We settle for just before the Fed

The return of bad news after a pretty good fortnight sent equity markets swing again yesterday. The US Nasdaq, rich in tech stocks, lost 4% in three sessions. The prophet of doom yesterday was called Walmart. The American distributor has lowered its forecasts for 2022 for the second time in a few weeks. The message is clear: the consumer is under pressure and the company must increase commercial efforts, understand how to cut margins, maintain a level of correct activity . As powerful as it is, the American consumer has also begun to arbitrate their spending. This all fits quite well with the current economic slowdown, of which some companies are already carrying the stigma. And it brings out the usual bipartisanism of these periods: companies that have a high pricing power, whatever their origin, do better than others. Those who revise their targets downwards are more numerous than usual and are generally caught between a rock and a hard place: rising costs but prices not rising as quickly.

This is the big story, the one that mere mortals see when it comes to buying everyday products or more durable equipment. In the financial markets, part of the daily movements are fueled by more mundane signals. For example, Microsoft and Alphabet’s deemed promising results last night. In reality, the results of the group founded by Bill Gates are not explosive and the title also fell post-session to their announcement. But the slope was reversed during the presentation conference thanks to a performance considered convincing by the CFO, in particular on the forecasts and dynamics of the Cloud division. The future will tell if they are carabistouilles but the marketing lining worked well. There was also a lack of consensus for Alphabet and the growth rate is at its lowest in two years. But we are far from the collapse known for example by Snap on advertising, or from the layoffs announced by Shopify. Here, too, the stock is gaining ground outside the session.

A few weeks ago, these small disappointments about players renowned for the quality of their results would no doubt have caused massive releases, but the mood has changed a bit lately. In any case, the two titles allow European and American leading indicators to turn green this morning, as the countdown is launched before the Fed’s monetary policy decision this evening. Wall Street bookmakers are giving a 75% chance for a 75 basis point rate hike, which appears to have become the base rate in the United States. The central bank should reaffirm its determination to destroy inflation by raising interest rates. Financiers will analyze Jerome Powell’s speech for clues as to how high the Fed intends to rise. A complicated or even futile exercise as the Fed itself doesn’t know it.

In the rest of the news of the day, a bunch of results from companies, from the largest to the smallest, from all continents. The morning headliners are Equinor, BASF, Airbus, GSK or Mercedes. On Wall Street, Meta Platforms and Qualcomm will take center stage after closing tonight. Yesterday post-European session, LVMH published results that still escape the trend but which were initially greeted lukewarm by demanding investors. Adidas and Michelin sent negative signals to their respective markets. We are a long way from the permanent party of recent years, when those who did not far exceed their goals were big losers. Incongruity of the day however, the Aficionatos can rejoice: Atos confirmed his annual goals, which had not happened since … Impossible to remember. And second inconsistency: it may have taken some time but it happened, Credit Suisse is visibly tired of making headlines about the banking scandals. The two-ply bank changes general manager and will initiate a thorough audit of its assets.

Finally, Joe Biden and Xi Jinping will discuss Thursday as the situation tightens again around Taiwan. The most optimistic hope that the meeting will be able to unblock the situation on the project to reduce customs duties on products imported from China to the United States (which would facilitate the Fed’s counter-inflationary plans). The project, which was due to be completed in early July, has not yet moved an inch.

Western leading indicators are therefore bullish this morning, relying on Microsoft and Alphabet more than Adidas. In Asia Pacific, slight increases were recorded in Japan, India and Australia, while China and South Korea lost ground, more sensitive to the decline in the Nasdaq last night.

The economic highlights of the day

The Fed’s rate decision will therefore monopolize attention at 8pm. Before that, there will have been an avalanche of US macro “stats”: wholesale stocks and durable goods orders at 2:30 pm, old real estate data at 4:00 pm, and oil stocks at 4:30 pm. The whole macro-diary here.

The euro fell to $ 1.0145. The ounce of gold lost ground to USD 1716. Oil is down again, with North Sea Brent at $ 104.40 a barrel and US WTI light crude at $ 95.21. The yield on US 10-year debt is remunerated at 2.80%, always below 5 years, 2 years and 6 months. Bitcoin is stable around $ 21,100.

