2023-12-18 07:00:56
To borrow a festive metaphor, investors have already gone on a binge this year, but they don’t seem ready to curb their appetite. After all, who said that following two plates well garnished with turkey, chestnuts and gratin dauphinois, we should resist the temptation of a third candied chestnut? Not them, anyway. Even though Christmas is approaching, there is still a lot of news to follow this week.
Western stocks are on track to end 2023 at their best levels of the year, following another positive weekly performance. With a 52% increase in 2023, the Nasdaq 100 perfectly illustrates the awakening of investors’ greed, following a bitter-tasting 2022 vintage. The American index is less than 1% from its record, following seven consecutive weeks of increase. But other places are already at their zenith, such as Paris, Frankfurt, Amsterdam, and Milan. Investors are still playing the card of lowering rates in 2024. Depending on the day, they are more or less convinced that things will go quickly enough, even if central banks tell them that the pace of monetary easing will be less sustained. than they think. But beyond this debate, what mainly interests financiers is that the slope on rates has become bearish, which means that money will be less expensive in the months to come. This is a powerful vector for equity growth, which for the moment surpasses fears regarding the damage already caused by high interest rate policies and the possible resurgence of inflation.
Bank of America, which has a knack for producing a very dense, very interesting and sometimes unbeatable strategy document every week, is announcing 152 rate cuts in 2024. Cumulatively for all central banks combined, of course. But it gives an idea of the underlying trend. However, central banks know that investors are easily fooled. So they started throwing their hawks into the fight at the end of last week. Hawks are the most conservative central bankers, those who are perceived by investors as killjoys. Reasonable people think that hawks are rather the guardians of the temple, those who prevent their more naive counterparts, the doves, from being overtaken by their emotions.
Well the hawks are out. The head of the New York Fed, John Williams, that of Atlanta, Raphael Bostic and their colleague at the Chicago Fed, Austan Goolsbee, have all said in public over the last three days that the financial markets are mistaken in betting on massive rate cuts. Added to this are the declarations of Christine Lagarde for the ECB or Tiff Macklem, for the Bank of Canada, who also sought to calm the enthusiasm of investors on the pace of monetary easing policies. The pile-up of speeches has pushed back the rate cut projections considered by the market in 2024 a little, but there is still a gap between what central bankers say and what the market believes. The Bank of Japan meeting this week will not provide many arguments for one camp or the other: the BoJ operates in a separate world, which is still dominated by negative rates. No major decisions are expected Tuesday, but economists believe Gov. Kazuo Ueda will pave the way for a rate hike in April.
Important information to know to start the week
- Several leading maritime carriers (AP Moller Maersk, Hapag-Lloyd, CMA CGM, etc.) have stopped using the Suez Canal because of ship attacks in the Red Sea. This of course disrupts supply chains by extending travel times.
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American shale oil producers are producing much more than expected, undermining OPEC’s strategy. A very good article from Bloomberg mentions it here.
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The shock wave of the bankruptcy of the Austrian real estate group Signa hits where we don’t necessarily expect it. The SonntagsZeitung reveals that Migros, via the Federation of Migros Cooperatives, would have a debt of 200 MCHF, inherited from the sale of Globus in 2020.
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Turkish President Erdogan and Hungarian President Orban are meeting today in Budapest to mark the centenary of the friendship treaty between the two countries. The two leaders are NATO’s snipers, notably because of their privileged relations with the Kremlin.
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In Chile, the second proposal for a new constitution was rejected, as polls suggested. The text currently in force, dating from the dictatorship of Augusto Pinochet, therefore remains in place.
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On the agenda for the week, we therefore find the latest 2023 monetary policy decision from the Bank of Japan (Tuesday) and American PCE inflation (Friday). The final results publications of the year concern Heico, ThyssenKrupp Nucera, Ceconomy, Accenture, Fedex, Micron and Nike.
In Asia Pacific this morning, only the Indian and Korean markets are up slightly. The other places are dominated by profit taking, notably in Tokyo (-0.6% for the Nikkei 225), Hong Kong (-0.9% for the Hang Seng) and Sydney (-0.2%) . European leading indicators are bearish. The CAC40 lost 0.4% to 7,561 points at the opening. The SMI fell by 0.5% to 11,140 points. The Bel20 was down 0.2% at 3724 points.
Today’s economic highlights
The German Ifo business confidence index will be released at 10:00 a.m., ahead of December’s US house prices, compiled by the NAHB, at 4:00 p.m. The whole agenda here.
The euro is trading at 1.0914 USD. An ounce of gold is firm at 2023 USD. Oil is stabilizing, with North Sea Brent at USD 76.89 per barrel and American WTI light crude at USD 72.12. The performance of the American debt over 10 years evolves at 3.90%. Bitcoin is trading at $41,080.
The main changes in recommendations
- Argenx: Stifel maintains its buy recommendation and raises the price target from 557 to 560 USD.
- Beiersdorf: Citigroup maintains its purchase recommendation with a price target raised from 150 to 160 EUR.
- Centrica: Jefferies goes from buy to hold with a price target of 160 GBX.
- Cropenergies: Matelan Research maintains its strong buy recommendation and reduces the price target from 19.10 to 18 EUR.
- Danube: Barclays maintains its overweight opinion with a reduced price target of 115 to 113 EUR.
- Diasorin: Jefferies remains to be retained with a price target reduced from 102 to 98 EUR.
- Entain: Jefferies goes from hold to buy with a price target raised from 890 GBX to 1215 GBX.
- Ericsson: Société Générale maintains its recommendation to hold with a price target raised from 49 to 65 SEK.
