Paris Stock Exchange: Powell, it’s blurry

To go into a bit more detail, this is not the first time that the financial markets have tried to get their heads back in the past few months, and I am totally unaware of you, for that matter, if the current attempt will be successful. What I do know, however, is that these phases have an air of deja vu and that investors do not give the impression of having enough marbles to be serene. Besides, I can already hear at the back of the room the sneers in “dude, i dare you to find only enough for the fingers of one hand“. Of which act.

Tuesday’s session, the first of the week in the United States after a holiday, was marked by a sharp rise. For the record, Wall Street had already ended in the green last Friday, so that we can speak of a bullish series if we assume that a series begins with two terms and if we are a follower of positivism. It doesn’t take much to be happy, as my friend Baloo would say (a bear, by the way, which makes a lot of sense on the stock market). The three main American indices, S&P500, Nasdaq and Dow Jones rose by more than 2%. All sectors were up markedly, with two paradoxes, however.

The first is that oil stocks exploded higher while basic materials were the least favored sector. This illustrates the fact that investors are having a little trouble positioning themselves in relation to the recession scenario and that they have clearly seen that the barrel of crude oil, despite recent fears about activity, seems to be unstoppable its current pedestal. Caution all the same on the black gold which undergoes a new blow this morning, after rumors lending to Joe Biden the intention to temporarily suspend the federal tax on the gallon of gasoline. This decision would not in itself be particularly disruptive for prices, but it shows that the United States is looking for ways to ease the pressure on consumers, which could lead to other more targeted measures on the supply side. To be continued therefore. A good connoisseur of the file also whispered to me this morning that the European restrictions on Russian oil have not yet really entered into force and that they could have their small upward effect once they materialize. What is funny is that despite the fact that we multiply studies, talk about rupture and endless palaver on the subject, oil remains a highly strategic asset driven by forces that are both simple to understand and complex to anticipate.

The other paradox, which for once is much more anecdotal, is Meta Platforms, the only drop yesterday among the 15 largest American companies. And what a drop, since Mark Zuckerberg’s group lost 4%, bringing its 2022 liabilities to 53%. The group lost a symbolic lawsuit in the United States in a case of targeting, which forces it to review an advertising algorithm. Technology investments in 2022 are complicated, but some are more complicated than others. But investors cannot ignore all the boxes run by megalomaniacs, since they are clearly successful.

In the macroeconomic section, the figures for sales in old real estate in the United States in May published yesterday were down, as expected. In economics, there are often complex mechanisms at work, but the relationship between the rise in key interest rates and the real estate market is diaphanous: money is more expensive, so loan conditions are tightening, de facto excluding some sections of the mortgage population and pushing others to be cautious about their purchases. May inflation figures due today in the UK and Canada should do nothing to quell the inflationary frenzy. In China, the government calls for increased investment and announces that it is preparing measures to promote growth. The most mischievous will have noted that these measures are supposed to be in preparation for two years.

But the big “news” of the day is Fed boss Jerome Powell’s biannual oral speech before the banking committee of the American Senate, from 3:30 p.m. Paris time. The market will once again take its word for it in an attempt to hone its rate trajectory guessing skills. It’s futile, but that’s the way it is. The text of the speech is published at the start of the intervention and can be used by the Fed to convey messages. A question-and-answer session follows with exchanges that are a little less smooth than a calibrated communication. So interesting and a source of volatility, and therefore of influence, for stock markets in dire straits.

Stock markets are a little disparate in Asia Pacific this morning. Japan and Australia are moving around balance while Hong Kong loses more than 1%. In Europe, the CAC40 started the session down -1.45% at 5878 points and the SMI -0.7 % at 10,403 points.

Economic highlights of the day

Nothing to report, except of course the biannual hearing of Jerome Powell before the congress. The whole macro diary here.

The euro and the dollar are still neutralizing each other around 1.05 USD. The ounce of gold fell to 1827 USD. Oil fell again with Brent from the North Sea at 110.74 USD a barrel and US light crude WTI at 105.45 USD. The performance of the american debt at 10 years fell again slightly to 3.26%, while short maturities (3 months and 6 months) rose. Bitcoin rebounds to $21,500.

