We start this morning with the marriage announced yesterday of Activision Blizzard with Microsoft, or rather the entry of the video game publisher into the hands of the software giant. The proposed price of $70 billion, colossal as it is, represents only 2.9% of the capitalization of the creator of Windows. However, this is its biggest acquisition, far ahead of Linkedin in 2016 ($28 billion) or Nuance last year ($18 billion). This transaction is shaking up the Landernau of video games, as evidenced by Sony’s 9% drop this morning or Ubisoft’s 12% surge yesterday. It also raises antitrust issues that will be examined around the world, particularly in the United States.
Who are you burying today?
Well first we bury the Nasdaq. With its drop of 2.57% yesterday, the technology index is once again approaching the correction zone. Well let’s not bury him too quickly anyway, he has often had a lot of responders in recent years. “Historical correlations imply a drop in the Nasdaq valuation of around another 10% from the current level“, wrote Kepler Cheuvreux on Monday, wondering if the rise in results would make it possible to absorb the compression of multiples, even though earnings expectations are “almost flat since last Auguston the Nasdaq. The US tech index has lost 6.8% year-to-date, and 9.2% from its November peaks. Its aggressive proxy, Cathie Wood’s Ark Innovation fund, stands out for its shares at -18.7% in 2022, while its evil twin, the Tuttle Capital Short Innovation ETF, gains 20.7%.
We also bury the lavish monetary policy of the past ten years, with the disappearance of asset buybacks and the rate hike cycle that will begin in the United States. Brian S. Wesbury of First Trust has published an interesting paper on inflation, pitting Democrats against corporate greed against Republicans against public spending. For the economist, known for his Republican sympathies, the two camps are in bad faith, unless they stick their finger in the eye deeply. No, from his point of view, it is the lax monetary policy that explains the inflation, which makes rigorous monitoring of the coming months all the more important and singularly complicates the task of the central bank. However, Wesbury thinks that a few rate hikes and tapering (disappearance of asset purchases) will not be enough to remove any laxity in monetary policy.
We then bury the old Suez, after the announcement of the success of Veolia’s takeover bid, which left little doubt given the agreement finally reached between the two rivals on the takeover price. The group of Antoine Frérot achieves a big blow by getting its hands on its alter-ego, at the price of the resale of certain assets of Suez, in particular its “water” branch in France which will keep the surname. Unless we see a resurgence of Lyonnaise des Eaux, since vintage names are all the rage. The transaction woke up Veolia shares, which went from less than EUR 16 at the start of November 2020 to more than 32 currently, i.e. a gain of 100% in 14 months. A first class funeral then.
Finally, perhaps we should bury the received ideas about bank profits. After surprising investors on many occasions with the quality of their results last year, the first US banking announcements are disappointing to say the least. JPMorgan Chase fell 6% on Friday after the publication of record earnings, but less flamboyant than expected (well, if we can say that a profit of $48.3 billion is not flamboyant). And relapsed by 4.2% more yesterday after his sidekick Goldman Sachs had in turn disappointed his world despite, again, stratospheric profits. “The Firm” plunged for its part by 7% at the close yesterday.
As often, the markets reacted belatedly to the very clear signals from the American central bank. Finally very clear it must be said quickly, because the Fed has also reacted too late. There have therefore been violent movements for a few days, in particular on the Nasdaq as we have seen. And when the Nasdaq coughs, the other indices catch a cold. In Asia, Tokyo lost 2.8% and Sydney just over 1%. The Hang Seng holds a little better in session but evolves in the red. There will be no major macroeconomic indicator today to cling to. It is the quarterly results that will probably set the trend. The CAC40 lost 0.3% to 7116 points shortly after opening.
Economic highlights of the day
December inflation figures for the UK and Germany are released at 8:00 am. In the United States, housing starts and building permits for December will be announced at 2:30 p.m.
The euro retreats to 1.13229 USD. The ounce of gold stagnates at 1813 USD. Oil is firm at USD 86.51 for WTI and USD 88.50 for Brent. The yield of the T-Bond goes back to 1.88% over 10 years. Bitcoin is losing ground below USD 42,000.
The main changes in recommendations
- Aalberts: Jefferies starts long tracking by targeting EUR72.
- ABB: RBC goes from sector performance to outperformance by targeting CHF 41.
