2023-06-14 05:45:00
We will still have to talk regarding the United States this morning, since it is from Wall Street that the impulses that drive the European stock markets come from. It’s “Fed Day,” with near-nonexistent suspense over the upcoming decision and few doubts regarding the message Jerome Powell will seek to convey. The equity markets, for their part, continued to rise, on both sides of the Atlantic.
Is it already folded? Everything contributes to one of the markets’ favorite scenarios coming true. Inflation continues to decline in the United States, the Fed should pass its turn this evening and maintain the status quo on its rates. And my little finger tells me that it’s going to continue to speculate loudly that the peak rate has passed, or rather that the Fed Funds rate won’t go any higher than it currently is, which comes back pretty much to say the same thing. Please note, I am not saying that this is the majority position. Moreover, the market still considers that a rate hike is a credible scenario at the meeting at the end of July. But in the short term, it’s almost sewn with white thread.
Thus, the Fed should pass its turn tonight. Vocabulary matters, as I pointed out on Monday. US central bankers seem to want to communicate with the term skip, i.e. “jump” regarding this June meeting. The word has a different connotation from the frequently used term pause (it is the same word in French and English). Pause suggests that the monetary tightening cycle may be over. Skip that he is not. Once once more, the difference is subtle, but sometimes a well-calibrated message can replace an action. If the Fed maintains a firm tone, economic players will keep their foot on the brake pedal, which will contribute to the objective of slowing the economy and therefore curbing the overheating of prices. The central bank might thus save itself a future monetary tightening by the sheer force of its communication. The weight of words, in short.
To sum up: the bottled bet of the day is that the Fed will leave rates unchanged while still rolling their eyes, both to impress financiers and to retain the ability to act on the data that will come back. the next meeting here.
What is funny, finally if we consider that the interest rate market is a funny thing, is that the confirmation of the decline in US inflation yesterday led to a small tectonic movement of adjustment. The bond market no longer really believes in a rate cut this year. This position is consistent with what emerges from the latest survey conducted by Bank of America among major asset managers, who are now in the majority expecting a first rate cut sometime during the 1is semester 2024 and more in 2023.
The equity markets, for their part, are still in an optimistic configuration, since the calamities promised for months do not materialize. We can probably be a bit alarmed by the skyrocketing level of complacency, because complacency is dangerous, it is what causes bubbles. But the mechanics at work remain powerful. I remind you that to counter runaway rate hikes and the disappointment of a Chinese economy that is unable to emerge from the post-covid quagmire, investors have been able to rely on an American economy that has refused to capitulate so far. and the rise of artificial intelligence. The question that strategists are now asking is whether the rise in the market will spread to other compartments and not remain confined mainly to technology. In this respect, the awakening of average values in the United States since the beginning of June is probably a positive signal.
In the rest of the news, Vladimir Putin admitted that the Russian army lacks a number of equipment in sufficient quantity. Donald Trump has pleaded not guilty to charges once morest him in the classified documents case. And Bruno Le Maire explains in the Financial Times that French public finances will get back on track thanks to savings.
In Asia Pacific equity markets, Japan continues to soar with the Nikkei 225 up 1.5% this morning. It’s more mixed elsewhere. Mainland China and Australia rose around 0.3%, while Hong Kong lost some ground. South Korea is struggling the most today, down 0.7% on the Kospi. European leading indicators are slightly bearish. The CAC40 lost 0.04% to 7287 points shortly following opening.
Economic highlights of the day
The US monetary policy decision will fall at 8:00 p.m. Previously, European industrial production (11:00 a.m.) and US producer prices (2:30 p.m.) will lead the session. The whole agenda here.
The euro is strengthening around 1.0792 USD. The ounce of gold is exchanged for 1948 USD. Oil rebounded, with North Sea Brent at $74.32 a barrel and US WTI light crude at $69.64. The performance of the american debt over 10 years stands at 3.80%. Bitcoin is stable at $26,100.
The main changes in recommendations
- Aston Martin: Jefferies goes from underperforming to retaining by aiming for 300 GBp.
- BNP Paribas: HSBC remains on the buy side with a price target reduced from 78 to 76 EUR.
- Boliden: DNB switches from buy to hold targeting 376 SEK.
- Capgemini: AlphaValue remains to be accumulated with a price target raised from 200 to 209 EUR.
