2023-08-07 05:52:23
It was a bit of a mess last week on the side of economic and financial data. Mixing Apple and Amazon earnings, macro US labor market stats, the holidays, a few central bankers and bond yields and shaking hard, you got stocks and bonds down, oil up and a couple of other quirks.
We have to find the determinants of the start of the stock market week on Friday followingnoon, which is not the easiest exercise since no one seems to agree on the tectonics of the current financial plates. If I believe my diagonal morning readings, to put into perspective insofar as I am half-awake:
Two members of the Fed said that the central bank may soon review its policy, but another said the opposite. Two major American investment banks believe that the United States economy will escape recession, but one of their competitors wrote that the economic contraction is coming. Economists believe that the monthly employment report in the United States published on Friday is positive for the path of key rates because job creations are less robust than expected. But some counterparts take them for puppets because, at the same time, the hourly wage has increased and the unemployment rate has fallen.
I think we can still conclude that no one is certain and that everyone is content to make plausible hypotheses.
What is certain is that Friday’s session ended up in Europe and down in the United States. On Wall Street, the jobs report I mentioned just above was initially well received for its “rate-hikes-are-paying-so-the-Fed -will-not-have-to-take-them- once more”. But the rest of the session went less well and the closing took place down 0.5% for the S&P500 and the Nasdaq. Even Apple and Amazon were at odds on Friday. The first lost 4.8% following mixed results, which pushed its capitalization below the $3 trillion mark. Amazon has somewhat compensated for this stall by soaring 8% following quarterly, conversely, stronger than expected.
There it becomes a little more technical (and even less understandable). US bond yields jumped last week, approaching their peaks of last November. But they chickened out on Friday. So despite the fall in shares on Wall Street, which seemed to reinforce the rather negative reading of the employment figures for monetary policy. The 10-year US is showing at 4.06% this morning, while it approached 4.20% three days ago. The market still does not believe in another rate hike from the Fed in September and does not believe much either by the end of the year. If we look at the futures contracts, there is a probability of just under 40% for another turn of the screw in 2023. I rewrite it here: one of the most powerful drivers of the rise in equities in the world is back to a monetary cycle more favorable to activity, ie with a falling cost of money.
That’s good, the financiers will still be able to tear themselves apart over their analyzes of the situation this week, with the great return of price statistics. US inflation for July will be released on Thursday, ahead of producer prices on Friday. Previously, on Wednesday, China will have communicated on its consumer prices. As we wrote in Zonebourse’s weekly update at the end of last week, the two powers have very different problems to manage. Beijing faces the threat of problematic deflation, while Washington fears a reacceleration in price increases following the lull of recent months.
As for companies, the publication of quarterly results continues, at a less frantic pace than over the previous fortnight. Siemens Energy, Glencore, Bayer, Ahold Delhaize or Novo Nordisk in Europe and Eli Lilly, United Parcel Service, Zoetis and Walt Disney across the Atlantic are on the shelves. In the United States, 84% of S&P500 companies have already revealed their figures. The balance sheet remains broadly unchanged (I’m stealing the data from FactSet): companies are facing the biggest year-on-year earnings contraction since Q3 2020, but they are beating analysts’ projections (who tend to be over-pessimistic in phases of doubt, let us remember). Poor in absolute terms, but good in relative terms, in a way.
Additional information to remember to start the week:
Ukrainian attacks on Russian fleet push up grain prices Tension mounts in Africa as ECOWAS threatens to intervene in Niger to end coup US scientists reiterate breakthrough nuclear fusion. With Barbie, Warner Bros exceeds one billion dollars in revenue. Useless but intriguing information all the same: the fight between Musk and Zuckerberg might be held on August 26.
In Asia-Pacific this morning, there is something for everyone. Japan, India and Taiwan are up, while Australia, South Korea and Shanghai are losing ground. Hong Kong is evolving not far from equilibrium. European leading indicators are bearish, but US futures are looking up. The CAC40 lost 0.2% to 7297 points shortly following opening. The SMI yielded 0.18% to 11,078 points.
Economic highlights of the day
German industrial production for July is the only major statistic of the day. The whole agenda here.
The euro is flirting once more with 1.10 USD. The ounce of gold is stable at 1938 USD. Oil is firm, with North Sea Brent at $86.12 a barrel and US WTI light crude at $82.42. The performance of the american debt over 10 years has calmed down a little to 4.06%. Bitcoin is trading around $29,000.
