Inflation, recession, energy crisis… There are very few reasons to rejoice at the approach of a winter when some of our leaders have decided to drop the tie for the turtleneck (Bruno Lemaire) to save the heating bill and avoid rationing.
Financial market moment
Before Covid, the world’s almost synchronous economic growth was 3.5% per year with more than low interest rates and inflation on the mat.
Today, Europe has already been in recession since the beginning of the second half. It’s a safe bet that the level of inflation will still struggle to fall below 6% next year.
In this context, the equity markets ended up giving way and the CAC 40 now shows a performance of -20% since the start of the year. This is therefore the first sacrifice that investors must accept for the moment.
Valuations are adapting to the stagnation of the Slavic conflict and to new economic and monetary conditions. US 10-year rates are close to 4%, also restoring opportunities to act on the bond asset class, which is posting one of its worst performance years in 2022.
Only the dollar prances in the lead, with its stature as an international reserve currency and the system of dollarization of raw materials.
While corporate results appeared solid until the first half of the year, Fedex’s warning reminds us that if the macroeconomy suffers, the microeconomy will also suffer.
Few refuges exist but opportunities arise: the banking sector, mergers and acquisitions (M6, etc.), high-dividend shares can give glimmers of hope to the most reckless.
With regard to the remuneration of savings, retail banks are beginning to take into account the new interest rate situation by offering more attractive remuneration on term accounts (2-3%). A massive return to the equity market cannot be in the news before entering winter because the cut in the Russian gas supply is difficult to anticipate.
To take a step back, let’s take a look at the latest adverse events. The Covid and then the war in Ukraine raise the questions of the collective errors of humanity which prove to be frequent due to erroneous beliefs, a lack of forecasts or, less prosaically, due to the natural predation of man.
This is demonstrated by the book by journalist Guillaume Erner (“Failing is an art”) which theorizes and then highlights “Superfails”, those moments when human beings unknowingly create the conditions for their own collective failure.
The value of the month: M6
The announcement of the abandonment of the merger with TF1 has not taken away the speculative appeal of the television channel, which is attracting the interest of private investors (Xavier Niel, Stéphane Courbit, etc.) for one sector (media broadcasters classics) whose multiples are very inexpensive (EV/EBITDA 2022 =<3x for a 2022 Free Cash Flow Yield of 14% for M6).
The final word
The barrel of oil has just lost 45 dollars (a drop of 35% compared to its peak in March 2022).
This “petrol blues” (as the Rolling Stones sang in 1978) will restore purchasing power to motorists and consumers.
