Sometimes the incredible ability of financial markets to hang on to any branch comes up against an intractable problem: the lack of a branch. This is a bit like what seems to be happening in the middle of the week on the stock markets, which gives us a little pre-nativity depression. To do a little counter psychology, the negative scale is well stocked: the spread of the Omicron variant of the coronavirus is weighing on economic sentiment, prices are out of control in several key segments and geopolitics is straining on the lines of Sino-American and Russian-European front. Usually in such a situation, the investor draws his master asset, the central bank of the United States and his Captain America of the moment, Jerome Powell. “Don’t panic, the Fed is here“is a rallying cry that has caught up with a lot of badly embarked situations in recent years.
But this time Captain America may have switched sides, coerced and forced by economic circumstances and, it has to be said, a procrastinating tendency that probably caused him to miss more appropriate windows of fire. The Fed will deliver the verdict tonight on discussions among its members on the conduct of monetary policy. The markets know that the central bank will have to reduce its support for the economy, to contain inflation and help to make the labor market more fluid. It remains to be seen in what proportion. There is no doubt that the institution will put away its asset buyback program, but investors are mainly looking to anticipate the pace of rate hikes to come, they who are no longer used to suspense. I would remind you that since the 2008 crisis, central banks have adopted a habit of flagging their decisions very early on, taking all the necessary precautions so as not to offend the susceptibility of economic players. Hence a benign environment that has lasted for years, complacently maintained by central bankers taken at their own game. The flip side, rather the setbacks, are investors fed on liquidity and unaccustomed to the original programs , who are understandably nervous when told the end of recess is approaching.
Critics of the Fed say it took too long to react, which has two consequences. First, it is subjected to events instead of taming them. Then its policy is a little out of step with the economic realities of the moment, which reduces its effectiveness and creates a risk of shock if it had to take more vigorous compensatory measures. And while Captain Powell America isn’t to be buried too quickly – he’s already proven he has the respondent to brush the markets the wrong way – he’s never looked so cornered. Except of course when Donald Trump insulted him on Twitter because he did not follow his wise advice. But let me remind you here that the reactions of the equity markets to the Fed’s decisions can be singular: less austere communication than expected may be enough to make the indices happy, even as economic conditions are deteriorating.
After having written all that, I just need to add to close the Fed chapter that the date is fixed after the close of the European markets, which will be in the throes of sky-rocketing all day long.
In the meantime, the news of the morning revolves around the favorable vote of the American house of representatives to the raising of the ceiling of the federal debt. That means Joe Biden can now sign the text, which he will do unless he has some self-destructive urges by tonight. The Financial Times reveals in parallel that the United States will place eight new Chinese companies on its blacklist prohibiting American investors to put their balls there, because of the relations maintained with the Chinese central power. The DJI drone star is one of them. At the same time, Washington is considering imposing new sanctions on China’s number one chip maker, Semiconductor Manufacturing International. The atmosphere between the two powers remains icy cordial.
European markets are heading for a small technical rebound this morning, but leading indicators are nervous. In Asia, the drops and the increases alternate in rather narrow margins at the end of the course.
The economic highlights of the day
Inflation figures in the UK (8 a.m.) and France (8:45 a.m.) will kick off the day, before a battery of US statistics in the afternoon (retail sales, Empire State, wholesale stocks, property prices and oil stocks). Then at 8:00 p.m., the Fed’s monetary policy decision was taken, followed at 8:30 p.m. by the explanatory press conference. Tonight, two announcements from China in addition: industrial production rose 3.8% in November, a little more than expected. Retail sales, on the other hand, are below expectations.
The euro remains under pressure at $ 1.1262, while gold has lost ground to $ 1,770 per ounce. Oil is also down, with Brent at $ 72.92 and WTI at $ 69.84. The yield on US debt lost 1 point to 1.43% over 10 years. Bitcoin is trading around $ 48,200.
The main changes in recommendations
- Aedifica: Berenberg is still buying with a price target raised from 124 to 127 EUR.