The main changes in the recommendations

  • Assicurazioni Generali: JP Morgan goes from overweight to neutral, aiming for 17 euros.
  • Axa: JP Morgan goes from neutral to overweight, aiming for 29 euros.
  • BigBen: In Extenso it remains long with a reduced target of 19.05 to 17.75 EUR.
  • Eutelsat: AlphaValue remains long with a reduced target from EUR 16.80 to EUR 11.60.
  • Lindt: Goldman Sachs remains long with a price target increased from 123,000 to 127,000 CHF.
  • Logitech: Goldman Sachs remains long with a reduced price target from 107 to 92 CHF.
  • Rémy Cointreau: Jefferies is still buying with an increased price target from 200 EUR to 220 EUR.
  • Stadler Rail: UBS remains long with a reduced price target of 50 to 45 CHF.
  • UBS: RBC continues to outperform with a reduced price target of 19 to 17 CHF.
  • Unilever: Deutsche Bank moves from holding to buying.
  • Veolia: Jefferies remains to be maintained with a reduced price target of 27 to 25 EUR

In France

Business results

  • Airbus: Continue
  • Atos: The annual objectives are confirmed after the semester.
  • Crossroads: Continue
  • Danone: The group is raising its revenue growth forecast for 2022.
  • Eurofins: the group is revising its ambitions for 2022 upwards after record revenues in the first half.
  • Klépierre: The real estate company sees a little higher than in the past for its annual results.
  • LVMH: Second quarter organic growth reached 19%, with revenues of € 18.73 billion. The results are high.
  • Michelin: The tire maker has lowered its market growth forecast this year. But the goals should be kept.
  • Valeo: 2022 objectives confirmed after half-yearly accounts. Order taking is high, management assures.

Important (and less important) announcements.

  • TF1 and M6 Métropole Télévision would be ready to stop their merger project if the Competition Authority followed up the report of its investigative service.
  • JCDecaux wins the contract for the future automatic toilets in Paris.
  • Spie signs an agreement for the refinancing of its syndicated loan of 1.2 billion euros, indexed to sustainable development criteria.
  • Voltalia emits OCEANS.
  • Manitou has obtained a new revolving credit line of 375 million euros.
  • Affluent Medical achieves “excellent” safety and efficacy results for its pivotal Optimize II clinical trial with Kalios, an adjustable mitral ring.
  • Lagardère, Eurazeo, M6 Métropole Télévision, Prismaflex, Solocal, Econocom, LNA Santé, Munic, Qwamplify, Enensys, AST Groupe, Aramis, Toosla, Cast, Herige, Tarkett, Bilendi, Albioma, Generix, Ober, Audacia, Enogia, have published their accounts.

In the world

Business results

  • Adidas: the group is revising its targets for 2022 downwards.
  • Alphabet: Digital giant earns 5% off session after quarterly results.
  • BASF: The pharmacist increases his income prospects but warns of risks.
  • Daimler: Mercedes raises its annual forecast.
  • Equinor: The Norwegian giant has published quarterly results that have risen sharply, thanks to the surge in oil.
  • GSK: To continue
  • Holcim: The quarterly results are improving and exceeding expectations.
  • Iberdrola: Continue
  • Microsoft: The stock earned a 4% discount on the session after publishing the quarterly results.
  • Reckitt: Go on
  • Texas Instruments: Stock gains 3% after closing on Wall Street on the back of well-received quarterly results.

Important (and less important) announcements.

  • Activist investor Elliott has built a position in PayPal, according to the Wall Street Journal.
  • Credit Suisse appoints Ulrich Körner as CEO, following the departure of Thomas Gottstein. The bank will conduct an in-depth strategic review.
  • Twitter shareholders will vote on Musk’s acquisition on September 13.
  • Chaos in the German skies as Deutsche Lufthansa has to cancel hundreds of flights due to strikes.
  • Chinese promoter Country Garden Holdings is launching a capital increase in Hong Kong to strengthen its balance sheet.
  • Teva will pay $ 4 billion to solve an opiate case in the United States.
  • Main publications of the day: Meta Platforms, Qualcomm, T-Mobile US, Bristol-Myers Squibb, Equinor, Rio Tinto, British American Tobacco, The Boeing Company, Airbus, GSK, Kering, Iberdrola, Daimler … The whole agenda here .


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