Well honey, the session of January 5, 2022 was really trying for the American markets, Nasdaq 100 in the lead. The index rich in technology stocks lost more than 3.1% with only 8 increases, without being able to count on its aristocrats. Apple lost more than 2.5%, Microsoft almost 4% and Alphabet or Nvidia even more. Meta Platforms did not find a hiding place in the metaverse either: -3.7% at the bell for the ex-Facebook. To get an idea of the mini-earthquake endured by growth stocks, it is still best to go and see Cathie Wood’s Ark Innovation fund, a concentrate of daring bets on future stocks: -7% yesterday after -4, 4% the day before. The tech pope sees her main ETF drop to $ 86.12 after flirting with $ 160 in February 2021.
The slide in growth stocks swept the S & P500, which gave up 1.9% at the end of the course and did not spare the Dow Jones, down -1.07%, helped by its old guard: Merck, Walmart and Verizon. Small incongruity anyway, Intel gained 1.4%: it has been some time since the leader in processors has been decorrelated from its peers because it is severely judged by investors for having missed technological turns. But the innovations presented yesterday at CES in Las Vegas, in particular the self-proclaimed fastest mobile processor in the world, have revived the group’s image. Intel, the low-cost tech of the year? Case to follow.
But in fact, where does this big depression come from? From the minutes of the last US central bank meeting in December, which was released yesterday. As a reminder, the Fed meets eight times a year in the Monetary Policy Committee (FOMC) to communicate on its policy and adjust it if necessary. Debates between central bankers last two days, and the condensed verdict is announced at 2:00 p.m. Washington time on the second day (8:00 p.m. KST). An introductory press conference follows, orchestrated by the current president, in this case Jerome Powell. But the detailed content of the discussions between central bankers was not revealed until three weeks after the meeting. So yesterday for the FOMC held on December 14 and 15.
However, the report, which is called “minutes” in both French and English, shows that Jerome and his gang are more nervous than expected about inflation. It is all the more embarrassing since they had spent a good part of 2021 underestimating the impact, before a back-pedaling not so badly built at the end of last year. In reaction to yesterday’s information, economists are now more likely to anticipate the announcement of a turn of the screw on quarter-point rates at the meeting scheduled for March 16 and 17 (it will be of the second FOMC of the year, the first being scheduled for January 26 and 27).
The Fed is not raising rates for fun, but to avoid the overheating of the US economy, where the labor market has lost its fluidity and where cost inflation is shattering price tags. By raising rates, a central bank increases the cost of borrowing for households and businesses, which means that banks are reducing the number of loans granted, which in turn reduces the amount of money in circulation and allows for limit economic spillovers. All the art and skill of a central bank is then to avoid going too far, so that the economy does not sink into the doldrums, otherwise the remedy would be worse than the evil. Tech stocks are over-allocated because they tend to be richly valued and higher rates erode the multiples that investors are willing to pay.
The minutes of the last Fed meeting also wreaked havoc on cryptocurrencies, with Bitcoin falling below 43,000 per unit. More logical, the more “hawkish” than expected position of the central bank finally made the bond market react, with a 10-year US T-Bond whose yield rose to 1.73%, an increase of 20 basis points compared to its level at the end of last year.
Insofar as the European markets had done better than hold yesterday, like a CAC40 which had been awarded 0.8% to sign a new record, the awakening will be a little painful this morning on the old continent, with bright red leading indicators. In an America still so divided, we celebrate if we can say this January 6 the first anniversary of the invasion of the Capitol by Donald Trump aficionados. Joe Biden, who is starting a crucial year for his mandate by giving the impression of running out of fuel for inspiration, is due to deliver a speech at the start of the afternoon European time.
The economic highlights of the day
Scheduled loaded with German factory orders for November (8:00 a.m.), followed by the Challenger study on December layoffs in the US (1:30 p.m.) and the first German inflation estimate for December (2:00 p.m.). Return to the United States at 2:30 p.m. with the November trade balance and new weekly unemployment benefit claims, then durable goods orders and the ISM for services (4:00 p.m.).
The euro climbs back to 1.13132 USD. Gold does not change much at 1805 USD per ounce. Oil lost 0.5% after rising the previous day, to $ 79.69 Brent and $ 76.83 WTI. The yield of the 10-year American rose to 1.72%. Bitcoin drops heavily to $ 42,854.
The main changes in recommendations
- Aker BP: Jefferies remains to be held with a target price reduced from NOK 313 to 257.
- Alfen: Bryan Garnier starts buy tracking by targeting 105 EUR.
- Assicurazioni Generali: Deutsche Bank switches from buy to hold targeting EUR 19.
- Esker: Berenberg remains a buyer with a target raised from 320 to 400 EUR.
- Essity: Jefferies remains to be kept with a price target raised from 280 to 300 SEK.
- ID Logistics: Berenberg remains to be retained with an objective raised from 330 to 360 EUR.
- Ipsen: Societe Generale switches from holding to buying, targeting EUR 94.30.
- Johnson Matthey: Bernstein goes from outperformance to market performance by targeting 2500 GBp.
- Lundin Energy: Jefferies switches from buy to hold targeting 358 SEK.
- Reckitt Benckiser: Jefferies remains to be retained with a price target raised from 6100 to 6150 GBp.
- SFS: UBS goes from neutral to buy, targeting CHF 155.
- Stellantis: RBC starts sector performance monitoring.
- Swedish Stirling: Bryan Garnier starts buy tracking by targeting 22 SEK.
- UBS Group: Jefferies is still buying with a price target raised from CHF 22 to CHF 23.
- Unilever: Jefferies remains for the purchase with a target price reduced from 4700 to 4650 GBp.
In France
Important (and less important) announcements
- Carrefour gained 5% yesterday after a new rumor, propagated by Bloomberg, on discussions of merger with Auchan.
- Crédit Agricole would have submitted a takeover offer for Banca Carige at the symbolic euro.
- Stellantis joins forces with Amazon for the future cockpit of its cars.
- Sodexo confirms its objectives for 2021-2022 but still does not appoint its future CEO.
- ALD (Société Générale) will buy back LeasePlan in shares for € 4.9 billion. SG will go down to 53% of the capital.
- Natixis intends to sell its entire stake in Coface, ie 10.04% of the capital.
- Valneva confirms the schedule of clinical trials and applications for authorization of its inactivated COVID-19 vaccine candidate, VLA2001.
- Ubisoft has launched an Ubisoft + subscription service, allowing you to play more than a hundred titles, on Microsoft’s Xbox console.
- Eiffage and the State of Senegal sign an amendment to the Avenir highway concession contract.
- Tikehau Capital achieved record net inflows in 2021 with € 6.3 billion raised for its asset management activity.
- Bastide makes acquisitions in France.
- Prodways sells four machines to a new Australian customer.
- Claranova will gradually buy out the minority interests in Planet Art.
- The laboratory that evaluated Noxxon’s NOX-A12 in a non-oncological indication has decided not to pursue this path.
- ECA achieves an important milestone for the Belgian-Dutch program against submarine mines.
- SES-imagotag finalizes the acquisition of the Irish start-up MarketHub.
- Drone Volt strengthens its offer with the launch of a new version of Heliplane drone.
- Nanobiotix is recruiting the first patient in the phase III study nanoray-312 with NBTXR3 in head and neck cancers.
- Crypto-Blockchain Industries will divide the face value of its shares by 10.
In the world
Important announcements (and others)
Readings