Bussola il punto Intesa Sanpaolo viewpoint

Intesa Sanpaolo : The epidemic “will weigh heavily on economic activity”

Intesa Sanpaolo : United States – At its April meeting, the FOMC reinforced its commitment to act aggressively and proactively in the face of the COVID-19 emergency.

Abonnieren Sie unseren kostenloser Newsletter


Weekly Economic Monitor – Weekly Economic Monitor – 30 April 2020

Intesa Sanpaolo – Research Department


The Committee warned that the epidemic “will weigh heavily on economic activity” in the near term, and “poses considerable risks” in the medium term but refrained from making forecasts.

As regards monetary policy, the Fed maintained its generic forward guidance on rates, also in light of market expectations considered “appropriate”, while purchases will continue in order to support the functioning of the market. In the present phase, the Fed will keep a navigating by sight, using all the tools available.

United States. The April Employment Report , due out next week, will shed light on the deterioration of the labour market at the height of the lockdown, probably outlining a collapse in non-farm payrolls by around -19 million, and a rise in the unemployment rate to around 15%, setting a new post-WWII high, but below the peak reached during the Great Depression, as a result of the expected contraction of participation.

The ECB’s latest monetary policy measures are aimed at the money market and guarantee generous liquidity conditions to all segments of the European banking system. No particular changes emerged about the purchase programs, except that the ECB considers the PEPP as a program that renders OMTs useless in these circumstances, thanks to its flexibility.

The week’s market movers

In the Eurozone, March industrial output data will be released this week: unprecedented contractions are forecast both in Germany (-17.8% m/m) and France (-20% m/m), due to the effects of the shutdown imposed by the national governments.

The second estimates of April PMIs should confirm the composite Eurozone index at a long-term low of 13.5, from 29.7, the manufacturing index at 33.6 from 44.5, and the services index at 11.7 from 26.4. Lastly, euro area retail sales are also seen to plunge in March, by -10.0% m/m from 0.9% m/m.

This week, only a few data releases are lined up in the United States . Focus will be on the April Employment Report, expected to be extremely negative, but also affected by major uncertainties in terms of both job losses and the increase of the unemployment rate, due to multiple factors tied to the definition of the variables and to individual behaviour.

The message will in any case be consistent with the indications provided by data on jobless claims: record-breaking drop of employment figures and surging unemployment rate to around 15%, well above the high hit during the great recession.

The April non-manufacturing ISM is expected to crash to long-term lows, as has been the case for all the other April survey indices. New jobless claims should stay at around 4 million in the closing week of April.


Appendix
Analyst Certification

The financial analysts who prepared this report, and whose names and roles appear on the first page, certify that: (1) The views expressed on companies mentioned herein accurately reflect independent, fair and balanced personal views; (2) No direct or indirect compensation has been or will be received in exchange for any views expressed. Specific disclosures: The analysts who prepared this report do not receive bonuses, salaries, or any other form of compensation that is based upon specific investment banking transactions.

Important Disclosures
This research has been prepared by Intesa Sanpaolo S.p.A. and distributed by Banca IMI S.p.A. Milan, Banca IMI SpA-London Branch (a member of the London Stock Exchange) and Banca IMI Securities Corp (a member of the NYSE and NASD). Intesa Sanpaolo S.p.A. accepts full responsibility for the contents of this report. Please also note that Intesa Sanpaolo S.p.A. reserves the right to issue this document to its own clients. Banca IMI S.p.A. and Intesa Sanpaolo S.p.A. are both part of the Gruppo Intesa Sanpaolo. Intesa Sanpaolo S.p.A. and Banca IMI S.p.A. are both authorised by the Banca d’Italia, are both regulated by the Financial Services Authority in the conduct of designated investment business in the UK and by the SEC for the conduct of US business.
Opinions and estimates in this research are as at the date of this material and are subject to change without notice to the recipient. Information and opinions have been obtained from sources believed to be reliable, but no representation or warranty is made as to their accuracy or correctness. Past performance is not a guarantee of future results. The investments and strategies discussed in this research may not be suitable for all investors. If you are in any doubt you should consult your investment advisor.
This report has been prepared solely for information purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any financial products. It should not be regarded as a substitute for the exercise of the recipient’s own judgement.
No Intesa Sanpaolo S.p.A. or Banca IMI S.p.A. entities accept any liability whatsoever for any direct, consequential or indirect loss arising from any use of material contained in this report.
This document may only be reproduced or published together with the name of Intesa Sanpaolo S.p.A. and Banca IMI S.p.A.. Intesa Sanpaolo S.p.A. and Banca IMI S.p.A. have in place a Joint Conflicts Management Policy for managing effectively the conflicts of interest which might affect the impartiality of all investment research which is held out, or where it is reasonable for the user to rely on the research, as being an impartial assessment of the value or prospects of its subject matter. A copy of this Policy is available to the recipient of this research upon making a written request to the Compliance Officer, Intesa Sanpaolo S.p.A., 90 Queen Street, London EC4N 1SA.
Intesa Sanpaolo S.p.A. has formalised a set of principles and procedures for dealing with conflicts of interest (“Research Policy”). The Research Policy is clearly explained in the relevant section of Banca IMI’s web site (www.bancaimi.com).
Member companies of the Intesa Sanpaolo Group, or their directors and/or representatives and/or employees and/or members of their households, may have a long or short position in any securities mentioned at any time, and may make a purchase and/or sale, or offer to make a purchase and/or sale, of any of the securities from time to time in the open market or otherwise. Intesa Sanpaolo S.p.A. issues and circulates research to Qualified Institutional Investors in the USA only through Banca IMI Securities Corp., 245 Park Avenue, 35th floor, 10167 New York, NY,USA, Tel: (1) 212 326 1230. Residents in Italy: This document is intended for distribution only to professional investors as defined in art.31, Consob Regulation no. 11522 of 1.07.1998 either as a printed document and/or in electronic form. Person and residents in the UK: This document is not for distribution in the United Kingdom to persons who would be defined as private customers under rules of the FSA.
US persons: This document is intended for distribution in the United States only to Qualified Institutional Investors as defined in Rule 144a of the Securities Act of 1933. US Customers wishing to effect a transaction should do so only by contacting a representative at Banca IMI Securities Corp. in the US (see contact details above).

Valuation Methodology

Trading Ideas are based on the market’s expectations, investors’ positioning and technical, quantitative or qualitative aspects. They take into account the key macro and market events and to what extent they have already been discounted in yields and/or market spreads. They are also based on events which are expected to affect the market trend in terms of yields and/or spreads in the short-medium term. The Trading Ideas may refer to both cash and derivative instruments and indicate a precise target or yield range or a yield spread between different market curves or different maturities on the same curve. The relative valuations may be in terms of yield, asset swap spreads or benchmark spreads.

Coverage Policy And Frequency Of Research Reports

Intesa Sanpaolo S.p.A. trading ideas are made in both a very short time horizon (the current day or subsequent days) or in a horizon ranging from one week to three months, in conjunction with any exceptional event that affects the issuer’s operations. In the case of a short note, we advise investors to refer to the most recent report published by Intesa Sanpaolo S.p.A’s Research Department for a full analysis of valuation methodology, earnings assumptions and risks. Research is available on IMI’s web site (www.bancaimi.com) or by contacting your sales representative.

Source: BONDWorld