It would be "imprudent" to keep rates unchanged until inflation climbs back to the 2% level. So said the chair of the Fed Janet Yellen in Cleveland, in the first speech given after the meeting of the board of the central bank. There is a risk, explained Yellen, that too accommodating a policy could have negative effects on the labor market. “My colleagues and I – she added – could have misjudged the strength of the labor market”. Thus the prospect of a rate hike as early as December takes shape, with an immediate fallout on the dollar, which is strongly recovering against the euro to 1,1788.
THE TAX REFORM IS UNDERWAY. ALABAMA FURTHER TO THE RIGHT OF TRUMP
Wall Street takes note of it, without making drama: attention is focused today on the start of the tax reform process, which provides for a cut in the tax rate of companies to 20% from 35%. Taxation for natural persons should not exceed 35% of income. It will be an opportunity for redemption for Donald Trump: yesterday the president's candidate in the Republican primaries in Alabama was defeated by far-right judge Roy Moore, supported by Steve Bannon.
AT THE START ALSTHOM.SIEMENS. TODAY THE SAINT NAZAIRE AFFAIR
The rise in the dollar certainly does not displease the Eurozone, grappling with the scenario opened up by the German vote. Yesterday Emmanuel Macron relaunched the idea of closer integration between France and Germany, presenting a series of concrete measures, from defense to the right of asylum to the convergence of budgetary policies and the expansion of the Erasmus project before and after the University.
In this climate, Siemens-Alstom was born, a "merger of equals" of the railway activities from which the second largest group in the sector was born. It is an agreement with a strong political content, criticized in France because, albeit with guarantees on governance (and the choice of the CEO entrusted to Paris) it marks the passage of control to the partner from across the Rhine.
Today, in Lyon, there may be an encore between Fincantieri and Stx, the first step in the integration between Naval Group, the parent company Thales and, for the Italian side, Leonardo (+1,49%) and Fincantieri (-2,05%) . In reality, the great agreement will require time and portfolio corrections because today the reports are too unbalanced in favor of Paris. But it is probable that “the Airbus of the sea” will set sail today with the long-awaited sale of Stx to Fincantieri which has a formidable performance behind it: +154,74%.
ASIA RISES, WALL STREET BE CAREFUL
In this context, once the upward push has been slowed down, the Stock Exchanges await signals on the direction to take. Hong Kong gains 0,4% and the CSI300 index of Shanghai and Shenzhen stock exchanges 0,1%. The stock exchanges of South Korea and India are flat.
The drop in Tokyo (-0,5%) is due to the dividend detachment of many stocks. In Japan, too, tax reform plans are holding the table, pending the elections. Tokyo Mayor Yuriko Koike has decided to challenge Prime Minister Shinzo Abe.
Little move Wall Street: Dow Jones -0,05%, S&P 500 +0,01%. Modest recovery of the Nasdaq: +0,15%. After four down sessions, Apple raises its head again (+1,72%), thanks to the push of some brokers: Raymond Jones has raised the Apple target to 180 dollars (from 170).
On the corporate front, a slump for Nike (-3,18%) after the accounts which also signaled higher-than-estimated profits (0,57 dollars per share against 0,48 expected).
OIL STILL AT HIGH HIGHS
Oil is still at its highs this morning: US crude trades at 52,14 dollars a barrel. On the question of Iraqi Kurdistan, according to Moscow, oil projects in that area "must go ahead" even after the controversial referendum for independence from Baghdad, strongly contested even by two regional powers such as Iran and Turkey. This was stated by Russian Energy Minister Alexander Novak. At Piazza Affari Eni +0,3%, Saipem unchanged, Tenaris -0,2%.
EU EXCHANGES MOVE LITTLE, MADRID SUFFERS
Flat closure for European stock exchanges. The market is trying to understand the possible effects of the German elections on the stability of the Eurozone. Futures up slightly this morning. In Milan, the Ftse Mib partially recovered the losses of the beginning of the week: the index closed with a gain of 0,18% at 22.430 points. Paris in plaster (+0,03%). Frankfurt also moved little (+0,08%), in the red London (-0,21%). The weakest was Madrid (-0,26%).
THE BTP/BUND GAP WIDES. TODAY THE AUCTION BOT
The Italian secondary market closes the session with a minus sign, penalized by the exacerbation of tensions between the United States and North Korea: war scenarios, as always, push money towards safe havens, disfavoring the peripherals.
