Believe my experience, when I receive so few emails from analysts, economists, market commentators or Bloomberg during a weekend, it’s either that Monday is a holiday, or that the financial sector is in PLS. It is true that London, Shanghai and Hong Kong are taking a break today. But the reality is that financiers are paralyzed by the current period, which has made them lose their libido for risky assets.
On Wall Street, investors had breathed a sigh of relief last Thursday, when the American technological armada had recovered its head in place, thanks to a powerful rebound. But the respite was short-lived with a memorable relapse on Friday: -4.5% for the Nasdaq 100 at the close, and a staggering -13.4% for the whole of April. After putting the graph of the index in monthly variation, I had to move the time scale back to October 2008 to find a slope of such magnitude (-15.8%). I don’t really like analogies of this kind, but the period September / October 2008 was the height of the financial crisis with the bankruptcy of Lehman Brothers and the rescue of Merrill Lynch on September 15, 2008. The economic context is of course very different, but it illustrates the way in which the markets correct their excesses: with brutality.
There had been a few warning shots in recent years, but so far, the American stars of technology had always come to the rescue of their sectoral counterparts with baroque valuations. Most often by publishing unheard-of profits that immediately boosted investors’ taste for risk. But not this time: Netflix is has-been, Google is back in line. Even King Apple is caught up in shortages. Not to mention Amazon, whose stock tumbled 14% on Friday after results show that inflation doesn’t just happen to others. To hijack an old stock market saying, when “Tech” coughs, Wall Street catches a cold. It is also one of the factors of the best index performance in Europe: we are a bit nil in technology stocks on this side of the Atlantic.
There is one who is having a good laugh right now, it’s Warren Buffett. The Nebraska billionaire took advantage of the big annual rout of his investment company Berkshire Hathaway to hold forth on stage, as much as possible when you’re 92, and swing a few poison arrows. Against the Wall Street camarilla in particular, guilty according to him of winning “much more money when people bet like in the casino than when they invest“The ease with which his group built a 14% position in Occidental Petroleum recently makes him think that”most major corporations in the USA have become poker chips“. Against Bitcoin too, which “produces nothing”. Buffett, never stingy with good words, also launched that “inflation is cheating almost everyone“, after noticing the damage caused by the price increases on the companies it has in its portfolio. Berkshire Hathaway has invested heavily in recent months, after having been very cautious before. Extremely conservative choices in the companies oil and insurance in particular.His most exotic bets of the moment concern HP Inc and Activision Blizzard, that is to say.
In addition, some news that should not be missed this weekend:
- The EU is reducing its dependence on Russian fossil fuels. The bloc will propose to cut Russian oil imports by the end of the year. At the same time, deliveries of Russian gas to Europe fell by 27% in January-April over one year.
- In France, an agreement between EELV and LFI was signed in view of the June legislative elections.
- Nancy Pelosi met the Ukrainian president with a delegation of American parliamentarians.
- China is still entangled in its zero Covid strategy, which is causing lockdowns and major economic and social disruption.
- The countdown has therefore begun before the Fed’s verdict on its key rates on Wednesday. The probability of a rate hike of 50 basis points, a pace twice as fast as usual, is at 99.1% according to the CME’s FedWatch tool. The big odds are for a rate hike of 75 basis points: the remaining 0.9%.
In short, quite a bit of tension today and leading European indicators which are bearish this morning. Rather mechanical all that: the old continent had closed higher on Friday, creating a big gap with the closing in the bright red of Wall Street. In Asia Pacific, Japan held firm (0.2% increase at the close) but Australia lost 1.2%.
Economic highlights of the day
The April manufacturing PMIs for the major economies will be released throughout the day, along with the US manufacturing ISM (4:00 p.m.). All the “macro” agenda here. This weekend, China reported an official manufacturing PMI at half mast, at 47.4 points in April (an index below 50 is synonymous with economic contraction).
The dollar keeps the euro under pressure, at 1.0518 USD. The ounce of gold struggles to play its role of refuge at 1885 USD. Oil is still firm, with North Sea Brent at $105.92 a barrel and US WTI light crude at $103.78. The yield on US 10-year debt rose to 2.94%. Bitcoin is suffering at $38,700.
The main changes in recommendations
- Belimo: UBS remains short with a price target reduced from 342 to 328 CHF.
- Mercedes: Jefferies remains to be kept with a price target raised from 66 to 75 EUR.
In France
Important (and less important) announcements
- In France, new car registrations were down 22.58% in April, according to the PFA.
- Qantas orders around fifty Airbuses.
- Nexans launches a share buyback program.
- Elis acquires the Danish company Centralvaskeriet.
- Damartex acquires Médical Santé.
- OSE Immuno obtains a European patent on CLEC-1.
- Obiz completes the takeover of Adelya.
- DLSI, Waga, Orège, Foncière Volta, NSE, M2i, DMS Imaging, Diagnostic Medical Systems, Cerinnov, Ober, Buy-Louer.fr, Coil, Gold by Gold, Travel Technology Interactive, Vergnet and Prologue have published their accounts.
In the world
Important announcements (and others)
- Amazon slumped 14% on Friday, its biggest drop in 15 years, after disappointing results.
- Alimentation Couche-Tard would negotiate a merger with EG Group, according to the Wall Street Journal.
- Berkshire Hathaway strengthens in Activision up to 9.5%.
- A US pension fund has taken legal action against former Credit Suisse chairman Urs Rohner and 19 other directors and officers in connection with the bankruptcy of the Archegos Capital fund.
- The largest shareholder of HSBC, the Chinese insurer Ping An wants a split in the group.
- Intesa Sanpaolo renews Carlo Messina as general manager.
- TUI says the rise in bookings indicates a sustainable recovery.
- Dormakaba sells its Mesker business.
- Burkhalter sells Kolb el-consult AG to Oberriet.
- Main earnings releases of the day: Moody’s, Nutrien, NXP Semiconductors, Mitsui, Expedia, ON Semiconductor, Bénéteau, Piaggio, Bonduelle… The full agenda here.
Readings