It is the summer of revenge for Europe. The Monetary Fund certifies the recovery of the economy, starting from the Italian one. And Italian banks are now considered an opportunity, no longer a risk. Even Greece can return to the markets with good chances. Even in the rhetoric of the Front National the question of the end of the euro falls by the wayside. Meanwhile, the single currency is in excellent health against the dollar. The tug of war between Brussels and the greats of the digital economy fits into this framework, the last true expression of American leadership, bruised by the conflict between President Donald Trump and Congress.
The results of Alphabet, the parent company of Google, last night offered an eloquent picture of the conflict between the big names in the digital economy and Brussels. The search engine achieved a strong increase in revenues (+21% to 26 billion dollars) and a good operating result (6,9 billion dollars against 5,9 billion a year ago) but, due to the fine disbursed by the European Union, net profit fell to 3,5 billion: -28%, the lowest since 2008. Wall Street, after the publication of the results with the stock market closed, punished the stock with a sharp drop, around at 2,5%. The one-off effect of the fine (absorbed in a single quarter) does not weigh as much as the fact that the assumptions that motivated the sanction, according to Brussels, remain standing. Alphabet, in fact, continues to bring together the activities of YouTube, Maps and Android, a formidable trio that ensures the search engine, together with Facebook, the almost monopoly of advertising in the digital world.
In short, the situation does not change. And it predicts new bitter conflicts on much more delicate ground than Trump's proclamations on America First. In short, Europe turns out to be a tougher nut to crack than expected.
ASIA HOLDS HOLD AWAITING THE FED, THE OLD ECONOMY SUFFERS ON WALL STREET
Little moved the Asian stock markets already tuned to the expectation of today's and tomorrow's Fed meeting. The Japanese Stock Exchange is starting to close slightly lower, Nikkei index -0,1%. The CSI 300 index of the Shanghai and Shenzhen stock markets lost 0,3%. Hong Kong on parity. The +1% of Sydney stands out. The stock exchanges of India and Korea are flat.
Before the release of Alphabet's accounts, the Nasdaq (+0,36%) set a new all-time high at 6.410,81 points. On the other hand, both the Dow Jones (-0,31%) and the S&P 500 (-0,11%) fell.
Few surprises from the macroeconomic data. Better than expected, the Markit PMI index relating to industrial activity rose to 53,2 in July from 52 in June. Just below estimates, sales of new homes in June were 5,52 million, up from 5,62 million in May. Various corporate results weighed on the markets. The giant Johnson & Johnson loses ground (-1,7%) in the face of competition from generics on some drugs.
Halliburton, giant of services to the oil industry, the title loses 3%, slowing down from the +3% of the pre-exchange. The data is higher than expected, but during the conference call, CEO Jeffrey Miller said that there are signs of a slowdown in the shale oil industry. Stanley Black & Decker loses 5% after data for the quarter. The decline of General Electric continues (-1,2%) to its lowest since October 2015.
ARABIA AND RUSSIA STOP THE FALL OF OIL
Important day for oil: OPEC's top producer, Saudi Arabia, has promised to cut exports to support the rebalancing of global supply and demand. The price of crude oil turned upwards, with the Wti at 46,3 euros and the Brent at 48,6 euros. Saudi Energy Minister Khalid al-Falih, backed by Russia, also added that the agreement to cut production could be extended beyond March 2018, if necessary. Countries joining the coalition have pledged to set quotas for Nigeria and Libya as well.
SAIPEM CLOSES THE QUARTER IN THE RED: -110 MILLION
At Piazza Affari petroleum in no particular order. Good Saipem (+1,79%) waiting for the accounts for the first half, released this morning before the opening of the markets. The six-month period closed in the red for 110 million euro, of which -157 million in the second quarter, due to some write-downs and reorganization charges. At an adjusted level, the oil services company recorded a half-yearly net profit of 92 million. In terms of 2017 guidance, revenue estimates go from around 10 billion to 9,5 billion. Fractional growth for Eni (+0,15%); down Tenaris (-0,51%).
Saras +1,5%. Last week the refining margin recovered to 5,0 dollars/barrel from 4,20 previously. It is the highest level since the beginning of the year. Since January, the stock has risen by 31%, to which must be added the 5% dividend detached in May.
MILAN +0,6%. FUTURES ON THE RISE THIS MORNING
European stock futures are up 0,5% this morning. The honeymoon of the markets continues in the public debt securities of the periphery of the euro area. Milan +0,59%, Ftse Mib index at 21.237, boasted the best performance in the Old Continent, benefiting from the upward revision of the GDP estimate by the IMF. The judgment of the IMF is partly at the origin of the slowdown in London -1,01%. Frankfurt also fell, under the pressure of losses in the auto sector (-0,25%). Positive Paris (+0,20%) and Madrid (+0,21%).
CHEAPER TICKETS, RYANAIR SLIPS
Ryanair accused a drop of 3,2% in Dublin. Shares of the Irish airline fell on news that airfare fares could fall by 9% in the coming months. The drop in the price of oil and the increase in aircraft capacity (especially in Italy, Spain and Portugal) is bringing into the market companies and routes that would not be profitable with different premises. CFO Neil Sorahan said this morning that the industry was becoming more competitive and that Ryanair would respond with lower prices.
Commenting on the forecasts of the International Monetary Fund, which revised Italy's growth upwards, Prime Minister Paolo Gentiloni said that “our country is finally showing interesting numbers. We grow a few steps more than others, certainly also because we start from lower”.
