The financial markets have once again put on their invincibility cloak since last Monday, March 7 and the start of a rebound which has now reached double digits for quite a few indices. Even the threat brandished by the American central bank to raise its key rates at a forced march has not had a negative effect, we believe we are dreaming. The most visible sectors are those that have suffered the most recently: consumer discretionary, technology and financials. The more defensive compartments are on hiatus. We adapt to everything, seem to say the investors, who take their side of a more complex environment because it is more uncertain. For my part, I was rather certain that the accumulation of bad news was going to plunge us into a prolonged period of slump. I haven’t totally given up on this scenario, but the financial markets are playing a different tune.
Moreover, one must always be wary of certainties and of what is difficult to quantify. For example, I don’t really know if investing in an electric vehicle is good for the planet and for my wallet, even though I have a hunch, but I have been considering buying one for several weeks. Recent events have convinced me to do so. Of course, there are no more electric vehicles for sale. Firstly because many people had the same impulse as me and some were less procrastinating. Then because the war in Ukraine, which is not even a month old, has cut off access to certain key components, in particular the wiring harnesses. In an industry like the automobile, which has taken years to elevate “just in time” to the status of art, this is a disaster.
I don’t remember which American newspaper last week headlined something like “what luck for the electric vehicle industry. Unfortunately nothing is ready“. Ah yes, Elon Musk is ready. He even grew a 5 in Europeand giant factory, a “Gigafactory”, in 22 months. 22 months between the first stone and the delivery of the first electric vehicle to a customer yesterday. But despite his efforts, we have to wait until February 2023 to receive a Tesla in Europe. I know, I tried. However, the American manufacturer has a good chance of achieving the objective of having an annual production capacity of 1.3 million vehicles by the end of 2023.
Personally, I didn’t believe it was possible that a guy like Musk would be able to disrupt such an orderly and conservative industry as the automotive industry in such a short time. But he did and everyone is trying to copy him. Of course, he couldn’t care less about my opinion and that of everyone else, and there were many for years who told him he was going to screw up. Bottom line, Tesla weighs more than all the other mainstream automakers combined on the stock exchange. Some say it’s too much, others say it’s deserved. I admit that over time, I went from a skeptical and vaguely retrograde position to a form of admiration. More for global industrial intelligence than for the picaresque boss of the company, even if the two are ultimately perhaps inseparable. To be exact, Elon Musk did not found Tesla, which was founded by Martin Eberhard and Marc Tarpenning, but he was the one who orchestrated its rise to power.
All that to say that I have abandoned my initial certainty and that you always have to be able to question your positions. I therefore promise to try to find something positive and constructive in the current economic-political-strategic trends. Starting by remembering that being invested for the long term by being well diversified is the best guarantee against the ups and downs of the financial markets.
This morning, the news is buzzing with new sanctions against Russia and European energy autonomy projects ahead of Joe Biden’s arrival in Brussels tomorrow. In particular, there will be talk of Russia’s presence in the G20, a place coveted by Poland. Before that, Ukrainian President Volodymir Zelensky will speak remotely in front of the French parliament during the day. I also note some papers on the dreaded shortage of diesel fuel on the old continent and others on the fall in bonds which favors the repatriation of liquidities on shares: again the “TINA” of which I spoke yesterday: there is no no alternative to shares.
Western equity markets are expected to rise at the open. In Asia, Tokyo signs a 7and consecutive session in the green, on big gains of 3% exactly, as if clever little guys had fun aiming for a round number. China continues to unwind its rebound. The CAC40 started the day up 0.24% to 6675 points.
Economic highlights of the day
The figures for new real estate in the United States will be published at 3:00 p.m. DOE Weekly Oil Inventories are scheduled for 3:30 p.m. The whole macro diary here.
The euro rises to 1.10269 USD. The ounce of gold lost ground to 1921 USD. Oil remains firm, with North Sea Brent at $117.12 and US WTI light crude at $110.7. The yield on US debt rises to 2.4% over 10 years, while German debt offers a coupon of 0.50% over the same duration. The French OAT is approaching 1% (0.96%). Bitcoin is trading around 42,000 USD.
The main changes in recommendations
- ABN Amro: AlphaValue goes from accumulating to reducing, targeting EUR 12.30.
- Air Liquide: Jefferies remains long with a price target reduced from 181 to 179 EUR.
- Arkema: Jefferies remains on the buy side with a price target reduced from 154 to 139 EUR.
- Avanza: JP Morgan starts tracking at neutral, targeting 250 SEK.
