J-1 avant Jackson Hole

The stock markets ended a series of several bearish sessions yesterday, on relatively modest rebounds. In Europe, this took the form of increases generally below 1%, except for the Footsie 100, which went it alone, losing a little ground. In the United States, the scenario was almost identical, with a group shot of the three main indices which respectively won 0.29% for the SP500, 0.28% for the Nasdaq 100 and 0.18% for the Dow. Jones. Above all, the session was marked by new US macroeconomic statistics which were somewhat contradictory, or at least which did not help to clear up the fog of current trends. On the one hand durable goods orders at a standstill, even if the statistic stripped of its most volatile elements was finally a little higher than expected. And on the other hand, the old property market, which contracted a little less than expected. We will leave aside the question of knowing if it is the forecasters who are useless to concentrate on the essentials: the American economy is indeed in a phase of slowdown, even if it is clear that it is showing a good resistance.

In Europe, the situation is even a little more complex, because of the mad surge in gas prices, which once once more reached EUR 300 per MWh yesterday. It climbed higher last March, but current needs raise fears it won’t stay up long enough. As all the countries of the old continent have rushed to fossil fuels to stretch their storage capacities towards 100% in anticipation of winter, the game of supply and demand, even if the term of the game is probably bad chosen in this case, almost inevitably causes an imbalance in favor of sellers. We see and we read everywhere the damage caused by this situation. Factories that temporarily close because they are unable to cover their production costs at the price of a packet of pasta in any supermarket. But I’m going to share with you my little personal experience as a rural elected official dating from Monday, during the meeting of the municipal council of my small town, which illustrates quite well what is going to fall on the corner of our faces.

Monday evening therefore, in front of a somewhat sparse audience of elected officials, the month of August obliges, we had to explain, the mayor and me, that the price of the school canteen was going to increase by a double-digit amount from the week next. First, because the service provider raised its prices by 10% to incorporate its cost increases, as stipulated in the contract. Then because the revaluation of the salaries of municipal staff decided by the State to compensate for inflation leads to an increase in our payroll, which will not be offset by revenue, unless we aggressively review our tax policy (the only form of “pricing power” of the community, to use a vocabulary that is more familiar to you). This bad news came on top of the +20% taken by the estimate for resurfacing the asphalt road in the forest, or the 40% (!) additional costs for the construction project of the village medical centre, which we also had to announce on Monday. But I had another in my bag, since I also had to warn my colleagues that our heating bill was probably going to swell by 60 to 70% starting next year, despite the relative protection offered by four-year tariffs. rather lenient negotiated in a group with more than 150 other Savoyard communities. No need to go further, everything is in keeping and it would be very naive to imagine that the inflationary situation will not have profound repercussions on our daily lives, and for a long time. I hesitate to wish you a good return to school. In any case not sure we prefer to eat in the canteen following that.

The financial markets don’t give a damn regarding my little town (although I imagine they shouldn’t) and instead focus on the two main news items of the weekend: the second estimate of the American GDP for the second quarter which must fall at 2:30 p.m. and the speech of the head of the United States central bank, Jerome Powell, scheduled for tomorrow at 4:00 p.m. at the Jackson Hole symposium (just following the publication of the American inflation known as “PCE” at 2:30 p.m.). The stock market dreams of Powell coming to the podium saying the fight once morest inflation is sure to be won and that he will have a week of debauchery in Ibiza in September rather than raise rates. But it is still the killjoys who will win, that is to say those who expect a speech centered on the efforts that remain to be made, vigilance, the economy which is holding up somehow, this -that. The devil will hide once more in the details to interpret the oratorical nuances and mimicry of JayJay. It’s not what will pay my municipal gas bill, but it will still spit paper tomorrow followingnoon. Oh, the symposium starts today with prestigious speakers, but without insulting them, it is indeed Powell’s speech which will constitute the high point of the little party organized each year in Wyoming.

In the rest of the world, China continues to announce stimulus measures. This was the case yesterday morning, in an attempt to offset the effects of the historic drought on activity. Going back to the structure of the previous paragraph, the stock market is dreaming of China launching a big, big, all-around economic revitalization plan with the narrative going right (i.e., four-digit billions, American-style ). But instead of the bazooka, Beijing is pulling out the glue gun to close the gaps, here real estate, there energy production. The advantage is that inflation has remained relatively low in China. To each his torments.

