Lending money at zero interest to everyone. Without interest or expiry. This is what central banks will have to do to deal with the coming recession. And the suggestion that three sacred monsters of economic thought, ie Stanley Fischer already alongside Janet Yellen at the Fed, former Swiss central bank president Philip Hildebrandt and Jean Boivin, former governor of the Bank of Canada, presented to central bankers meeting in Jackson Hole. Once the race to lower rates has ended, the reasoning is, it will be necessary to invent a “helicopter money” to prevent the economy from stalling. An extreme hypothesis, of course, but one that reflects concern about the signs of a slowdown that are multiplying on the money markets: two-year bond yields remain above long-term ones, a signal that has been anticipating the recession for half a century.
THE WHOLE FED DOESN'T LIKE THE DECLINE IN RATES
It is in this setting that the world is preparing to witness the confrontation between central bankers in Jackson Hole: at 16 pm, Italian time, President Jerome Powell will speak, who could anticipate a forthcoming rate cut, however insufficient to meet Donald Trump's requests. Downturns are also in Europe even if the Bundesbank curbed expectations yesterday.
It is in this context that an intense weekend opens which, in addition to Powell's signals, foresees the G7 in Biarritz, a new opportunity for discussion between the USA and its European partners. Meanwhile, the Amazon is burning.
THE CHINESE CURRENCY AT THE LOWEST SINCE 2008
The Asian stock exchanges are starting to close in positive territory: Japan and Australia +0,3%. Better Hong Kong +0,5% and the Chinese CSI +0,7%.
The performance of the currency markets is more significant. The Chinese renminbi continues to fall, the exchange rate against the dollar is at its lowest since 2008 at 7,09 after seven consecutive sessions of dollar appreciation.
The yen remained around 106,6. The dollar appreciates against the Korean won, to 1.211.
Little move on Wall Street awaiting indications from the Fed: Dow Jones +0,19%, down &P 500 by 0,05%. NASDAQ -0,36%.
Boeing shines +4,2% as it starts to put the 737 Max back into production.
Yesterday evening, two voting members of the board of the central bank, Esther George and Patrick Herker, reduced the expectations of new stimulus measures: the US economy is not bad at all and inflation, some signs of recovery is sending it . But Dallas Fed President Robert Kaplan, interviewed by the Wall Street Journal, warns that the economic picture could deteriorate quickly due to the international environment, so it may be necessary to cut interest rates again this fall.
T-BOND RATES RISE UP, MOSOONS HOLDING BACK INGOTS
The indications of the last few hours, coming from the leaders of the Fed, take the form of a rise in market rates, the yield on the Treasury Note rises to 1,63%, from 1,60% yesterday. The Australian 0,97-year trades at 7% (+XNUMX basis points), on the highs of the last two weeks.
Gold is down to $1.496, -0,3%. Since mid-August, the quotations of the most traded precious metal have lost about 30 dollars. The trend of the Monsoons also weighs heavily: Indian farmers, especially the poorest, buy gold, in view of the good harvests to come.
Brent oil moved little at 60,1 dollars a barie, -0,6% yesterday. In Milan, Saipem +0,1%, Tenaris +1,1%. Eni -0,2%.
FROM THE BUNDESBANK A BRAKE ON THE INCREASE OF EXPENDITURE
A cold shower hit the European stock exchanges yesterday afternoon: an article by Bloomberg reports that the Bundesbank, in the light of the latest data arriving from the economy, no longer deems strong support to the economy necessary and in any case not urgent. The publication of the article at 16,53 caused a trend reversal in the session, which had been positive until then.
- Piazza Affari also closed slightly lower -0,14% at 20.816 points. The Moody's agency has cut its growth estimates for the Italian economy for the current and next year. In the Global Macro Outlook 2019-2020 published yesterday, the growth forecast fell to 0,2% for 2019 while an expansion of 2020% is expected for 0,5, three tenths less than the estimates of two months ago .
- The other squares are in red: Paris -0,87%, Zurich -0,4%. In contrast, Madrid +0,24%.
- Frankfurt -0,44%. In August, the manufacturing PMI recorded a less significant contraction from 43,2 to 43,6 than the previous one and less marked than forecasts.
AIR OF AGREEMENT ON BREXIT, THE STERLING RISES
The weakest is London -1,11% A drop linked to the performance of the pound +1% both against the single currency and against the greenback. The British currency is set by the hope of a new Brexit deal, after Angela Merkel said she had not set a 30-day deadline for the United Kingdom to find a solution to the so-called Irish 'backstop', saying there was it is time until 31 October, the date foreseen for the exit from the EU.
THE YIELD OF BTPs BELOW 1,30%
Mixed session conclusion for BTPs: the short section closes in negative territory and the medium-long section instead with a plus sign. Investors are waiting to understand how the government crisis will evolve.
The spread trades at 198 basis points from 202 on the previous day following the minimum of 195.
The 1,34-year rate is around 1,30%, compared to 1,29% at the start after falling below 10%, the lowest since 2016 November XNUMX.
At the August 27 auction, the Treasury will offer Ctz 2 billion. The bund trades at -0,64% (+3 basis points).
BANKS, SKIP THE SUPERVISION ADDENDUM
The banking index closes well below the highs, after the warning from the Bundesbank. Equita lowered its rating on the sector to Underweight, as it expects a worsening of the cycle of non-performing loans. “We see warning signs of deteriorating credit quality,” the note reads. Analysts warn that the cost of risk, in the second quarter, reached the highs of the last two years.
However, the decline in the spread supported the big names: Unicredit +1,2%. Goldman Sachs cut the target price on the stock to 16,2 euros, from the previous 17,5 euros, confirming the Buy recommendation. Intesa Sanpaolo +1%. Bank Bpm +2%. In assets under management, Fineco Bank stands out +1,3%.
Yesterday, the Frankfurt supervisory authorities removed the addendum on non-performing loans launched by former president Danièle Nouy. A softer provisioning calendar comes into effect as a result. The authority requires 100% NPL coverage after 3, 7 and 9 years, but depending on the case and no longer 100% coverage after two or seven years.
PIRELLI SUPERSTAR, NEW BLOW FOR ATLANTIA
Among the industrialists it was the day of Pirelli, the best blue chip with a rise of 2,5%. Instead, Fiat Chrysler settles +0,1%. Cnh Industrial -0,4%. Worse Ferrari -1,41% and Exor -1,18%
Atlantia loses ground after Minister Toninelli's no to the Gronda of Genoa. Leonardo also down -1,6% and Stm .0,7%. Prismian -1,19%
MONCLER BRAKES, RECORD REBOUND BY OVS
Fashion recedes after recent progress with Moncler -2,14%,
Outside the main list, Ovs shoots up +10% which recovers the losses suffered in the last month.
