How wide is the Atlantic these days. Yesterday morning a survey by the authoritative German research center Sintex certified that the risk of Italy leaving the euro zone is at its highest for four years, since the surveys began. Out of a sample of over a thousand European investors, 19,3% consider this result probable. The figure for France and the Netherlands is also on the rise.
Conversely, US consumer confidence is skyrocketing. The index elaborated by the Conference Board rose to 107,1 in November from 100,8 in October, the consensus of economists expected an increase to 101. The consumer confidence index rose to levels prior to the collapse of Lehman Brothers . Trump effect, but not only. The upward revision of US economic growth in the third quarter, well before the elections, was also a positive surprise. US GDP rose by 3,2% on the previous quarter, against forecasts of +3,0%. Meanwhile, Trump has fulfilled an electoral promise: in the face of the threat of retaliation, Carrier (air conditioners) has given up on transferring production from Indiana to Mexico.
REFERENDUM, THE ECB READY FOR ACTION
But the euro area has one card to play: the determination of Mario Draghi. On Monday, the ECB president warned the markets not to underestimate the strength of the eurozone. Yesterday the Reuters agency, on the basis of information arriving from the Eurotower, announced that the central bank is ready to temporarily increase the purchases of Italian government bonds in case the result of Sunday's referendum translates into a surge in the spreads. It is the parachute that the market, at the mercy of speculation and rumors, was waiting for, as evidenced by the rebound of MPS (+17%) which erased the abyss (-13%) on Monday. But tension remains: the relief is only temporary.
However, Meteo Borsa still forecasts volatility on the markets. Oil will move the day today, pending the outcome of the eagerly awaited OPEC summit in Vienna (starting set for 11): a flop could trigger a sharp drop in prices, also to the detriment of Trumpflation.
SAMSUNG INCREASES ITS DIVIDEND. MNUCHIN AT US TREASURY
Asian stocks rose slightly: Tokyo 0,1%, stocks in the Asia Pacific area +0,3%. Hong Kong gains 0,3% and Shanghai 0,8%. Mumbai +0,5% and Seoul +0,3%. Samsung boom (+3,9%): the board of the Korean giant, responding to requests for funds, has decided to increase the dividend and to start a reorganization of business and governance.
Despite the uncertainty over oil, Wall Street has also resumed its upward path: the Dow Jones rises by 0,13%, as does the S&P 500 index. The Nasdaq, after hitting a new all-time record at 5.400,58, closed up 0,21% at 5.379,92. The dollar lost ground against the euro, which rose to 1,061 (yesterday's close at 1,060).
Steve Mnuchin, former Goldman Sachs, will be the new US Treasury secretary. Hedge fund manager, he has financed some big Hollywood blockbusters. The appointment of Tom Price, an enemy of Obamacare, to Healthcare has pushed up the stocks of the health and pharma sector: United Health, the country's largest insurer, rises by 3,2%, AbbVie +3,8%. The biotech index also rose (+0,9%).
Tiffany climbs 3,1%, best stock in the S&P500 index. The company released higher-than-expected quarterly data. Revenues rose 1,2% year over year to $949 million, the first quarter of growth after nearly two years of declines. Like-for-like sales in stores open for more than a year fell by 3%, against an estimate of -4,3%. Profit was also better than expected, equal to 95 million dollars, +5% year on year.
IRAN-IRAQ, LATEST OBSTACLES TO THE OIL AGREEMENT
In Vienna today the ceiling on oil production by the OPEC countries will be discussed indefinitely according to what was agreed at the beginning of the month in Algiers: it should drop to 32,3-33 million barrels per day from the current 33,64 million. But the agreement, according to the latest information, appears very difficult: the conditions of public finances, in addition to the war effort of the countries involved in the conflicts in Syria and in Yemen (but also the civil war in Libya and the guerrilla in Nigeria), make production cuts are indigestible. Iran and Iraq (but also Russia which is not part of the cartel) say they are willing not to increase production, but reject the possibility of cutting. Tehran's minister, Zanganeh, has asked Saudi Arabia for a unilateral cut of one million barrels a day, more than Riyadh is ready to concede.
Crude oil in New York closed down 3,9%, 1,85 dollars, at 45,23 dollars a barrel. Prices are slightly up this morning. Stocks in the energy sector are down on Wall Street (-1,12%). In Piazza Affari Eni closed up 0,6%. The six-legged dog expects to collect 2 billion euros from the sale of part of the fields in Mozambique, as much from the sale of a further share of the maxi Zohr field in Egypt to reach 50%. Another 3-3,5 billion could come from the sale of its Italian customers in the gas sector. The disposals would serve Eni to keep the share of dividends unchanged. Saipem -1%, Tenaris also retreats -1,4%.
