The Federal Reserve cut rates by a quarter point as expected. But a fundamental uncertainty about the next steps emerges from the top of the central bank. Three members of the board voted against Jay Powell's decision: Eric Rosengren and Esther George spoke out against the decrease, James Bullard demanded a half-point cut on the contrary, however less than what was requested by Donald Trump who angrily tweeted against “a Fed without vision, led by a bad communicator”. And now? There is some uncertainty about the next steps. Probable, but far from certain, a new cut within the year, for which seven members line up (out of 17 on the enlarged board). For 2020, half of the bankers are betting on another cut, just as many, however, expect an opposite choice.
THREE OUT OF TEN AGAINST POWELL, UNCERTAINTY ABOUT 2020
Wall Street's performance reflected the doubts of the central bank: the indices first fell, in view of a 2020 with more rigid conditions. Then they recovered after statements by Powell, who reiterated that the Fed will proceed by looking at the economic situation. But what heartened the markets were above all the new purchases on repos, an indication of the desire to put a stop to the drainage of liquidity. In summary, a slightly more "hawkish" Fed than expected but not too much to avoid a collision with the White House. "A choice that serves no one - comments Donato Masciandaro in the Sole 24 Ore - except for the Fed itself to float by pretending to be independent from both President Trump and Wall Street". A severe analysis that may apply to other central bankers, grappling with an unwelcome novelty: monetary policy, stressed in recent years, is less and less effective:
THE BOJ DOES NOT EXCLUDE NEW INTERVENTIONS
The confirmation comes from the Bank of Japan summit which closed a few hours ago. The BoJ has released an update note on the monetary policy guidelines. From an operational point of view, nothing changes, but in the press release there is a hint of a possible worsening of the macro picture. The Bank of Japan has warned that it could take further steps in October to boost growth.
ALSO BERN IS CONFIRMING WITH SUPER LIGHT RATES
Today, however, Switzerland will have to decide whether to further cut the cost of money, already the cheapest in the world, to avoid the effects of the franc rush.
On the other hand, the Bank of England, squeezed by the Brexit effect, will not move. The data coming from the economy (unemployment at 3,8%, wages rising by 4%) on the contrary, would make a ministretta advisable.
Tokyo's Nikkei index slowed down after the press release: in the final session it gained 0,4%, against +1% last night. The yen strengthens to 107,8 against the dollar.
The Hong Kong Stock Exchange loses 1%, those of China are on parity.
The yuan weakens to 7,10.
LITTLE MOVE WALL STREET. FEDEX AND NETFLIX HOLD DOWN
The US stock markets, which had already largely discounted the Fed's move, did not move much. On Wall Street, the Dow Jones closed up 0,13%, the S&P 500 practically unchanged +0,03%, the Nasdaq lost 0,1%. %.
Microsoft +0,82%. The giant will distribute a quarterly dividend of $0,51 (+10,9%). The group has also been planning a $40 billion buyback.
Netflix subscribers drop for the first time since 2011.
Also noteworthy is the slump of FedEx (-14%) after lowering its profit estimates, which could be influenced by the trade war between China and the United States. JP Morgan lowered the company's target price to $146 from $168, a neutral judgment confirmed.
On bonds, too, the Fed effect was modest, a modest increase in Treasury Note yields, the generic 1,79-year US bond traded at XNUMX% this morning.
Brent oil moved little at 63,6 dollars a barrel, closing yesterday -1,5%.
The euro dollar fell 0,4% to 1,103.
BUSINESS PLACE BOUNCES. AT THE TOP OF EUROPE. BTP ALLO 0,88%
Piazza Affari +0,67%, close to 22 points, closed one of the best markets in Europe on a positive note, awaiting the decision on the Fed's rates and fears of new tensions on the international front.
In the rest of Europe: Frankfurt +0,14%; Paris +0,09%; Madrid +0,31%. Outside the Eurozone London -0,1%, Zurich -0,09%.
The Btp market was not moved pending the decisions of the Fed.
The Italian secondary ended the session uphill, with investors' eyes focused on the Fed's verdict. The gap between BTP and Bund rates on the 10-year segment stood at 139 basis points from 141. The 0,88-year rate is at 0,93 .XNUMX% from XNUMX%.
BANKS IN RECOVERY ON THE MEDIOBANCA CIA
Session under the banner of recoveries for bankers on the rise after the correction on the eve. All things considered, the underlying tone remains positive after the expansive maneuver by the ECB. The best were Bper Banca (+0,6%) and Ubi Banca (+0,45%). Unicredit in fraction of increase (+0,18%). Still brilliant among financial Nexi (+2,14%).
Attention was focused on Mediobanca (+0,71%) and Generali (+1,01%) after Del Vecchio's blitz in Piazzetta Cuccia: in the opinion of analysts, the king of eyewear will not stop at 6,94 % in the merchant bank. Equita underlines that Del Vecchio's move "increases the speculative appeal of Mediobanca which is supported by very solid fundamentals, but does not see an increase in the probability of corporate actions in the short term".
HONG KONG WEIGHTS ON LUXURY, US CLOUDS FOR PRYSMIAN
Moncler sinks, leaving 7% on the ground after the CEO yesterday said he was cautious about the 2019 forecasts due to the protests in Hong Kong. Mediobanca Securities has a target of 37 euros, while Equita sees a negative impact of 2% on 2019 profit. Kepler Cheuvreux has reduced the target price on the stock from 44 to 41,5 euros, confirming the buy recommendation.
Another sore point was Prysmian (-2,97%), which continues to suffer from the effects of the cut in Corning's estimates for the fiber optic cables business. JP Morgan has revised its opinion on the company due to the deterioration of the fundamentals of the telecommunications cable sector, but recommends 'overweight' with a target of 23,5 euros.
A good start for Atlantia (+1,54%) the after Castellucci, despite the controversy over the bonuses attributed to the outgoing ad. The game on the future of Alitalia is getting underway.
The utilities led by Enel (+2,04%) and A2A (+1,25%) performed well. Hera scores an increase of 2,13%.
LEONARDO BRAKED BY RENTI. MEDIASET, THE WITHDRAWAL IS WITHDRAWAL
Leonardo swerves instead (-1,55%), which did not benefit from the intervention of Matteo Renzi who, in an interview, called for a merger with Fincantieri. According to a trader, “the market wouldn't like the deal, but I don't see how Renzi can have a say in the group's future. Leonardo sees a correction phase, after the rise that began at the end of August".
Also noteworthy are the gains of Amplifon +3,08% and the recovery of Juventus +2,32% before the positive debut in the Champions League.
Mediaset stable, just below the withdrawal price at 2,77 euros three days after the deadline set for joining next Saturday. The situation of the subsidiary Mediaset Espana is more uncertain, which in the Media for Europe project will merge with Alfa Romeo under a European holding company. The share is listed at 6 euros, a far cry from the withdrawal price of 6,54 euros. According to Berenberg, if the operation is successful, the Alfa Romeo intends to detach a dividend of 100 million and start a buyback of up to 280 million.
