2023-10-11 06:02:58
Someone seems to have rewritten the synopsis of the Fed’s series of twists and turns on rates this week. For what ? I don’t know, but this had the gift of putting the stock markets back on track. Investors celebrated results boosted by mind-blowing price increases at PepsiCo, while being concerned about the end of overgrowth at LVMH. All with the 27th annual version of the rumor about a support plan in China.
The equity markets have clearly regained their Mojo this week, speculating on two of their favorite themes, the reduction in key rates in the United States and the arrival of a recovery plan in China. On the first point, it is difficult to blame the financiers for moving too quickly, since it is the American central bankers themselves who seem to have suddenly decided to pave the way for a less punitive monetary policy. This convergence of speeches is quite suspicious, since even the Fed hawks seem to be becoming gentle as doves. From there to thinking that there is a coordinated communication plan deployed by the central bank, there is only one step that I cannot take due to lack of tangible evidence. But there is never smoke without fire in the Fed’s strategies. Yesterday, it was the president of the Atlanta Fed, Raphael Bostic, who gave his little soothing speech, explaining that the American central bank does not need to continue raising its rates and that no recession doesn’t show up. At the same time, Bostic is almost the leader of the doves, which puts his position into perspective. No, what has most impressed markets in recent days is some form of softening of the bullish rhetoric coming from several hawkish representatives in recent days, including Mary Daly, Lorie Logan, Christopher Waller and Neel Kashkari.
Why is the Fed orchestrating a shift in its announcements? This is the question of the moment, especially after the conservative approach that she seemed to adopt during the September 20 meeting, visible in particular in her famous dot graph. Perhaps central bankers have favorable inflation statistics that the market doesn’t have? Or, less enthusiastically, are they alarmed by the deterioration of certain indicators? The impact of the emerging conflict in the Middle East, on the other hand, seems too fresh to have played a role in this turnaround. Investors, for their part, are enjoying it since the declarations of the members of the Fed are in line with their forecasts on the evolution of key rates.
This is the first and most fundamental explanation for the renewed strength of the stock markets this week. The second, which had an accelerating effect on yesterday’s session alone, is the return of the revenge of the counter-attack of the rumor on a plan to support the economy in China. This famous plan which is part of the register of things that we wait for but which never arrive, like the Arlesienne, the American recession, Godot, the reduction of the budget deficit and now autumn, since it is 30 degrees in Annecy on October 11. Well, it came out of the hat yesterday during the day. Bloomberg revealed that Beijing plans to increase its budget deficit for 2023 to launch a series of measures to boost the economy. All this remains extremely vague, but enough to strengthen the appetite of financiers. In Europe, mining stocks or stocks exposed to Chinese consumption, including luxury goods, immediately reacted positively to the rumor, contributing for example to bringing the gains of the French CAC40 to 2% at the end of the afternoon, the strongest rise in the index for months.
Well, that was before the publication of LVMH’s third quarter sales, which were the attraction of the evening. The group has not been unworthy, but the slowdown in organic growth to ordinary levels makes the narrative of the extraordinary sectoral rise of recent years more difficult to maintain. The stock was in sharp decline post-closing, although it has already lost 12% in three months. We’ll have to wait until the dust settles to determine whether the story is broken or just damaged. Previously, PepsiCo kicked off the quarterly earnings season with well-received numbers. The American offset the pressure on volumes with fairly impressive price increases: this is the seventh consecutive quarter that the group’s prices have seen double-digit increases. But as long as it happens, why deprive yourself? It’s good for the results. Less for purchasing power and for the phantasmagoric sharing of efforts to limit inflation.
To be continued today, producer prices in the United States in August (2:30 p.m.) and the minutes of the last Fed meeting (8:00 p.m.), the content of which we however partly know since the September meeting gave rise to updating the expectations of the institution and its members. Vigilance also on gas prices in Europe, which jumped to a seven-month peak, after suspicions of sabotage of the gas pipeline linking a Finnish LNG terminal to Estonia.