- Compagnie Financière Richemont: HSBC remains on the buy side with a price target raised from 185 to 188 CHF.
- CompuGroup: Morgan Stanley goes from online weighting to underweighting by targeting EUR 41.
- Crédit Agricole: HSBC remains to be kept with a target price raised from 11 to 12 EUR.
- Essity: JP Morgan remains neutral with a reduced price target of 285 to 270 SEK.
- Galenica: UBS remains neutral with a price target reduced from 77 to 76 CHF.
- Iberdrola: BNP Paribas Exane remains outperforming with a price target raised from 12.70 to 3 EUR.
- ING: HSBC remains to be kept with a target price raised from 12 to 13 EUR.
- Intercontinental Hotels: Morningstar remains to be kept with a price target raised from 5,500 to 5,850 GBp.
- KBC: HSBC remains to be kept with a target price raised from 68 to 69 EUR.
- L’Oréal: Berenberg remains to be kept with a target price reduced from 412 to 402 EUR.
- Merck KGaA: DZ Bank goes from hold to buy targeting EUR 195.
- Nordea: JP Morgan moves from overweight to neutral by targeting 130 SEK.
- Porsche Automobil Holding: Berenberg remains long with a price target reduced from 85 to 76 EUR.
- Prudential: Jefferies remains long with a price target raised from 1900 to 2020 GBp.
- Sartorius AG: DZ Bank remains short with a price target reduced from 315 to 273 EUR.
- Societe Generale: HSBC remains on the buy side with a target price reduced from 33 to 31 EUR.
- Swatch Group: HSBC remains to be kept with a price target reduced from 370 to 300 CHF.
- Swedbank: JP Morgan goes from overweight to neutral by targeting 205 SEK.
- Teleperformance: Gilbert Dupont remains on the buy side with a price target reduced from 325 to 282 EUR.
- Tokmanni: DNB starts the follow to hold aiming for EUR 12.50.
In France
Important (and less important) announcements
- Alstom signs a cooperation agreement with Air Products to promote the development of direct zero-emission transport solutions in Poland.
- The European Commission has authorized the creation of a joint venture between Orange and Capgemini in the field of cloud computing.
- The FDA clears Bylvay (Ipsen) to treat a form of cholestatic pruritus.
- ISS recommends that Atos shareholders vote once morest the draft resolutions of board opponents.
- Elis acquires the Italian rodent and insect control company Gruppo Indaco.
- Biomérieux appoints Pierre Boulud as Chief Executive Officer.
- Xavier Niel, Matthieu Pigasse and Moez-Alexandre Zouari have submitted an offer of one billion euros to increase the capital of Casino. The distributor confirms having received a letter of intent relating to an increase in equity of €1.1 billion, including €200 to 300 million contributed by the trio.
- Ubisoft is betting on AI and virtual reality.
- Icade has signed agreements for the sale of its health division to Primonial REIM for €2.6 billion.
- An LR deputy asks Bruno Le Maire to oppose Orpéa’s restructuring plan.
- Inventiva announces positive Phase II results in an investigator-initiated clinical study evaluating lanifibranor in patients with T2DM and NAFLD.
- Theranexus reports “encouraging” preliminary Phase I/II results with Batten-1 in Batten disease.
- The small corner of dilution : Buy-Louer signs a partnership with Actusite. Les Forges de Tarbes (Europlasma) signs a €15 million contract for shells.
- They have published / They must publish:Oeneus…
In the world
Important (and less important) announcements
- Accenture will invest $3 billion to strengthen itself in artificial intelligence.
- Entain is buying Polish sports betting operator STS in a deal valued at $946m.
- Logitech CEO Bracken Darrell is stepping down effective immediately.
- Shell wants to invest $12 to $15 billion between 2023 and 2025 in low-carbon solutions.
- A judge temporarily blocks the takeover of Activision by Microsoft.
- In financial difficulty, Evolva does not rule out a sale of the company.
- Unilever extends its supply contract with Barry Callebaut.
- Aurubis on track with its growth plans, according to its CEO.
- Ford will invest $660 million to produce its new Ranger model in Argentina.
- The European Commission is expected to approve subsidies worth €2bn from the German state for ThyssenKrupp’s “green” steel plant project in Duisburg.
- Bed Bath & Beyond chooses com as a candidate to take over its assets.
- The main publications of the day: Progressive, Lennar, Fraport… The whole agenda here.
Lectures
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