- Adecco: UBS goes from selling to buying, aiming for CHF 55.
- Alfen: Oddo BHF goes from neutral to outperformance by targeting EUR 88.
- Asos: Germany Sachs goes from buying to neutral, aiming for 2750 GBp.
- Bureau Veritas: UBS goes from neutral to sell.
- DBV Technologies: Societe Generale goes from buying to keeping, aiming for EUR 3.40.
- Delta Plus Group: GreenSome Finance goes from neutral to long, targeting EUR 116.70.
- DKSH: Stifel goes from holding to buying, aiming for 90 CHF.
- DNB Bank: Deutsche Bank goes from holding to buying.
- Electricité de France: JP Morgan goes from overweight to underweight, targeting EUR 7.60.
- Fuchs Petrolub: Deutsche Bank goes from hold to buy targeting 50 EUR.
- Lonza: Vontobel goes from hold to buy, aiming for 810 CHF.
- NN Group: Citigroup goes from buying to neutral.
- Ryanair: Liberum goes from holding to buying, aiming for 19 EUR.
- Safran: Morgan Stanley goes from underweight to weighted online by targeting EUR 109.
- Schneider Electric: RBC goes from outperformance to sector performance by targeting EUR 175.
- Segro: JP Morgan moves from online weight to overweight by targeting 1450 GBp.
- SFS Group: Baader Helvea goes from accumulating to buying, targeting 165 CHF.
- Sika: Jefferies remains on the buy side with a target raised from 441 to 456 CHF.
- Siltronic: Jefferies goes from neutral to long, targeting EUR 160.
- Swiss Life: Citigroup goes from buy to neutral, targeting CHF 616.80.
- Veolia: Berenberg remains on the buy side with a target raised from 35 to 38 EUR.
- Wienerberger: Oddo BHF starts outperformance monitoring by targeting EUR 42.
- Zurich Insurance: Citigroup goes from neutral to buy.
In France
Important (and less important) announcements
- Christel Heydemann in pole position to take over the general management of Orange.
- Sanofi announces positive data in a second phase III trial with Dupixent in the treatment of nodular prurigo.
- Gecina places a Green Bond of €500 million with a maturity of 11 years at 0.875%.
- Havas (Vivendi) acquires Tinkle.
- Eurazeo raises a new record amount of €5.2 billion in 2021.
- Delta Plus offers the Italian Maspica.
- Transgene and PersonGen in collaboration for the evaluation of a new therapeutic combination against solid tumors.
- Drone Volt buys the Dutch Skytools.
- Carbios is accelerating its industrial development.
- Riber receives an MBE machine order.
- Results from Abivax’s Phase I/II study with ABX196 in liver cancer will be presented on January 21 at the ASCO GI Cancers Symposium 2022.
- Vogo participates in a consortium to meet the global challenges of prevention and detection of concussions in the world of sport.
- Visiativ has recruitment ambitions.
- Econocom, Implanet, Entech, Spineway, Kerlink, Arcure, Grolleau, Réalités have published their accounts and/or forecasts.
In the world
Important announcements (and others)
- ASML expects sales significantly lower than projections in the 1er quarter, and anticipates 20% annual growth by integrating the disaster that hit the group.
- Compagnie Financière Richemont’s organic growth clearly exceeded expectations in fiscal Q3.
- Sony falls on the stock market after Microsoft’s operation on Activision.
- Burberry announces 5% growth in quarterly sales.
- EQT is doing better than expected for the 2021 financial year.
- TechnipFMC selected for a wind project in Scotland.
- Ford will record in its accounts a gain of $8.2 billion linked to Rivian.
- Disgruntled Tesla shareholders want Elon Musk to pay back $13 billion for SolarCity acquisition.
- AT&T and Verizon are making a move on 5G without eliminating the risk of air traffic disruptions.
- Poenina and Burkhalter plan to merge.
- The board of directors of Assicurazioni Generali, in the grip of an internal struggle over the renewal of its CEO Philippe Donnet, responded on Tuesday to rebellious shareholders, considering the criticisms leveled at him “unfounded”.
- Main results publications : UnitedHealth, Procter & Gamble, ASML, Morgan Stanley, Compagnie Financière Richemont, Antofagasta, Burberry, Virbac…
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