The US economy risks “facing nasty surprises” if it waits too long to raise rates. Therefore "it makes sense" proceeds gradually to increase the cost of money. Janet Yellen herself said it on the eve of Donald Trump's official investiture. For the Fed chairwoman, who spoke at the Commonwealth Club of California in San Francisco, the risk is to cause a surge in inflation or a sharp increase in financial instability, "or both", underlined Yellen, noting that the new president inherits a much better economic situation than eight years ago.
The confirmation came from the Beige Book which shows that the economy is growing, "albeit at a modest pace", throughout the country. There is a shortage of skilled labor in the labor market and "in many districts an even tighter labor market is expected, with wage pressures likely to increase".
A Bull message is therefore coming from the USA, perhaps too robust for Mario Draghi's tastes, who will thus have to face pressure from the Bundesbank today in Frankfurt to accelerate the cut in Qe, given the rapid rise in inflation. Draghi, however, will do everything to avoid shocks, clarifying that progress is far from being considered consolidated, and that the Eurozone still needs an extremely expansive monetary policy. All while waiting for the surprises that, as usual, the opening show of the US presidency promises.
TOKYO STARTS AGAIN, NEW SAMSUNG COLLAPSE
Meteo Borsa forecasts a robust reaction of the markets to Yellen's message. The dollar recovered on the Asian markets, recovering the lost ground against the yen at 114,48 against 112,57. The euro trades at 1,0641. The recovery of the US currency favors the recovery of the Tokyo Stock Exchange (+1,1%) despite the new crash of Toshiba (-26%): the American losses of the group are higher than expected. Samsung improves in Seoul (+2,7%) after the judiciary rejected the arrest request for the giant's number one.
Chinese lists were weak: Hong Kong and Shanghai -0,4%. Xi Jingping continues his pro-globalization campaign in Davos without reacting to the accusations of the new US Commerce Minister, Wilbur Ross, who in the Senate defined China as "the most protectionist country in the world". Mixed session on Wall Street in the wake of signals launched by Janet Yellen on rates: the Dow Jones lost 0,11%, while the S&P 500 gained 0,18%. Better the Nasdaq +0,31%.
Yields increase, the prices of T bonds traded decrease by 2,42%. The financials sector closed on positive ground (+0,8%) despite the negative closure of Goldman Sachs (-0,6%) and Citi (-1,7%) which also presented very positive quarterly results.
JP MORGAN PROMOTES TENARIS
Qualcomm (+1,5%) contributed to supporting the Nasdaq: there will not be an antitrust complaint against the chip giant. In the aftermath of the Stock Exchange, Netflix made a great leap (+7,91%), driven by the growth in subscriptions outside the United States. The black jersey goes to Target (-5,8%) after the umpteenth confirmation that the Christmas campaign was disastrous for traditional commerce, crushed by online sales.
Brent Oil finished down 2,7% but is up 1% this morning. According to a report by the IEA (International Energy Agency), in 2017 the production of shale oil in the USA will start to grow considerably again. Exxon Mobil -1,4%. In Milan, oil stocks rose: Eni +0,6%, Saipem +1,3%. Leap by Tenaris (+2,7%): tonight JP Morgan raised its recommendation to Neutral, from the previous Underweight. The target price rises to 35 dollars, it was 24,5 dollars before the increase.
Saras fell by 4,6%, to 1,574 euros, after the announcement that Rosneft sold the entire 12% stake it still held to institutional investors at a price of 1,53 euros per share.
MILAN +0,3%, ABROAD PURCHASES FOR THE BTP 15
The European Stock Exchanges moved little on the eve of the ECB directorate. In reality, the markets do not expect any particular news from the meeting. On the contrary, attention is already focused on the inauguration ceremony of the new US president, Donald Trump.
Slight acceleration in the final in Milan for the Ftse Mib which closed the session at 19.358 points, up by 0,3%. Frankfurt (+0,5%) and London (+0,4%) were also positive, Paris (-0,2%) in the red. Pearson shares fell to the City: -27%, to 582 pence, a level not seen since September 2009. The crisis stems from the drop in sales in US universities. The publisher has warned that operating profit for 2017 will be £630m at most: analysts had expected £700m on average.
Weak closure for the Italian bond market in an overall negative session for the entire sector of the euro area, in the face of substantial supply activity by sovereign issuers.
The protagonist of the day was Italy, which placed 6 billion euros of a new 15-year BTP via syndicate, collecting orders for 21 billion. Approximately 60-65% of the security was placed with foreign investors and the remainder with Italian entities. 11% of the issue went to the USA. Today the auctions of Spain (5 billion) and France (10 billion) will be held.
On the rise, the Italian 1,94-year rate rose to around 1,91 from 167% at the end of yesterday's session, while the spread with the same maturity of the Bund narrows to XNUMX basis points.
BPER SHOPPING IN VALTELLINA, CITIGROUP SIZES GENERALS
Yesterday was the day of small and medium banks. Sale Carige (+2,4%) and Popolare di Sondrio (+2,7%) does even better. But, above all, the race for Creval exploded (+17%, at 0,476 euros), the best stock on Piazza Affari after announcing the choice of two advisers, Equita and Mediobanca, to help it select possible strategic options. The operation that has been talked about for months is a possible acquisition of Creval by Banca Popolare dell'Emilia (Bper, unchanged yesterday) which seems to aim at a threesome marriage that also includes Popolare di Sondrio.
Slight drops instead for the main banks: Unicredit ended the session down by 0,3%. The reverse split of ordinary and savings shares will be effective from 23 January. Capital Group, the first shareholder with 6,7%, is betting on the relaunch of the bank under the direction of CEO Jean Pierre Mustier.
Intesa lost 0,2%, Banco Bpm -0,2%. Positive Ubi (+0,4%). The Directorate of the Bank of Italy authorized the purchase of three of the four failing banks placed under resolution on 22 November 2015. Nuova Banca Marche, Nuova Banca Etruria and Nuova Cassa di Risparmio di Chieti were formally sold to Ubi Banca on the basis of the offer (one euro) made a week ago. Now the time has come for the authorization procedures of the ECB and the EU Commission, which should arrive within three months.
Among the insurance companies, the weakness of Generali weighed after the confirmation of a "sell" by Citigroup which raised the target to 12 from 10 euros. “We still see margin deterioration in some of its key markets, while ongoing macroeconomic uncertainty in Italy could weigh on the stock over the course of the year,” the report reads. Cattolica Assicurazioni closed up by an abundant percentage point on the day in which a newspaper spoke of Scor's entry into the capital.
EXTEND MEDIASET, FLY LUXURY
Mediaset extended in the final (+0,8%), after having floated just below parity for most of the session on the day of the meeting with analysts in London the announcement yesterday of some targets for 2020.
Luxury bought well, with Ferragamo jumping by more than 2% in the wake of Burberry's better-than-expected quarterly results. An increase of more than 1% for YNAP and almost 2% for Moncler.
