery will take longer. Maybe until the end of next year”. So said the chairman of the Fed, Jerome Powell, speaking last night on television. A mixed message: for the real exit from the crisis it will be necessary to wait until the end of 2021, the pessimists note. But Powell argued that the Fed "is not short of ammunition" in anticipation of the vaccine which, according to Donald Trump, will arrive in months. Faced with these signals, the markets have chosen the path of cautious optimism.
TOKYO IN RECESSION, DUEL WITH TAIWAN AT WHO
Tokyo is making progress (+0,4%), despite the confirmation that the country is back in recession: GDP fell by 3,4% in the first quarter, after -7,5% at the end of 2019. Thai GDP too, in first quarter, it recorded a 1,8% loss from a year ago. It is the first time that the country's economy has contracted since 2014.
Hong Kong's Hang Seng (+0,4%) and Seoul's Kospi (+0,6%) rose. The Shanghai Composite +0,6% on the eve of delicate appointments for Beijing. Today the World Health Organization has to decide whether to admit Taiwan, one of the countries that have best dealt with the pandemic. In that case, it would be a major defeat for President Xi, on the eve of the Party Congress which opens on Wednesday. Meanwhile, Washington has raised new barriers against Huawei, ready to market the new 5G mobile.
India's stock is down 2%, while the rupee weakens. Goldman Sachs revised its second-quarter GDP estimates down to -45%, versus -20% based on an end of the lockdown in mid-month. However, the same economists revised their forecasts for the third quarter upwards to +20%, while they left those for the fourth quarter unchanged (+15%).
RISES THE BRENT, RIYAD FULL OF WESTERN ACTIONS
On the oil front, following the orders from China, there are signs of recovery. Brent crude rose by 3%, to 33,5 dollars a barrel, the highest in the last five weeks. And the risk of a new storage crisis is receding. The number of drilling rigs dropped to a 10-year low, while the level at Cushing's reservoirs in Oklahoma, the oil hub, dropped for the first time since February.
Not just oil. Saudi Arabia's sovereign wealth fund has invested $7,7 billion in European and US blue chips and bought shares in British Petroleum, Boeing, Facebook, Bank of America, Citigroup, Walt Disney, Marriott, Pfitzer and Starbucks
THE YELLOW METAL AT THE HIGHEST FOR SEVEN AND A HALF YEARS
The gold rush does not stop: 1.759 dollars an ounce, +1,1%, the highest for seven and a half years. The tensions between the US and China are pushing the yellow metal, but even more so are the low rates, which are expected to be below zero despite Powell's denial.
THE MINIMUM RATE OF BTP ITALIA IS 1,4%.
In this context, the Italian Treasury is playing the card between today and Thursday (a day reserved for institutions). BTP Italy indexed to inflation, now in edition number 16. For the first time, a duration of five years and a "loyalty bonus" equal to 8 per thousand gross of the invested capital have been provided for those who hold the securities until maturity. The minimum rate of the issue, announced on Friday, will be 1,4%.
In last year's edition, 6,75 billion of an eight-year bond was placed with a final coupon of 0,65%. This time the goal is more ambitious: we are talking about 14-15 billion, also because the offer coincides with the expiry of the issue four years ago and with the coupon detachment of various blue chips.
MPS AND TERNA MEETING, TELECOM QUARTERLY REPORTS
A busy calendar of appointments also for the companies in Piazza Affari. Today the meetings of MPS and Terna will be held. The boards of Telecom and Exprivia meet for the quarterly reports.
To a lesser extent, the dividend campaign. Today 22 companies detach the coupon against 69 a year ago. The request by the EU authorities to postpone or cancel the distribution of bank coupons weighs heavily.
DIVIDEND DISCONNECT FOR GENERALI, BALANCE FOR ENI
Leading the distribution of profits are Eni (balance) and Generali. Worth mentioning is the coupon of Azimut (1 euro) with a dividend yield of 7%.
A2A follows in the main basket, Buzzi, Italgas, Prysmian, Recordati and Saipem. Among the mid caps, Anima, Erg, Inwit, Salini and Unipol. Finally, Be, Cellular Line, Cementir, Falck, Interpump, Massimo Zanetti and Tamburi.
FCA CONFIRMS THE LOAN FOR SUPPLIERS
Spotlights turned on this morning on Fiat Chrysler, after the request for a subsidized loan of 6,3 billion from Intesa Sanpaolo guaranteed by Sace. The three-year credit line will be used exclusively for the group's Italian activities and to support the automotive supply chain in Italy, made up of approximately 10 small and medium-sized enterprises, following the reopening of the Italian plants closed due to the Covid-19 pandemic. XNUMX, launched at the end of April.
The model designed for the automotive sector will be available for all other Italian sectors, from tourism to fashion and agro-food. In practice, the bank directly pays workers and suppliers of the large companies that take out the loan.
The request sparked controversy over the weekend: why help FCA after moving the headquarters abroad? In reality, the request concerns the Italian activities of the group which, with 55 employees, remains the most important private manufacturing in the country. Not to be overlooked is the fact that FCA has only moved its registered office to the Netherlands, with the aim of exploiting the advantages of corporate governance (the double vote in the meeting for the majorities) but the tax office is in London.
Among the best blue chips of last week we find Diasorin (+18%) and Recordati (+9%): both stocks belong to the pharmaceutical sector and have updated their respective historical records. At the opposite extreme, Exor, penalized by the stop on the sale of Partner RE.
FED MINUTES, MNUCHIN AT CONGRESS, THE ZED COMES OUT
After Powell's interview, the publication of the minutes of the latest Fed meeting, scheduled for Wednesday, does not lose interest. Tomorrow in Congress Powell and Treasury Secretary Stephen Mnuchin will speak on anti-Covis-19 measures, while political confrontation escalates. The Democrats on Friday night voted on a new 3.000 trillion dollar package of measures that the Republicans do not like, however, as they consider it a super electoral tip to be given before the start of the presidential elections.
The US NAHB real estate market index will be released today.
On the European front, the Zew indices for Germany and the Eurozone to be followed tomorrow, as well as the inflation of the single currency block itself. But two other issues keep the tension in Euroland high: the distance between the North and South of the Old Continent on the Recovery Fund and the stalemate of negotiations with London a few weeks before the deadline set for an agreement on Brexit.
THE EUROPEAN PMI ARE HERE, THE BPOC HAS MEETED
Among the market movers of the week, also pay attention to the PMIs of France and Germany, as well as the always awaited surveys on oil stocks and on the requests for unemployment benefits submitted in the United States, also overwhelmed by the coronavirus. The dissemination by Acea of data on car registrations in Europe should be followed.
Meanwhile, the meeting of the Chinese central bank will be held on Wednesday, which on April 20 lowered rates to an all-time low of 3,85%.
