2023-09-26 07:03:00
The surge in bond yields yesterday did not prevent Wall Street from remaining weightless, to use the words of the famous Grenoble economist Calogero (hello Julien). I didn’t really understand why. Meanwhile, the ECB wonders, Jamie Dimon histrionics and luxury gets tripped up in the thick carpet, just at the moment when Coty wants to reconnect with its roots.
Wall Street’s stock indices managed to extricate themselves from the prevailing slump yesterday, to close with slight gains, following a particularly complicated week. On the other hand, I wish you good luck in understanding why the session went the way it did, because I’m not going to help you much. The most dynamic sector of the day was energy, even as oil is losing some of its recent surge. Semiconductors rallied in the absence of news. And 10-year bond yields have skyrocketed to easily exceed 4.5% in the United States, which is not really the sign of a frank and massive call for air in favor of stocks. But we’ll come back to that a little later. In the end, the titles of agency dispatches often mention the expression “technical rebound“, which is our way, the scribblers, of not saying that we don’t really know what happened. In general, we alternate with “cheap buyouts“to prevent it from being seen too much, or even with”hopes of recovery“, when we are really out of ideas. The same (big) tricks exist when things are going down but we don’t have too many explanations. In these cases, it’s more like “return of risk aversion” where the “profit taking“that we draw, but the”technical adjustments” also work in this sense. In short, the Nasdaq and the S&P500 gained 0.4%, while the Dow Jones was content with a huge rebound (technical therefore) of 0.1%.
In Europe, the mood was significantly more gloomy. In France in particular, where the CAC40 is betrayed by its luxury representatives LVMH, Kering, Hermès and to a lesser extent L’Oréal. Investors fear that years of breakneck growth will end. This would make the valuation levels reached by the files difficult to justify, leading to a correction. The movement is fueled and probably amplified by the usual follow-up of design offices. Once the first has revealed its doubts and the decline has set in, the others also end up giving up through a domino effect. As a result, we see downward adjustments of price targets or recommendations every day, which fuel the seller flow. This is still the case today with Morgan Stanley. Not sure that Coty, which has just launched a listing process in Paris in addition to New York, has chosen the best calendar to show its (powdered) nose. The other European markets all closed in the red yesterday, to varying degrees. In addition to the collapse of luxury goods, markets were affected by cautious comments from ECB members on the trajectory of rates. Only Switzerland finished in balance, helped by its defensive triad Nestlé, Roche and Novartis, which compensated for the marked decline of the Geneva luxury champion, Compagnie Financière Richemont.
The modest American recovery therefore occurred despite the surge of more than 10 points in the yield on the 10-year American government bond, which reached 4.55% this morning, a 16-year high (the age of number two in fact, whose birthday is today and who will receive his main gift late, due to his father’s guilty lack of organization). What is going on ? Investors are taking note that the American economy is so resilient that the Fed may have to implement a more severe high rate policy to sustainably counter inflation. In this regard, the boss of JPMorgan Chase gave us a little outing between common sense and terror in the Indian press. The voluble Jamie Dimon pointed out that the world is nowhere near 7% Fed rates. More precisely, he did not say that the central bank will have to reach such levels, but he stressed that this scenario was no longer unthinkable following it was ruled out not so long ago. I quote him: “going from 0 to 2% represented practically no increase. Going from 0 to 5% took some people by surprise, but no one would have excluded 5% from the field of possibilities… I’m not sure that the world be ready for 7%. This is not Dimon’s preferred scenario, but its probability is not zero. A large part of the market thinks that rates are already at the ceiling and another large fraction sees them, at worst, a little higher. The Fed’s dot plot shows that only one of the eighteen FOMC members expects rates to be slightly above 6% next year.
Caution and mistrust are therefore the key words of this difficult month of September for the stock markets. Today’s session will be marked by a series of macroeconomic statistics in the United States. I imagine that the signals of strength from the American economy will be rather poorly taken by investors for whom the moderation of key rates is always the major determinant. The opportunity to bring out the old saying “good news is bad news”, which has been the guiding principle of recent months.
Difficult to find green in Asia Pacific this morning, apart from India which is picking up a few points. Japan lost 0.9%, while China remained at half mast, still tormented by its promoters with feet of clay and the flat electroencephalogram of its economy. Hong Kong loses 1% once more. South Korea and Taiwan fell by a little more than 1%. Australia returns 0.45% and is approaching its summer lows dating back to the beginning of July. European leading indicators are struggling to emerge in the green despite their contraction the day before. Around 8:00 a.m., they move slightly into the red. The CAC40 lost 0.6% to 7080 points at the opening. The SMI fell 0.4% to 10,965.