- BASF: Jefferies remains long with a target price reduced from 80 to 74 EUR.
- Beazley: HSBC goes from buy to neutral, targeting 480 GBp.
- BioMérieux: Jefferies remains to be kept with a price target reduced from 113 to 89 EUR.
- BP Plc: Morgan Stanley goes from online weight to overweight.
- Clariant: Goldman Sachs goes from neutral to buy, targeting CHF 20.10.
- Covestro: Jefferies remains to be kept with a price target reduced from 63 to 56 EUR.
- DiaSorin: Jefferies goes from underperformance to hold by targeting EUR 125.
- ENI: Morgan Stanley goes from overweight to weighted online.
- Eurazeo: Berenberg remains on the buy side with a price target raised from EUR 102.50 to EUR 113.50.
- Evonik: Jefferies remains to be kept with a price target reduced from 30 to 27 EUR.
- FinecoBank: JP Morgan starts tracking to overweight by targeting EUR 19.
- Givaudan: Jefferies remains underperforming with a price target reduced from 3400 to 3300 CHF.
- Incap: Inderes goes from accumulating to reducing, aiming for 74 EUR.
- Lanxess: Goldman Sachs goes from buy to neutral, targeting EUR 44.
- Novozymes: Jefferies remains long with a target price reduced from 530 to 510 DKK.
- Philips: AlphaValue shifts from buying to accumulating targeting EUR 33.50.
- Reckitt: Jefferies goes from holding to underperforming aiming for 5000 GBp.
- Royal DSM: Jefferies remains to be kept with a price target reduced from 178 to 168 EUR.
- Royal KPN: Jefferies remains to be kept with a price target raised from 2.74 to 2.88 EUR.
- Salzgitter: Jefferies remains long with a price target raised from 40 to 50 EUR.
- Solvay: Jefferies remains to be kept with a price target reduced from 115 to 103 EUR.
- Symrise: Jefferies remains long with a target price reduced from 130 to 125 EUR.
- TotalEnergies: Deutsche Bank goes from buy to hold, targeting EUR 48.10.
- Umicore: Citigroup goes from neutral to buy, targeting EUR 46
- Watches of Switzerland: Societe Generale is starting to track purchases by targeting 1,430 GBp.
In France
Important (and less important) announcements
- TotalEnergies is gradually putting its activities in Russia to sleep.
- Crédit Agricole suspends its activities in Russia.
- Automotive Cells Company (ACC), a joint venture of Stellantis with Mercedes and TotalEnergies, plans to invest in Italy to build a battery factory.
- Renault’s decision to resume car manufacturing in Russia has drawn heavy criticism from its biggest shareholder, the French government, according to The Telegraph.
- L’Oréal issued €3 billion in bonds, including €1.2 billion with environmental bonds.
- Technip Energies launches its share buyback program.
- Rallye launches a global takeover bid on its unsecured debt.
- Gaztransport & Technigaz has been entrusted by Samsung Heavy Industries with the design of the tanks for four new LNG carriers.
- Standard & Poor’s raises Fnac Darty’s rating from BB to BB+.
- Median Technologies has completed development of its iBiopsy Lung Cancer Screening CADe/CADx medical device software.
- Graines Voltz confirms its forecasts.
- Virbac, Groupe Crit, Bastide, EPC, HighCo, Invibes, Clasquin and Poxel have published their accounts.
In the world
Important announcements (and others)
- Severstal could default on a dollar bond today, according to the WSJ.
- ZTE soars 60% after the end of the investigation targeting the company in the United States.
- The luxury house Lanvin could enter Wall Street via the SPAC Primavera Capital Acquisition.
- Adobe loses 2.7% post-session after the communication of its quarterly.
- Authentication specialist Okta victim of hacking.
- Toshiba’s elevator division, valued at $4 billion, has a few contenders.
- CLS Behring owns 94% of Vifor shares at the end of the offer.
- Chinese regulators are pushing Alibaba, Baidu or com for more accounting transparency to help maintain their listing in the United States, according to Reuters.
- The Elliott consortium could offer an improved offer on Nielsen Holdings.
- Cresco is negotiating the takeover of Columbia Care for $2 billion, according to Reuters.
- The Chinese promoter Kaisa is delaying the publication of its results, due to the confinement in Shenzhen.
- The main publications of the day: Tencent, Wuxi Apptec, Cintas, General Mills, ENBW, Raymond James, KB Home, Auto1… The whole agenda here.
Readings