The euro confirms its state of grace as markets reopen. The single currency trades at 1,6689 against the dollar, the highest since August 2015, and also gains positions against the yen. Speculation bets that the trend could bring the euro close to 1,715. The strength of the European currency is supported by the inflow of capital (46,9 billion in the first five months of 2017, against 14,6 billion outflows) on the stock exchanges of the Old Continent. But the rise of the euro can be explained above all by the unease of the dollar, which is weighed down by political conflicts in the USA: the dollar index, based on the trend of the currency against the six main currencies, is at its lowest for 13 months while widens the conflict between Congress, which voted new sanctions against Russia, and the Trump administration. The president's son-in-law, Jareed Kushner, will testify before Congress today.
In this context, the Stock Exchanges are slowing down. In Tokyo, the Nikkei index drops by 0,9%; the Asia Pacific area was also weak (-0,2%). The Chinese Stock Exchanges are an exception: Hong Kong gains 0,5%, driven by the growth of arrivals in Macau casinos. In Shanghai (+0,3%) China Unicom shines (+2,8%): the State has authorized the entry into the capital of the public telecommunications company of the Internet giants, Bidu, Alibaba and Tencent.
Waiting session for oil: Brent at 48,19 dollars (+0,3% but after the sharp fall of 2,5% on Friday). This evening the OPEC and non-OPEC countries meet in St. Petersburg: for the occasion, a ceiling could be set on the production of Libya and Nigeria, so far exempt from respecting the quotas.
EUROPE, THE RECOVERY IS GROWING. USA AND LONDON SLOW DOWN
The rise of the euro thus affects the start of a week full of events, both at a macro level (see the Fed board meeting) and at a corporate level, dominated by the turnaround announced in Telecom Italia.
The improvement in the eurozone found new confirmation this morning in the publication of theIMF's Summer Update of the World Economic Outlook. “Growth estimates for 2017 have been revised upwards for several euro area countries, including France, Germany, Italy and Spain, for which growth in the first quarter of 2017 was above expectations”.
Forecasts for Italy, in particular, see GDP estimates rising to 1,3% in 2017, or 0,5 percentage points more than the April forecasts. In 2018, the economy will grow by 1,0%, or +0,2 percentage points compared to previous estimates.
Great Britain slows down, but the sharpest slowdown is that of the United States: GDP was revised downwards from 2,3% to 2,1% in 2017 and from 2,5% to 2,1% in 2018. Who the Chinese economy is growing more than expected: +6,7% in 2017 and +6,4% in 2018, respectively 0,1 and 0,2 percentage points more than the April forecasts. However, India is better: +7,2% this year, +7,7% in 2018.
VIVENDI CHOOSES GENISH FOR TIM. THE MATCH HAS JUST BEGUN
Eyes on Telecom Italia today. In the morning the appointments committee will officially finish the divorce with CEO Flavio Cattaneo, liquidated prematurely with a check for around 30 million euros. In the afternoon, a board of directors who promises to be closely contested (Vivendi has 8 directors out of 15) will ratify the decision by temporarily entrusting management to a triumvirate made up of the new general manager, Amos Genish, currently responsible for Vivendi for convergence, the chairman Arnaud de Puyfontaine and the deputy Giuseppe Recchi, who will go to some powers already in the hands of Cattaneo, including the supervision of Sparkle.
Lastly, on Friday, a new board will approve the group's six-month accounts, which promise to be very positive: the operating margin should be around billion, revenues for the quarter growing to 4,8 billion (+8,5%), a positive combination which had not been achieved in the former Italian incumbent for some time.
In short, Cattaneo leaves after having achieved the pre-established objectives in advance, however insufficient to reawaken the title. In reality, the European risk has already restarted, a game in which Telecom appears to be a fundamental pawn: spin-off of the network, Mediaset game, risk of debt consolidation with the parent company Vivendi (at the end of the Consob investigation) are the mines on the path of the after Cattaneo.