Today’s economic highlights
100% American day with July real estate prices from the FHFA (3:00 p.m.), then the Conference Board’s consumer confidence index, the Richmond Fed’s manufacturing index and old real estate figures (4:00 p.m.). The whole agenda here.
The euro fell to 1.0583 USD. An ounce of gold trades at 1913 USD. Oil continues to consolidate, with North Sea Brent at USD 91.54 per barrel and American WTI light crude at USD 89.06. The performance of the American debt over 10 years soars to 4.55%. Bitcoin is trading at $26,380.
The main changes in recommendations
Adevinta: BNP Paribas Exane goes from underperformance to neutral with a price target raised from NOK 70 to NOK 105.Aperam: ING Bank maintains its buy recommendation and reduces the price target from EUR 43 to EUR 35.ArgenX: Barclays maintains its overweight recommendation and raises the price target from 520 EUR to 540 EUR.Ascential: Citi maintains its buy recommendation with a price target raised from 360 GBP to 370 GBX.Axa: BNP Paribas Exane maintains its recommendation of outperformance and reduces the price target from 38 EUR to 35 EUR.Bankinter: Citi maintains its buy recommendation and increases the price target from 7.90 EUR to 8.50 EUR.Barclays: Morgan Stanley changes weighting to line to be overweight with a price target raised from 190 GBX to 230 GBX.Barratt Development: Jefferies remains to be retained with a price target reduced from 492 GBX to 483 GBX.Benevolentai: JP Morgan maintains its neutral recommendation with a reduced price target from 1.60 EUR to 1 EUR.Berkeley: RBC Capital starts sector performance monitoring with a price target of 4950 GBX.Burberry: Deutsche Bank maintains its recommendation to hold with a price target reduced from 2240 GBX to 2200 GBX. Morgan Stanley maintains its weighting recommendation in line with a price target reduced from 2400 GBX to 2200 GBX. Crest Nichols: RBC Capital starts monitoring at underperformance with a price target of 205 GBX. Elekta: SEB Bank moves from a recommendation of keep to buy with a price target raised from 85 SEK to 86 SEK.Entain: JP Morgan maintains its recommendation to overweight and reduces the price target from 2200 to 1800 GBX.Erg: AlphaValue/Baader Europe reduces its recommendation to accumulate to be reduced with a price target reduced from 28.70 EUR to 24.80 EUR.Eurofins: Société Générale maintains its recommendation to keep with a price target reduced from 61.20 EUR to 60 EUR.Fnac Darty: HSBC maintains its recommendation to hold with a price target reduced from 36 EUR to 26 EUR.Generali: HSBC maintains its recommendation to hold with a price target raised from 19 EUR to 21 EUR.Getinge: AlphaValue/Baader Europe maintains its buy recommendation and reduced the price target from 295 SEK to 284 SEK.Givaudan: Baader Helvea maintains its accumulate recommendation with a price target raised from 3100 CHF to 3250 CHF.Hermès: Morgan Stanley maintains its weighting recommendation in line with a reduced price target of 2080 EUR to 2000 EUR.Hugo Boss: Morgan Stanley remains overweight with a price target reduced from 85 EUR to 80 EUR.Italgas: Morgan Stanley moves from online weighting to underweight with a price target reduced from 6 EUR to 5, 40 EUR.ITM Power: AlphaValue/Baader Europe maintains its buy recommendation and reduces the price target from 150 GBX to 129 GBX.Johnson Matthey: Citi maintains its neutral recommendation with a price target reduced from 19.50 GBP to £18.20. Jefferies maintains its buy recommendation and reduces the price target from 2200 GBX to 2100 GBX.Kering: Morgan Stanley maintains its weighting recommendation in line with a price target reduced from 580 EUR to 520 EUR.Lanxess: Jefferies remains to be retained with a price target reduced from 28 to 26 EUR.LVMH: Morgan Stanley maintains its recommendation to overweight with a price target reduced from 1020 EUR to 900 EUR. Stifel maintains its buy recommendation and reduces the price target from 950 EUR to 850 EUR.Moncler: Citi maintains its buy recommendation with a price target reduced from 77.50 EUR to 71.50 EUR. Morgan Stanley maintains its weighting recommendation in line and reduces the price target from 69 EUR to 64 EUR. Nexi: Goldman Sachs maintains its buy recommendation with a price target reduced