The main changes in recommendations

• Admicom: Inderes goes from accumulating to buying, aiming for 63 EUR.
• ArcelorMittal: JP Morgan goes from overweight to neutral, targeting EUR 32.50.
• Carrefour: Bernstein goes from market performance to underperformance by targeting EUR 16.50.
• Ceres Power: Goldman Sachs goes from selling to buying, targeting 700 GBp.
• Derichebourg: Oddo BHF goes from outperformance to neutral by targeting EUR 9.
• Flatexdegiro: Oddo BHF remains outperforming with a price target reduced from 30 to 16 EUR.
• Grifols: Alantra Securities goes from buy to neutral, targeting EUR 20.39.
• Kingspan: Berenberg remains long with a price target reduced from 100 to 86 EUR.
• Kone: Goldman Sachs goes from neutral to sell, targeting EUR 44. Berenberg goes from buy to hold aiming for 50 EUR.
• Mips: Berenberg switches from buy to hold aiming for 600 SEK.
• NatWest: Jefferies goes from hold to buy, targeting 359 GBp.
• Orange: Barclays goes from underweight to weighted online by targeting EUR 10.50.
• Rieter: UBS remains neutral with a price target reduced from 132 to 124 CHF.
• Sage Group: Jefferies remains long with a price target reduced from 890 to 740 GBp.
• Salzgitter: JP Morgan goes from neutral to underweight, targeting EUR 31.60.
• Sartorius Stedim Biotech: HSBC starts monitoring the purchase by targeting EUR 410.
• Schindler: Berenberg remains to be kept with a price target reduced from 195 to 180 CHF.
• Smurfit Kappa: Jefferies goes from hold to buy, aiming for 3700 GBp.
• Stora Enso: Handelsbanken resumes purchasing monitoring.
• Telia: Barclays moves from online weight to overweight by targeting SEK 50.
• Vodafone: Barclays moves from overweight to online weighting by targeting 140 GBp.
• Voestalpine: JP Morgan goes from overweight to underweight by targeting EUR 27.50.
• Vossloh: Jefferies remains to be kept with a target reduced from 42 to 32 EUR.
• Zur Rose: Credit Suisse starts tracking at underperformance by targeting CHF 73.

In France

Important (and less important) announcements

• Crédit Agricole is organizing an investor day and presenting its 2025 objectives.
• Safran inaugurates the extension of its aircraft nacelle site in Casablanca.
• The Swiss agreements of Sonepar, Rexel, Schneider and Legrand under the eye of justice, according to Mediapart.
• Stellantis is preparing for the post-SUV with its new Peugeot 408.
• Orange and Capgemini’s cloud company is expected to launch by the end of 2022.
• Faurecia finalized the capital increase of €705 million on the sidelines of the takeover of Hella.
• Dassault Aviation has proposed the sale of 15 Rafales to Colombia.
• Amundi is targeting average annual net income growth of around 5% over 2022-2025.
• Accor is negotiating the sale of 10.8% of Ennismore to a Qatari consortium for €185 million.
• Eiffage, as part of a consortium, wins the contract for transition parts for the future EnBW He Dreiht offshore wind farm off the coast of Germany.
• Euronext takes the first step towards a European clearing house.
• Gaztransport & Technigaz obtains an order from Hyundai Samho Heavy Industries for the design of the tanks of four new LNG-powered container ships.
• JCDecaux and VIOOH are launching a programmatic DOOH offer in Brazil.
• Albioma’s board of directors recommends Kyoto Bidco’s offer.
• Alten, Korian and GL Events organize their general meetings.
• Shell orders bio-isobutene derivatives for testing from Global Bioenergies.
• Hopscotch acquires three sports companies.
• Adocia’s Phase II trial with M1Pram achieves its primary objective in type 1 diabetes.
• Altheora strengthens its management.
• SA Metalliance receives an order in Italy.
• Hydrogen Refueling Solutions receives an order for a green hydrogen refueling station in Vendée.
• Drone Volt sells a Heliplane LRS in Canada to Groupe Gilbert.

In the world

Important (and less important) announcements

• The FDA is preparing a rule to remove most nicotine from cigarettes in the United States, according to a notice of proposal posted on the Office of Information and Regulatory Affairs website. With a possible impact on Japan Tobacco, British American Tobacco, Imperial Brands, Altria or Philip Morris.
• BASF’s business will experience a slowdown in the second half of the year, according to the CEO.
• Novartis suffers setback in Gilenya patent litigation.
• Interroll is reducing its forecast.
• Umicore unveils a 2030 strategic plan.
• Frasers rises to 4.9% of Hugo Boss.
• Oracle signs a partnership agreement to help Vodafone modernize its IT infrastructure.
• Carlsberg’s CFO resigns.
• Roxe close to a SPAC deal with Goldenstone Acquisition, according to Reuters.
• Lindt has completed its share buyback program.
• Vale will mobilize $400 million in 2022 to remove mine tailings dams.
• Volkswagen, AB Volvo and Salmar hold investor days.
• Daimler Truck, Workday, Kingfisher and Nasdaq organize their general meetings.
• Main publications of the day: Raymond James, The Berkeley Group, Micro Focus… The whole agenda here.

Readings