In Asia Pacific, the little music of the Chinese recovery plan, despite its nebulosity at this stage, is helping to keep the indices in the green. Japan and mainland China are up slightly, but Hong Kong (+1.2%) and especially South Korea (+2.2%) are rushing into the breach. India and Australia grew by 0.6%. European leading indicators are slightly bearish after their feverish outbreak the day before, but American futures are looking upwards, which could help create a buoyant flow on the old continent during the session.
Today’s economic highlights
Germany publishes the second reading of its September inflation at 8:00 a.m., but it is the American producer prices for September which will focus attention at 2:30 p.m., as well as the minutes of the last Fed meeting (8:00 p.m.). The whole agenda here.
The euro reached 1.0604 USD. The ounce of gold stabilizes at 1860 USD. Oil is firm, with North Sea Brent at USD 87.80 per barrel and US WTI light crude at USD 86.10. The performance of the American debt over 10 years is stable at 4.63%. Bitcoin is trading at $27,050.
The main changes in recommendations
Amadeus: Mirabaud Securities maintains its sell recommendation with a price target raised from 58.80 EUR to 59.74 EUR.AP Moller: Deutsche Bank goes from hold to sell with a price target reduced from 13,500 DKK to 10,900 DKK . Deutsche Bank goes from hold to sell with a price target reduced from 13,500 DKK to 10,900 DKK.BAE Systems: DZ Bank AG Research goes from hold to buy with a price target raised from 1050 to 1190 GBX.Befesa: Jefferies starts monitoring for purchase with a price target of 36 EUR.Biomérieux: Morgan Stanley maintains its overweight recommendation with a price target reduced from 113 EUR to 112 EUR.Carlsberg: Morgan Stanley improves its weighting recommendation in line with overweight with a price target of 1015 DKK.Carrefour: Stifel maintains its buy recommendation and reduces the price target from 23 EUR to 20 EUR.DiaSorin: Morgan Stanley maintains its recommendation to underweight with a price target reduced from 86 EUR to 85 EUR.Elisa: ABG Sundal Collier moves from hold to buy with a price target of 50 EUR.Ericsson: ABG Sundal Collier maintains its buy recommendation and reduces the price target from 80 SEK to 70 SEK.Euronext: Autonomous Research moves from neutral to outperform with a price target reduced from 82 EUR to 79 EUR. Euronext: Deutsche Bank maintains its hold recommendation with a price target reduced from 75 EUR to 72 EUR.Exor: ING Bank maintains its buy recommendation and raises the price target from 107 EUR to 115 EUR.Georg Fischer: Bank Vontobel AG maintains its buy recommendation and reduces the price target from CHF 75 to CHF 70.Geberit: Morgan Stanley maintains its recommendation to underweight/in line with a reduced price target from CHF 408 to CHF 401.GSK: Jefferies remains to hold with a price target raised from 1525 GBX to 1650 GBX. Hapag-Lloyd: Deutsche Bank moves from hold to sell with a price target reduced from 150 EUR to 91 EUR. Ipsen: RBC Capital maintains its sector performance recommendation with a price target raised from 120 EUR to 122 EUR.ITM Power: Citi maintains its neutral recommendation with a price target reduced from 1 GBP to 0.80 GBP.Kesko: SEB Bank moves from buy to hold with a target price of price reduced from 24 EUR to 17.70 EUR.Kone: Carnegie Group goes from buy to hold with a price target reduced from 58 EUR to 42 EUR.LVMH: Deutsche Bank maintains its recommendation to hold with a price target reduced from 815 EUR to 805 EUR. Goldman Sachs maintains its buy recommendation with a reduced price target of 965 EUR to 950 EUR. JP Morgan maintains its recommendation to overweight with a price target reduced from 870 EUR to 835 EUR. Mediobanca maintains its outperformance recommendation with a price target reduced from EUR 935 to EUR 897. Morgan Stanley maintains its recommendation of overweight/in line with a reduced price target of 900 EUR to 860 EUR. RBC Capital maintains its outperformance recommendation and reduces the price target from 810 EUR to 800 EUR. Moncler: Goldman Sachs maintains its neutral recommendation with a price target raised from 71.10 