from 10 EUR to 9 EUR. Optomed: Inderes maintains its recommendation to accumulate with a price target reduced from 4 EUR to 3.30 EUR.Persimmon: Jefferies remains to be kept with a price target reduced from 1250 GBX to 1201 GBX. RBC Capital starts sector performance monitoring with a price target of 1300 GBX.Redrow: Jefferies remains a buy with a price target reduced from 643 GBX to 635 GBX.Scor: BNP Paribas Exane maintains its outperformance recommendation and increases the price target from 32 EUR to 35 EUR.Siltronic: Stifel goes from a recommendation of hold to buy with a price target raised from 80 EUR to 111 EUR.SMCP: BNP Paribas Exane maintains its recommendation of outperformance and reduces the price target from 10.50 EUR to 8.50 EUR.Subsea 7: Pareto Securities maintains its buy recommendation with a price target raised from 160 NOK to 173.70 NOK.Swatch Group: Morgan Stanley maintains its weighting recommendation in line with a price target reduced from 340 CHF to 275 CHF.Swedbank: SEB Bank maintains its buy recommendation and raises the price target from 234 SEK to 259 SEK.Symrise: JP Morgan maintains its recommendation to overweight with a price target reduced from 113 EUR to 107 EUR.Technip Energies: AlphaValue/Baader Europe moves from lightening to accumulating with a price target raised from 23.90 EUR to 27.30 EUR.Telenor: Berenberg moves from hold to buy with a price target raised from 134 NOK to 140 NOK.Tod’s: Morgan Stanley maintains its underweight recommendation with a price target reduced from 34 EUR to 30 EUR.Vistry: Jefferies remains at purchase with a price target raised to 923 GBX at 1231 GBX. RBC Capital starts monitoring at underperformance with a price target of 875 GBX. Yellow Cake: Canaccord Genuity maintains its buy recommendation with a price target raised from 530 GBX to 635 GBX.
In France
Important (and not so important) announcements
Coty files for listing on the Paris Stock Exchange.Société Générale completes a €440.5 million share buyback.The FDA grants priority review to Dupixent (Sanofi) for the treatment of eosinophilic esophagitis in child aged 1 to 11.EssilorLuxottica launches Helix, an integrated digital platform intended for opticians.Air France-KLM will order 50 long-haul AirbusCanal+ (Vivendi) refuses the auction, the TV rights war with the LFP resumes.Carmat n will not achieve its annual objectives and might find itself short of cash. Figeac Aéro strengthens its management team. Gaussin renames GAMA its joint venture with Macinca, resulting from the takeover of Navya assets. Omer-Decugis equips itself with a solution of Aweta for its lawyers.The Chinese subsidiary of Europlasma is negotiating with a Chinese fund to develop a recycling process for lithium-ion batteries.The little corner of dilution: Veom raises funds via an OCA, transferred from Negma to Global Growth Holding.They have published / They must publish : Gascogne, Altheora, Cabasse, Poxel, Veom…
In the big world
Important (and not so important) announcements
Imperial Brands fell 6% yesterday following a report in The Guardian that British Prime Minister Rishi Sunak is considering banning cigarettes for the next generation.ASM International raises its revenue target for 2025.Verbio records a decline in profits and announces cautious outlook. ASOS reported a 10% drop in annual revenue, but said it was profitable in the final quarter and its turnaround plan was progressing. CRH will affect $10 billion in dividends and share buybacks over the next five years, according to its CEO. DWS (Deutsche Bank) pays $25 million to the American financial market supervisory authority to settle a procedure. The boss of Nissan , Makoto Uchida assured that there would be “no turning back” for the manufacturer on electric. Ford interrupts the construction of a $3.5 billion battery factory in Michigan, due to doubts on the competitiveness of the site.Evonik wants to reorganize by splitting certain assets.Spotify unveils a voice translation function by AI.Eckert & Ziegler lands a large contract in the United States.Cofinimmo divests two rest homes in Belgium.The main publications of the day: Costco, Cintas, Ferguson, Smiths Group, Trigano, Verbio, Danieli…The whole agenda here.
Lectures
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