{"id":1335,"date":"2013-10-31T07:00:00","date_gmt":"2013-10-31T07:00:00","guid":{"rendered":"http:\/\/starthostunlimiteddmffassi-ss.stackstaging.com\/bondworld.ch\/home\/sites\/20b\/7\/760c69a11c\/public_html\/investmentworld.ch\/index.php\/2013\/10\/31\/viewpoint-we-expect-numerous-questions-on-the-stress-tests\/"},"modified":"2013-10-31T07:00:00","modified_gmt":"2013-10-31T07:00:00","slug":"viewpoint-we-expect-numerous-questions-on-the-stress-tests","status":"publish","type":"post","link":"https:\/\/www.investmentworld.eu\/ch\/viewpoint-we-expect-numerous-questions-on-the-stress-tests\/","title":{"rendered":"Viewpoint: We expect numerous questions on the stress tests"},"content":{"rendered":"

This Thursday, the ECB will confirm a markedly accommodative rhetoric and the downward bias on interest rates. The ECB will also reassert that it is ready to resort to new medium-long term refinancing operations….<\/span><\/span><\/span><\/span><\/p>\n

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However, we do not expect a formal announcement to be made already this Thursday, and the decision may even be postponed until the beginning of 2014. Details on the publication of minutes may also at last be disclosed. We expect numerous questions on the stress tests, although we doubt Draghi will offer any additional information.
The November ECB meeting should once again prove to be rather interlocutory. The central bank will confirm that the recovery in the euro area remains very weak, and that risks are still skewed to the downside. Data over the past month have in fact brought no indication of a possible acceleration of the economic at the turn of the year. The ECB may repeat that the exchange rate is one of the factors influencing its assessment of the macroeconomic outlook, but beyond this we do not expect any remarks that may hint at a further slackening of policy rates. The ongoing slowdown of monetary aggregates and of lending to enterprises represents a further reason for caution. Quarterly M3 growth slowed further in September, to 2.2% y\/y, a low since January 2012. In September, lending to non-financial firms levelled of at -3.5% y\/y, from -3.8% y\/y the previous month, but loans with a maturity of over one year contracted at a sharper pace. It may be only a matter of time before the accommodative monetary policy, and the (very) gradual recovery, manage to reverse the lending downtrend. Indeed the lending survey for 3Q 2013 outlines a stabilisation of credit conditions. For the first time since 2009, the banks interviewed expect an improvement in the lending conditions for enterprises and on
consumer credit in the months ahead. However, while conditions on the supply side are set to improve going forward, demand for loans, in particular in the corporate segment, is still slowing, given the weakness of investments in machinery. The reference framework suggests that the ECB will want to reassert that the pressures on the underlying trend of consumer prices will stay slack in the medium term as well, and to confirm its downside stance on interest rates. A more exhaustive assessment of the macro outlook, and indications on the course of monetary policy, will come in December, when the ECB will update its estimates for 2014 and publish an initial forecast of growth and inflation in 2015, therefore providing indications on the path of monetary policy in the next 18 months.
As regards non-standard measures, we believe the ECB will want to confirm its readiness to launch new refinancing operations with a maturity longer than one year, to buffer the ebbing of liquidity upon maturity of the 36-month LTRO launched in December 2012, and keep its monetary policy bias unchanged. However, we do not expect a possible date to be announced before December or early 2014. Systemic excess reserves have dropped to 200 billion, with little
or no repercussions on the EONIA rate. A Fed effect may materialise, and reverse once the tapering process begins. However, it is also true that the market is gradually normalising. The latest lending survey showed that, for the first time, access and the cost of funding have improved to the point of contributing to an easing of credit terms, together with the decline in sovereign bond yields. Therefore, there seems to be no need to supply additional liquidity, or in
any case to make a formal announcement before the end of the year. The ECB will closely monitor the pace at which the funds are repaid, and the trend of monetary market rates, and take its decisions consequently. Mersch, a member of the ECB Governing Council, has said that if funds continue to be repaid in an orderly manner, another LTRO may not be necessary.
At the November meeting, details may be provided on the publication of minutes, as indicated by Draghi in August.<\/p>\n

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Appendix
Analyst Certification<\/strong>
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.<\/p>\n

Important Disclosures<\/strong>
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\u2019s 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 (\u201cResearch Policy\u201d). The Research Policy is clearly explained in the relevant section of Banca IMI\u2019s 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.
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Valuation Methodology<\/strong>
Trading Ideas are based on the market\u2019s expectations, investors\u2019 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<\/strong>
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\u2019s 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\u2019s Research Department for a full analysis of valuation methodology, earnings assumptions and risks. Research is available on IMI\u2019s web site (www.bancaimi.com) or by contacting your sales representative.<\/p>\n

Source: BONDWorld – Intesa Sanpaolo \u2013 Research Department<\/p>\n","protected":false},"excerpt":{"rendered":"

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