The main changes in recommendations
ABB: Barclays remains weighted in line with a price target raised from 32 to 33 CHF. Accor: Citigroup remains long with a price target raised from 37.90 to 41.50 EUR. Adidas: Credit Suisse remains at underperformance with a price target raised from EUR 120 to 130.AP Moller Maersk: ABG remains to be kept with a price target reduced from DKK 14,400 to 13,045.AstraZeneca: Morgan Stanley remains weighted in line with a price target raised from 12,600 to 12,700 GBp.BAE Systems: Deutsche Bank remains long with a target price raised from 1090 to 1140 GBp.Beiersdorf: Jefferies remains long with a target price reduced from 144 to 140 EUR. BBVA: KBW remains at market performance with a price target reduced from 9.67 to 9.38 EUR. Carl Zeiss: Deutsche Bank switches from buying to holding. Coltene: Research Partners switches from holding to buying, targeting 85.83 CHF.Crédit Agricole: AlphaValue remains to be lightened with a price target raised to EUR 11.91.90.CTS Eventim: JP Morgan resumes monitoring to overweight by targeting EUR 77.Deutsche Börse: UBS goes from buying to neutral by targeting 185 EUR.EDP Renovaveis: Goldman Sachs remains long with a target price reduced from 26.50 to 26 EUR.Fortum: Inderes remains long with a target price reduced from 16 to 15 EUR.Fresenius: Jefferies remains long with a target price raised from 38 to 41 EUR.Fresenius Medical Care: Jefferies remains underperforming with a target price raised from 21 to 29 EUR.IMCD: Jefferies remains long with a target price reduced from 160 to 158 EUR.JDE Peet’s: Jefferies remains to hold with a price target reduced from 29.75 to 25.90 EUR.K+S: Berenberg goes from hold to buy targeting 22 EUR.Intesa: KBW remains at outperformance with a price target raised from EUR 3.43 to 3.75. Lonza: Stifel remains to be retained with a price target reduced from 600 to 530 CHF. Mediobanca: KBW remains underperforming with a price target raised from 12, 72 to 14.40 EUR.Merck KGaA: Societe Generale remains to be kept with a target price reduced from 198 to 183 EUR.OC Oerlikon: Baader Helvea goes from reducing to accumulating by targeting 4.75 CHF.Rolls-Royce: JP Morgan goes from underweight to neutral, targeting 235 GBp. Safran: Bernstein remains outperforming with a price target raised from 161 to 172 EUR. Sika: Mirabaud remains long with a price target raised from 273 to 300 CHF. General: Jefferies remains long with a price target raised from EUR 43 to 46. Ströer: HSBC goes from hold to buy, targeting EUR 55. Teleperformance: Goldman Sachs goes from buying to neutral, targeting EUR 160. Unicredit: KBW remains outperforming with a price target raised from EUR 31 to 34.77. Worldline: Redburn remains long with a price target raised from EUR 49.40 to 50. WPP: Macquarie remains neutral with a price target reduced from 1050 to 850 GBp.
In France
Important (and less important) announcements
Societe Generale would have hired Citigroup to advise it on the strategic options of its securities custody activity, valued at more than one billion euros, according to information from Bloomberg. Eutelsat signs a partnership with Thaicom. Takeover bid on Keyrus, the offeror holds 69.7% of the capital. Novo Nordisk bought the controlling block of Biocorp at 35 EUR per share, pending the offer to the minority shareholders. Paredes raises its offer to 6.50 EUR per Orapi action. Visiativ takes over Techform at the helm of the court. Grolleau takes 49.9% of the Italian OMP Mechtron. The small corner of the dilution: Buy-Louer.fr draws a tranche of OCEANE of 0.75 M€. They have published / They must publish: Esso, Poujoulat…
In the world
Company results (comments are given on the spot and do not prejudge the evolution of securities)
Berkshire Hathaway posted operating profit of $10.04 billion in Q2, thanks to its insurance branch and completed divestments. demand for parcels.Scout24 revises its annual targets upwards following the acquisition of Sprengnetter.Siemens Energy still records provisions (€2.2 billion, but analysts generally expected worse) for problems with wind turbines and fears an annual net loss of €4.5 billion.
Important (and less important) announcements
International Consolidated Airlines has agreed to a 13% pay rise for 24,000 employees, according to the Financial Times.UBS to lay off 80% of staff at Credit Suisse investment bank in Hong Kong.KKR to buy German satellite operator OHB at EUR 44 per share, as part of a negotiated transaction (the share was listed at EUR 32.15 on Friday evening). Ericsson is being sued by certain shareholders in Sweden, who are claiming $170 million. Rio Tinto plans to increase its copper production due to rising global demand Warner Bros. ‘Barbie’ ticket sales top $1 billion Sika acquires Peru’s Chema Daimler Truck CFO Jochen Goetz dies in ‘tragic accident “.Moody’s raises Nexi’s credit rating from “Ba2” to “Ba1”.The main publications of the day: KKR, Palantir, BioNTech, International Flavors & Fragrances, Tyson Foods, Siemens Energy, Aurubis, PostNL… Full agenda here .
Lectures
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#understood #correctly..