On the corporate front, there were a few tech stock releases last night on Wall Street, with mixed fortunes: Salesforce and Splunk fell following disappointing and Snowflake surged for the opposite reason. In Europe, the main information of the day comes to us from Switzerland, where Novartis has put an end to the suspense on the future of its generic subsidiary Sandoz, which will be the subject of a split and an IPO in Zurich l ‘next year.

Markets rebounded in Asia this morning. Tokyo and Sydney gain around 0.8%. The session was complicated in Hong Kong where trading was interrupted due to a storm. Mainland China is slightly up late. European and US leading indicators are trending higher, a move bolstered by the release of slightly stronger than expected German Q2 GDP. The CAC40 gained 0.7% to 6430 points shortly following opening.

Economic highlights of the day

The German Ifo Business Confidence Index for August (10:00 am) will precede the weekly US jobless claims and the second estimate of US GDP in Q2 (2:30 pm). The whole macro diary here.

The euro is still trading below parity with the dollar, at 0.9985 USD. The ounce of gold goes up a little around 1756 USD. Oil is firm, with North Sea Brent at $101.70 a barrel and US WTI light crude at $95.30. The performance of the american debt at 10 years rises once more to 3.10%. Bitcoin is stagnating below $21,500.

The main changes in recommendations

  • Aveva: Investec goes from buying to keeping, aiming for 2700 GBp.
  • Biffa: Berenberg goes from buying to keeping, aiming for 415 GBp.
  • Coats: Jefferies remains long with a price target reduced from 100 to 96 GBp.
  • Compagnie Financière Richemont: AlphaValue remains to be accumulated with a price target raised from 134 to 139 CHF.
  • Request: Jefferies remains long with a target price reduced from 335 to 285 SEK.
  • Hennes & Mauritz: JPMorgan remains neutral with a target reduced from 145 to 130 SEK.
  • Iberdrola: AlphaValue remains to be reduced with a price target raised from 11.50 to 11.80 EUR.
  • Implenia: Research Partners remains to be kept with a price target raised from 25 to 30 CHF.
  • Komax: Credit Suisse goes from neutral to outperformance by targeting CHF 302.
  • McPhy: Kepler Cheuvreux remains long with a target reduced from 30 to 25 EUR.
  • Nel ASA: Norne Securities switches from buy to hold targeting NOK 17.
  • Rockwool: Nordea goes from holding to selling targeting 1455 DKK.
  • Scor: KBW goes from underperformance to outperformance by targeting EUR 28.
  • Sonova: Jefferies remains long with a price target reduced from 400 to 340 CHF.
  • Uniper: Citi goes from buying to selling targeting EUR 3.30.

In France

Important (and less important) announcements

  • The British CMA requests the sale of three activities as part of the merger between Veolia and Suez.
  • Unibail sells its 49% in the Westfield Santa Anita center in California.
  • 55% of Alstom’s dividend rights exercised in shares.
  • Traffic from Vinci concessions picked up in July.
  • AB Science has resubmitted a marketing application for masitinib (whose trade name is Alsitek) in Europe in ALS. This is a conditional MA request, ie to meet an unmet need before all the required data is available.
  • Erytech is renouncing to submit its only clinical candidate, Graspa, to the FDA in Acute Lymphoblastic Leukemia and is exploring its options for the future.
  • Enertime obtains ISO9001 certification for its quality management approach.
  • Micropole shares are listed on Euronext Growth.
  • Alan Allman, Actia, Adocia and HighCo have published their accounts.

In the world

Important (and less important) announcements

  • Novartis will spin off its Sandoz generics division and list it in Switzerland next year.
  • Yara is cutting its European ammonia production capacity by 35% due to record gas prices.
  • Salesforce lost 7% off session following a disappointing quarterly publication and the lowering of its forecasts.
  • Snowflake soars 16% off-market following its Q2 results.
  • Splunk plunges 11% out of session following its quarterly.
  • Nordstrom finishes down 20% following lowered targets.
  • Twitter CEO tells staff that whistleblower complaints are “inaccurate”.
  • SpaceX and T-Mobile US have an important joint announcement to make today.
  • Eni wants to invest in the production of Libyan gas.
  • Amazon will close Amazon Care at the end of the year.
  • Qantas shows an annual loss of 1.8 billion AUD, in line with expectations.
  • Bed Bath & Beyond has reportedly found a creditor for a $375 million loan.
  • Siegfried invests 100 million in a new production site in Germany.
  • Main publications of the day: Pinduoduo, Dollar General, VMware, Marvell, CRH, Delivery Hero, Fortum, Salmar, Bâloise, Alfen… The whole agenda here.

Lectures

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