MILAN, BOOM SEAT. BTP RECOVERS, SPREAD GOES DOWN
Surprise recovery of the European stock exchanges after the uncertainties of the beginning of the week. As already mentioned, the rebound was made possible by the news relaunched by Reuters of a possible temporary intervention by the ECB to purchase Italian public debt securities if the result of next Sunday's constitutional referendum were to create volatility on the markets. The ECB limited itself to issuing a dry "no comment". In any case, the monthly purchase program of the European Quantitative Easing has a sufficient degree of flexibility for which a possible temporary increase in purchases does not require a formal go-ahead from the ECB council.
The Milan Stock Exchange closed sharply, with the FtseMib index posting a 2,1% increase. Gains are spread across all sectors and particularly among banks. The other European Stock Exchanges were also positive with Paris rising by 0,9% and Frankfurt gaining 0,3%.
The ten-year BTP improves with the yield falling to 1,95%, from 2,06% yesterday. Spreads down to 173 from 186 at the opening. Yesterday it had surged to a maximum since March 2014 of 192 points. The Italian secondary closes a session marked by a significant increase. In yesterday's medium-long auctions, the Treasury placed 6,2 billion BTPs at 5 and 10 years and two CCTEUs against the 6,5 billion offered, with yields rising significantly. The yield differential between Italy and Spain on the ten-year stretch was also decreasing, closing at 45 basis points from 52 at the end of yesterday's session, the lowest since last week. Finally, the rate on the 50-year BTP, issued at the beginning of October with a yield of 2,85%, fell to 3,36%, the lowest since mid-November.
MPS, "THE ARRIVAL OF A SIGNIFICANT INVESTOR IS LIKELY"
The banking sector is still at the center of the scene: the sector index recorded a leap of 4,1% (+0,7% the European figure). At the head of the rebound is obviously Monte Paschi, the protagonist since the beginning of the week with fluctuations in the order of 32%. Yesterday, during a conference call with investors, the bank's CFO, Francesco Mele, said that “an agreement with a major investor is likely next weekend. If the Bank needs state aid, we could ask for burden sarin". If the capital increase plan on the market fails, one option could be precautionary recapitalization by the state.
Sale Generali (+2,8%) after the decision to convert the bonds (400 million) into shares of the bank. The company was confirmed in the list of preferred stocks in the insurance sector by Kepler Cheuvreux.
The shares of other banks also made a strong recovery, with increases exceeding five percentage points for Ubi (+5,8%) and Bper (+5,4%). Bene Intesa (+4,2%), Banco Popolare (+4,1%), Mediobanca (+4,2%) and Carige (+5,6%).
UNICREDIT, THE INCREASE "MACHINE" AT THE START
Unicredit rose by 3,1%. The formal invitations to the banks to form the guarantee consortium for the capital increase have started. Ten investment banks were contacted who will be in charge of setting up the guarantee syndicate for the placement of the securities. The Bank aims to raise 12-13 billion which will serve to strengthen its assets together with the money raised with the sale of Pekao (3 billion), Pioneer (4 billion) and a further stake in Fineco Bank. In all, they make around 20 billion, necessary, together with the sale of non-performing loans for 20 billion to maintain the rank of systemic bank. The institutions involved will include joint global coordinators Morgan Stanley, JP Morgan, Bofa-Merrill Lynch and Mediobanca. Credit Suisse, Goldman Sachs, HSBC, Citi and Deutsche Bank have been named as co-globals.
UTILITIES RISE, THUMP OF ITALIA INDEPENDENT (-3,6%)
The utilities are positive: Enel is up 2,3%, A2A +1,8%, Snam + 2,4% despite the downgrade of Goldman Sachs to Neutral from Buy. Italgas (+1,26%) benefited from Goldman Sachs' upgrade to buy from neutral with a target price of 4,2 euros from 4,35 euros. Positive Atlantia (+3,5%).
Good rise for Telecom Italia +2,7%, Mediaset rises by 2,1%. Industry stocks were positive: Leonardo +1,5%, StM +0,9%, Prysmian +3,3%. The luxury sector is brilliant: Ferragamo +4%, Moncler +2,6%, Tod's +2,7%.
Among mid caps, RCS is up 6%. Rai Way +3,18%: Equita Sim which reduced the target price of the share from 4,4 to 4,2 euros, a level that remains well above the current Stock Exchange prices.
In sharp decline Italia Independent -3,46% after the arrest in New York of Lapo Elkann.