The yield of the 10-year BTP, 2,18%, did not change much, but the spread with the Bund widens and reaches 176.90 basis points (+0,63%). The widening of the Italy/Germany yield premium is also a consequence of the switch to the new Italian benchmark August 2027, coupon 2,05%, compared to June 2027, coupon 2,20%, used until Monday evening. The Btp/Bund spread reached a session high at 179,5 cents, its peak since June 9, before retracing.
On the primary front, the auction of indexed Ctz and Btp, the offer of the ninth tranche of the zero coupon on May 30, 2019 and the reopening of the BtpEi in May 2022 and September 2032 held the test. The performance of the Ctz, placed at the new historic low of -0,22%, compared to -0,139% at the end of August, with a coverage ratio that rose to 2 from 1,68 in the last auction. The 12-month Bot offer will be held today.
FERRAGAMO PARADE IN PIAZZA AFFARI, EU STOP AT LUXOTTICA
Luxury sector in the limelight the day after the Milanese fashion show. The queen of the session was Salvatore Ferragamo (+3,11%): Deutsche Bank improved its stock recommendation from hold to buy with a target price of 26,5 euros. According to the analysts of the German Bank, the Florentine house is the most interesting case of turnaround after that of Gucci, another Florentine brand today in the Kering stable. The price level contributes to favoring a possible rally: only +2,89% since the beginning of the year.
Ynap (+2,14%) is also making a big splash, continuing last month's rally (+38% approximately) on the wave of possible interest from Alibaba. Yesterday the driver of the increase was the buy of HSBC, a target price of 37 euros. The new target price promises a potential upside of 21%. Out of 20 analysts surveyed by Bloomberg 15 recommend buying the stock and 4 to keep it in portfolio, the remainder to sell it. Based on current consensus estimates (31,11 euros), the expected P/E for this year is 61,40 times.
Cold shower in the evening instead for Luxottica (-1,51%). The European Commission has launched an in-depth investigation to evaluate the integration plan of the Italian group with Essilor in light of the EU merger regulation. The decision will come by February 12. The stock also paid for the negative recommendations of analysts: Kepler Cheuvreux reduced its target price from 58 to 53 euros (buy rating), JPMorgan from 51 to 49 euros (neutral rating). On the other hand, Safilo made strong progress (+3,3%).
TELECOM SLIDE, MEDIASET WANTS THE WORLD CUP
Waiting session for Telecom Italia (+0,19%). After the Italy-France bilateral meeting, the meeting of the committee on golden power, which must assess whether Vivendi has violated the rules on transparency regarding the control assumed in Telecom Italia, has been postponed to 28 September. The summit, in theory, will not deal with issues concerning private individuals but, given the strategic importance of telecommunications, it is easy to guess that the issue will not be overlooked. The government's orientation would be to use special powers, without however forcing the hand with sanctions: it would therefore go in the direction of continuing with moral suasion, awaiting Vincent Bolloré's moves on the future CEO of the telecommunications group.
Mediaset loses ground (-0,89%). CFO Marco Giordani confirmed the offer presented to Fifa (the International Football Federation) to broadcast the 2018 and 2022 editions of the main football competitions for national teams, including the World Cup. "We are on the market and we are interested in operations if there is a return", said Giordani, specifying that Mediaset's offer is rational "from an economic-financial point of view". The company closed the six-month period with revenues slightly down, at 1,846 billion euros, but with a positive net result of 74,8 million compared to the red of the previous year.
BANCO BPM, THE CHOICE OF THE INSURANCE MEMBER TODAY
The bankers were positive, having done better than the sector in Europe. Purchases on Bper (+2,95%) and Banco Bpm (+2,39%) in view of the expiry today of the terms for the binding offers for the bancassurance agreement: among the applicants Cattolica Assicurazioni (-0,6% ), Generali (-0,8%) and Covea.
Banca Mediolanum (+1,45%). Steady inflows in the asset management sector: 8,6 billion in August (76 billion since the beginning of the year) with assets rising to around 2.032 billion. The result of Eurizon stood out, amounting to approximately 1,35 billion for a total balance sheet of 1,884 billion of the Intesa Sanpaolo group (+0,6%).
CARRARO, COLD MARKET ON THE BUSINESS PLAN
Finally, the thud of Carraro (-4,55%, after having touched -8%) on the day of the presentation of the business plan to 2021 should be noted. The company aims to achieve a turnover of 670 million euros at the end of the plan. 90 million R&D investments are planned to support new technologies, a debt that will decrease to 91 million and a payout ratio of 50%. President Carraro: "Realistic objectives".