- Eurofins Scientific: Morningstar maintains its buy recommendation with a reduced price target of 80 to 75 EUR.
- Fresnillo: Morgan Stanley moves from market weight to underweight with a price target reduced from 620 GBX to 540 GBX.
- Gerresheimer: Jefferies remains a buy with a price target reduced from 130 to 120 EUR.
- Getlink: AlphaValue/Baader Europe moves from accumulating to reducing with a price target reduced from 19 EUR to 17.90 EUR.
- Hennes & Mauri: RBC Capital maintains its sector performance recommendation and raises the price target from 180 to 190 SEK.
- Holcim: Stifel maintains its recommendation to hold with a price target raised from 62.50 to 69 CHF.
- Kenmare Resources: Peel Hunt maintains its buy recommendation and reduces the price target from 625 GBX to 570 GBX.
- Kering: Morgan Stanley maintains its market weighting recommendation with a price target reduced from 435 to 400 EUR.
- Lagercrantz: SEB Bank goes from buy to hold with a price target raised from 116 SEK to 124 SEK.
- Metro: Landesbank Baden-Wuerttemberg maintains its recommendation to hold with a reduced price target of 6.50 to 6.20 EUR.
- Nestlé: Citigroup maintains its buy recommendation with a price target reduced from 130 CHF to 115 CHF.
- Panostaja: Inderes moves from accumulating to reducing with a price target reduced from 0.57 to 0.50 EUR.
- Paragon Banking Group: Keefe Bruyette & Woods moves from underperformance to market performance with a price target raised from 560 GBX to 660 GBX.
- Rentokil Initial: Goldman Sachs maintains its neutral recommendation with a price target reduced from 685 GBX to 660 GBX.
- Rexel: Berenberg remains a buy with a price target raised from 27 to 33 EUR.
- RWS Holdings: Canaccord Genuity ceases coverage of the stock. Canaccord Genuity moves from hold to unlisted with a price target reduced from 260 GBX to 235 GBX.
- Saint-Gobain: Morningstar maintains its recommendation to hold with a price target raised from 62 to 68 EUR.
- Sanofi: Intron Health moves from hold to buy.
- Seb: AlphaValue/Baader Europe maintains its recommendation to accumulate with a price target raised from 139 to 144 EUR.
- Sectra: ABG Sundal Collier maintains its buy recommendation and raises the price target from 180 to 210 SEK.
- Spisent Communications: Goldman Sachs stops covering the stock.
- Straumann Holding: JP Morgan maintains its neutral recommendation with a price target raised from 139 to 145 CHF.
- Virbac: Jefferies remains to be kept with a price target raised from 250 to 295 EUR.
In France
Important (and not so important) announcements
- Vivendi enters the CAC40 today, six months following leaving it, replacing Worldline.
- Teleperformance cancels 700,000 treasury shares (1.09% of capital) and controls 4.12% of its own shares.
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Otro Capital and a group of investors invest €200 million in Alpine Racing (Renault).
- Airbus will deliver its first A220 plane to the Australian group Qantas.
- Carrefour would offer to buy Casino’s convenience stores in addition to hypermarkets and supermarkets.
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Moody’s has affirmed Crédit Agricole’s long-term issuer rating at Aa3, with a stable outlook.
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India’s love for local single malts is shaking Pernod Ricard and Diageo.
- TotalEnergies and its partners obtain a new offshore exploration license in Suriname.
- Vivendi is challenging the sale of the Telecom Italia network in court.
- Alstom has finalized the syndication of its €2.25 billion revolving credit line.
- Carl Zeiss bought the Dutch DORC for €985 million, allowing Eurazeo to recover some €385 million in gross proceeds from the sale (24% gross IRR).
- McPhy wins a contract for the supply of green hydrogen by pipeline with HMS Oil & Gas in Germany.
- Tikehau Capital and Nikko Asset Management announce that they have entered into advanced discussions with a view to a strategic partnership in Asia.
- Clariane raises €140 million thanks to a real estate partnership with Crédit Agricole Assurances, which has subscribed to bonds from the company’s real estate subsidiary.
- Biosynex absorbe Theradiag.
- Nicox pre-selects first patient in phase IIIb with NCX470 in glaucoma.
- Sensorion Pleased with Milestone in Phase IIa Proof-of-Concept Clinical Trial with SENS-401 in Cisplatin-Induced Ototoxicity.
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The main publications of the day: none…
In the big world
Important (and not so important) announcements
- Exxon’s low U.S. tax payments cloud Joe Biden’s climate agenda.
- Unilever vend Elida Beauty à Yellow Wood.
- IBM buys Software AG’s enterprise technology business for €2.1 billion.
- Hapag-Lloyd and AP Moller Maersk temporarily stop traffic through the Suez Canal following attacks in the Red Sea.
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A consortium led by Sonae is launching a takeover bid for the Finnish Musti group.
- OCI sells its entire stake in IFCO to Koch for $3.6 billion.
- ThyssenKrupp Nucera, the manufacturer of electrolyzers used in the production of green hydrogen, forecasts an operating loss for the 2024 financial year.
- Illumina renounces Grailto comply with the EU veto.
- Visa takes control of Mexican payments company Prosa
- British American Tobacco is fined €107 million in the Netherlands for taxes on undeclared profits.
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On the sidelines of the presentation of its 2027 strategic plan, DiaSorin claims to be on the lookout for acquisitions.
- SGS separates from its Crop Science agronomic activities.
- Lufthansa resumes flights to Tel Aviv in January.
- Accenture acquires Redkite to expand its data capabilities.
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The main publications of the day: Heico, ThyssenKrupp Nucera, Ceconomy… The whole agenda here.
Lectures
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