EUR to 74.50 EUR. Nokia: ABG Sundal Collier goes from buy to hold with a price target reduced from 5 EUR to 3.90 EUR. Carnegie Group maintains its buy recommendation with a price target reduced from 5.50 EUR to 5.20 EUR. Novartis: Jefferies remains a buy with a price target reduced from 105 to 100 CHF. Novo Nordisk: Citi maintains its buy recommendation its buy recommendation and raises the price target from 600 DKK to 745 DKK. Reckitt Benckiser: HSBC maintains its buy recommendation with a price target raised from 76 to 78 GBP. Remy Cointreau: HSBC maintains its recommendation to hold with a price target reduced from 140 EUR to 116 EUR.Revenio: SEB Bank maintains its sell recommendation and reduces the price target from 21 EUR to 20.50 EUR.Rheinmetall: Barclays starts overweight monitoring by targeting 300 EUR .Roche: Jefferies remains to be held with a price target reduced from 305 CHF to 285 CHF.Scor: Mediobanca goes from outperform to neutral with a price target raised from 32 EUR to 33 EUR.Siltronic: Citi goes from a neutral recommendation to buy with a price target raised from 75 EUR to 105 EUR.Symrise: Bernstein maintains its market performance recommendation with a price target reduced from 107 EUR to 100 EUR.Technogym: Goldman Sachs maintains its neutral recommendation with a target price of price raised from 8.70 EUR to 9.20 EUR. Tomra Systems: Nordea Bank maintains its sell recommendation and reduces the price target from 139 NOK to 105 NOK. Unilever: RBC Capital maintains its sector performance recommendation with a target price raised from 4200 GBX to 4300 GBX.VAT Group: RBC Capital maintains its sector performance recommendation with a price target raised from 270 CHF to 290 CHF.Vestas: Sparebank 1 Markets maintains its sell recommendation with a price target of 110 DKK.Vodafone: Barclays maintains its equal weight recommendation with a price target reduced from 100 to 95 GBX. Goldman Sachs maintains its buy recommendation with a price target raised from 110 GBX to 115 GBX. Zurich Insurance: BNP Paribas Exane maintains its underperformance recommendation with a price target increased from 415 to 420 CHF.
In France
Important (and not so important) announcements
LVMH posted organic growth of 14% in Q3, slowing. The fashion & leather goods division grew by 9%, compared to 11.2% anticipated. Saint-Gobain cancels 7.6 million shares. Sanofi and BioMap develop artificial intelligence modules for the discovery of biotherapeutic drugs. Accor launches a program share buyback of €400 million. Gaztransport & Technigaz received an order from Korean Hyundai Heavy Industries for cryogenic tanks for five container ships powered by LNG. The CIAM fund, a small shareholder of Atos, in turn filed a complaint for “false or misleading information” linked to the planned partial sale of the French IT group to Czech businessman Daniel Kretinsky.They have published / They must publish : Osmosis, Ekinops, Eurobio, ISPD, Claranova…
In the big world
Important (and not so important) announcements
Birkenstock shares placed at 46 USD each as part of the IPO in New York.Samsung Electronics is progressing after sharply declining quarterly quarters, but which signal that the hardest part may be over for the sector.The latest rumours, Exxon Mobil would pay more than $250 per Pioneer Natural Resources share. BP Plc raises 2030 Ebitda forecast. Eni and partners to decide on LNG investment in Mozambique by mid-2024. Walgreens Boots Alliance names Tim Wentworth as CEO. Boeing is struggling to keep up with device deliveries this year. Apple will deploy an update for the iPhone 12. KKR plans to sell Q-Park for $4.2 billion. Novo Nordisk prematurely halts trial of Ozempic for treatment of kidney failure. Advanced Micro Devices strikes deal to buy artificial intelligence software company Nod.ai. Big Yellow raises £110m to continue building its stores .Aker Carbon Capture wins a feasibility study for a combined heat and power plant using biomass in Germany. Dormakaba will cut 183 jobs in Switzerland. The main publications of the day: Porsche AG, Aeon, Toho…All the agenda here.
Lectures
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