THE SPREAD DOWN TO 154 BPS, BTP UP FOR SIX DAYS
Closing still up for the BTPs, the sixth consecutive, with the spread on the Bund at its lowest for about seven and a half months. The rate on the ten-year BTP at an intraday low of 2,03%, the lowest level for about a month. The Btp/Bund spread in turn dropped to 154 bps, the lowest since December 19 of last year. For the six-monthly Bot auction on Thursday 27, an offer of 6,5 billion has just been communicated, equal to the amount of bonds due to expire.
Today the Treasury will announce the details of the medium-long term auctions on 28 July, which should see the launch of the new five-year BTP. Intesa Sanpaolo expects a total offer of up to 10,5 billion between five-year, ten-year and Ccteu, against paper maturing for over 22.
According to the operators, the Italian market is also being supported by the approaching phase of an "unloaded" phase on the supply side. The Treasury has already announced the cancellation of the mid-August medium/long-term auction and of the August 28th indexed offering "in view of the large availability of cash".
Meanwhile, the new Greek government bond could arrive this morning, which would mark the country's return to the capital market after a three-year absence. Athens is preparing a five-year benchmark issue, to be launched together with a cash repurchase offer on its outstanding 2019 government coupon 4,75% at a price of 102,6.
GENISH EFFECT: TELECOM FORGES ALLIANCE WITH CANAL PLUS
In view of the Board meeting on Tim's accounts (+3,8%), Bernstein confirmed the outperform recommendation on the stock and the target price of 1,1 euro, explaining that "Telecom Italia is much more than a story of governance". But while awaiting the results yesterday, the market's attention was obviously concentrated on the exit, on the contrary the severance pay, of the CEO Flavio Cattaneo. Yesterday evening Tim announced that the board of directors voted by majority the agreement with the manager: Flavio Cattaneo from the position of managing director which provides for the disbursement to the manager, upon termination of the relationship, of the gross amount of 22,9 million euros plus 2,1 million for the non-competition agreement. The Board has launched the succession plan which "will be the subject of further decisions in the meeting already convened for July 27". Tim argued that Cattaneo's exit is linked "to the acknowledgment of the important results achieved in advance of the plan which allow for the start of a new phase". In reality, the board split: the independent directors and the board of statutory auditors took sides against the exit (and the millionaire severance pay).
In any case, Telecom Italia is preparing to replace Cattaneo with the Israeli manager Amos Genish. In the meantime, the company has effectively frozen the Cassiopea project, i.e. the investments for the construction of an ultra-broadband network in areas with market failure, where the public company Infratel is operating. Even more significant was the launch of the integration of the commercial offer of Tim and Canal + products, Vivendi's pay TV.
ITALIAN BANKS, ANALYSTS SEE PINK
Positive judgments are raining down on the credit sector. Mediobanca Securities analysts, in a report on the Italian banking sector, said they were "constructive" on the sector. Experts expect Q2017 XNUMX results to show "similar trends" to those in the first three months of the year, "with the big banks" expected to show more momentum. The business house explained that its positive vision goes beyond the quarterly accounts and is based on the "interesting" assessments of Italian banks, both in absolute and relative terms (ie compared to European competitors).
Morgan Stanley also expects a good set of results for Italian banks for the second quarter thanks above all to the growth in commissions. The investment bank prefers Intesa+0,4% and Mediobanca+0,4% as 'top picks' securities. Among the banks, Ubi leaps up 4,5% with a rally that allows the title to recover the recent losses: the quarterly will be published next week. Banco Bpm (+2,88%) and Creval (+3,5%) were also strong. Going against the trend of the sector which sees the index up by around 1,1%, Bper Banca suffers from the downgrade of Kepler Cheuvreux and drops 0,68%, while Carige loses 0,4%.
Banca Generali continues to grow (+2,2%) in managed assets. Azimut is growing (+1,27%): for the first time since the accelerated book building of May 2015, Timone Fiduciaria's stake in the company has exceeded the threshold of 15% of the share capital.
STOP THE GERMAN CAR. FERRARI ACCELERATES
The automotive sector in Europe fell sharply: -2%, on the lows of the year on the wave of the news of the existence of a cartel among the major German car manufacturers: Daimler -3%, BMW -2,7%, Volkswagen -1,5%.
After a difficult start to the day, Fiat Chrysler (-0,1%) recovered its initial losses. Instead, the triumphal march of Ferrari continues (+2,1%) completely extraneous to the troubles of Dieselgate.
LUXOTTICA FLYING BACK DESPITE THE DOLLAR
Luxottica +1,4% before the publication of the closed stock market results. In the first half of the year, the group achieved a net profit of 562 million euros (+18,1%) on a turnover of 4,9 billion euros, up 4,2%. The operating result totaled 868 million (+10,1%). In the half year, cash flow generation reached a record level of 535 million. In North America, revenues rose by 1,9% in the half year (-1% at constant exchange rates) to 2,79 billion euros, with a return to growth in the second quarter (+2,7% at current exchange rates and + 0,4% at constant exchange rates to 1,42 billion). Europe confirmed itself as the group's growth engine, with turnover up 13% at current exchange rates to 2,2 billion (+14,9% at constant exchange rates).
CAMPARI MAKES CASH: 165 MILLION FROM THE SALE OF TWO BRANDS
Campari carried out the largest brand sale in its history by selling Carolans and Irish Mist for 165 million, thus accelerating the reduction of debt following the latest acquisitions.
Enel closed the day at 4,86 euros. But the negative performance (-1%) is linked to the detachment of the dividend balance of 9 cents: net of this element, the result is +0,8%. The other utilities were positive: Snam +1%, Italgas +0,3%.
Immsi +1% after Intermarine accounts. Stefanel +3,5% after the new debt restructuring agreement with the banks. Txt E-Solutions +3,8% after the sale of the retail activities.