CORPORATE ITALY COUNTS: ENI, ENEL, FCA AND STM
Under the pressure of the euro, the European stock exchanges have experienced significant declines in the last week. The Ftse Mib index of the Milan Stock Exchange closed the week with a drop of 1,5%. In recent days things have gone worse in Frankfurt (-3,4%), Paris (-2,6%) and Madrid (-2,6%). London, outside the euro area, gained 0,5%.
The accounts of corporate Italy come alive. Tomorrow the Boards of Saipem and Luxottica will meet to approve the quarterly accounts. The next day will be the turn of CNH Industrial and Stm. Thursday will be the turn of Enel: the electricity group will distribute an interim dividend today. Also on Thursday, the Board of Directors of FiatChrysler will meet as well as that of Telecom Italia. Finally, on Friday, the Boards of Eni and Monte Paschi will meet.
The car accounts are in the spotlight. In addition to FCA, the boards of the great German (Daimler and Volkswagen) and French (PSA Renault) auto companies will meet. The automotive sector was clearly the worst performer in Europe last week. Intano der Spiegel revealed the existence of a cartel among German groups that would operate through sixty industrial committees in which sit about two hundred people who deal with vehicle development, brakes, fuel and diesel engines, clutches and transmissions, as well as systems for waste treatment.
During the week, the Board of Directors of the Spanish Acs will also be held, which could announce the launch of a counter-takeover bid on Abertis, as an alternative to the offer launched by Atlantia.
The detachment of the coupon is also envisaged for Giorgio Fedon, Piquadro and Safe Bag (extraordinary).
TREASURY AUCTIONS UNDERWAY: 3,25 BILLION CTZ AND BTPEI
The week of the bond markets, dedicated to the auctions at the end of July, begins with good omens. On Wednesday 26 July, the Ministry of the Economy will make available to investors up to 3,25 billion euros between Ctz and Btpei. The six-month Bot auction will be held on Thursday, while on Friday it will be the turn of medium-long term securities. The Treasury has announced that it will cancel the medium-long term auction of Btp scheduled for 11 August and that of Btpei scheduled for 28 August. The ministry announced that it will cancel the medium-long term auction of BTPs scheduled for August 11 and that of BTPEIs scheduled for August 28. In a note, Via XX Settembre specifies that the decision was taken "in consideration of the large availability of cash".
At the end of the week Standard and Poor's revised the outlook for Greece, taking it from stable to positive and leaving the rating unchanged at B-. This is what the agency announced in a note in which it explains that the decision indicates that in the next 12 months there is at least a one in three probability that the rating will also be revised upwards. "The support from the Eurogroup will probably open the road for Greece to return to the bond market this year”, writes the agency.
THE FED WILL NOT RAISE RATES. BRAZIL WILL CUT THEM
The fifth meeting of the US central bank this year will close on Wednesday. The Fed has already made two of the three increases in the cost of money forecast for 2017. But the slowdown in the US economy has partially changed expectations: now only 50% and experts expect a third increase by the end of December. Complicating the macro picture is the difficult internal US political situation, clouded by the increasingly bitter conflict over Russiagate.
It is not the only geo-political emergency in the American continent. At the end of the week, at least on paper, there should be a vote in Venezuela on the constitutional reform desired by President Maduro, but tensions are skyrocketing. Meanwhile, during the week, the Brazilian central bank could cut back in an attempt to revive growth compromised by the political impasse.
ON WALL STREET THE BIG DIGITAL ACCOUNTS PARADE
The parade of financial statements of US companies continues. Tomorrow it will be the turn of General Motors, Caterpillar, Mc Donalds' and Texas Instruments. Friday will be the turn of the big oil companies, Chevron and Exxon. However, Wall Street's attention will be focused on the quarterly reports of the big names in the new economy, the real rulers of the stock market: Amazon, Alphabet and Facebook, which are presenting themselves for examination on the markets with a total capitalization of 1.664 billion dollars, 450 billion more from a year ago. Amazon, in particular, accounts for about 50% of global e-commerce, while Alphabet (formerly Google) and Facebook control 80% of advertising in the digital world.