- Aixtron: Morgan Stanley resumes online weighted monitoring targeting EUR 19.
- Aker Carbon Capture: SpareBank starts tracking to sell by targeting NOK 15.
- Avantium: Berenberg is still buying with a price target raised from 5.20 to 8.40 EUR.
- Barco: Berenberg remains on the buy side with a price target raised from EUR 24 to 27.
- Barry Callebaut: Goldman Sachs raises its price target from CHF 2,650 to CHF 2,700.
- BE Semiconductor: Morgan Stanley starts monitoring to underweight targeting EUR 70.
- Brunello Cucinelli: Jefferies remains to be retained with a price target raised from 50 to 55 EUR.
- Daimler Truck: Deutsche Bank starts buy tracking by targeting EUR 45.
- Eurofins: Stifel switches from keep to buy, aiming for 130 EUR.
- Harbor Energy: Berenberg switches from buy to keep targeting 350 GBp.
- Holmen: Jefferies remains to be held with a price target raised from 430 to 440 SEK.
- Jumbo: HSBC switches from hold to buy targeting EUR 17.50.
- Lindt: Goldman Sachs raises its price target from 117,000 to 130,000 CHF.
- Nestlé: Goldman Sachs raises its price target from 130 to 140 CHF.
- Red Electrica: Societe Generale switches from holding to selling targeting EUR 16.50.
- SIG Combibloc: Barclays moves from online weighting to underweighting, targeting CHF 21.50.
- Umicore: HSBC moves from buy to hold targeting EUR 36.
In France
Important (and less important) announcements
- The European Commission approves the acquisition of Suez by Veolia under certain conditions.
- Sanofi and GlaxoSmithKline announce positive preliminary data on their Covid-19 booster vaccine candidate.
- Atos launches new artificial intelligence platform to improve business operations and performance. In addition, the group joins “European Alliance for Industrial Data, Edge, and Cloud”.
- Amundi intends to sell 4% of Indian SBI FMPL as part of its initial public offering.
- Jennifer Moses co-opted on the Rothschild supervisory board.
- Gaztransport & Technigaz signs a contract for two new LNG carriers.
- McPhy Energy and Hydrogen Refueling Solutions sign a strategic partnership with Hype.
- Trigano finalizes the acquisition of three groups of leisure vehicle distributors in France.
- Icade transformed its last € 600 million bond loan into a green bond.
- Vente-unique.com is joining forces with Mirakl to launch its marketplace.
- Figeac Aero postpones the publication of its accounts, “given the discussions being finalized with Tikehau Ace Capital and the various lenders of the Group”.
- Bourrelier shareholders eligible for a price supplement under the OPR, in the event of no appeal on the arbitration award with Intergamma.
- E-Pango severely shaken by soaring gas prices.
- Hopium is launching a capital increase by private placement for an amount of around € 5 million.
- Toosla enters Euronext Growth.
- Plastiques du Val-de-Loire and Osmozis have published their accounts.
In the world
Important announcements (and others)
- The United States will add 8 companies to its blacklist of Chinese companies close to power, according to the FT: DJI, Megvii, Dawning Information Industry, CloudWalk Technology, Xiamen Meiya Pico, Yitu Technology, Leon Technology and NetPosa Technologies.
- MPC Energy Solutions and Leclanché enter into a strategic collaboration for energy storage solutions dedicated to public services.
- Assicurazioni Generali promises € 5.6 billion in dividends by 2024.
- Taxis G7 suspend their Tesla Model 3 fleet after a serious accident in Paris.
- RR Donnelley will ultimately be bought out by its major shareholder at $ 10.85 per share, who outbid Atlas to $ 10.35 per share.
- Stadler Rail will deliver 10 trams to a public transport operator in Potsdam, Germany.
- Fortescue will study the development of an iron mine in Gabon.
- Vontobel opens a wealth management branch in the United States.
- Net Protections loses 26% for its debut listing in Tokyo.
- Main results publications : Inditex, Lennar, Hennes & Mauritz, Metro, com…
Lectures
–
