I’m going to try this morning to extricate myself from an exercise that I’ve always had trouble mastering for twenty years that I’ve been doing this job: write constructive things in a complicated stock market period, without being too grandiloquent or giving lessons. Starting with a bit of history. Oh I won’t go back very far, just to November 22. That day, the Nasdaq 100 hit a record 16,764 points in session. Since yesterday, it is 27% lower. This is considerable as a drop in six months. But I can already hear Grandma Lucette telling me “you bore me always talking about the nassedaque, what does that have to do with the caquequarante?“. The CAC40 lost 17.6% on its highest, which dates from January 5. It’s a considerable drop in four months. I often talk about the Nasdaq because it crystallizes investors’ unreasonable appetite for risk and some form of panurgism since 2008.
Panurgism which has undoubtedly helped to maintain the illusion of an endless rise in the markets. What is also true: the markets are structurally bullish. On the other hand, when we accept 12 years of increases in 13 years, as was the case on the Nasdaq 100 between 2008 and 2021 (2018 being the only exception, and again on a contraction of -0.12%), we must also expect some backlash. For the CAC40, since Mamie Lucette is watching me, it’s a little less flamboyant but it’s not bad all the same: six increases over the last seven years, if we include dividends, and an index that has more than doubled between 2011 and 2021.
The reality is that the headlong rush of equity markets was no longer tenable given the current headwinds. Too much inflation, too much geopolitical tension, too many productive imbalances, too much money devoted to speculation and not enough elsewhere. I stop there so as not to go on too slippery ground. Until recently, anyone could get away with doing just about anything. I’m not sure who said past performance boosts confidence more than skill, but that’s kind of the idea. Now that we are in the hard, we must once again hammer home the good old principles of investment: bet on quality companies, whose fundamentals are adapted to current macroeconomic conditions, be diversified, adjust its level of risk, etc. etc Regaining humility also never hurts.
There will continue to be volatility in the coming days, both ways. Mamie Lucette recommends that you be wary of the announcement of inflation figures in the United States in April, which will be announced on Wednesday. They have a strong power of influence on the morale of the troops, because they can feed the box of fantasies of the investors as for the monetary policy of the Fed. Grandma Lucette would prefer me to talk about the Banque de France, but I had to explain to her that she was no longer concerned with that.
Today’s mood is a little less gloomy in the markets, with US leading indicators showing signs of a rebound. But as I am not a partridge of the year, I prefer to tell you that in such contexts, reversals are frequent and are triggered by details. Moreover, the VIX volatility index has risen above 35 points, flirting with its peak of last March. This means that the slightest raised eyebrow from Jerome Powell, whom Mamie Lucette finds very handsome, can have consequences on the indices.
At the macroeconomic level, fear of inflation has been replaced by fear of monetary austerity, which is turning into apprehension of a recession. Which caused the star shock absorber of 2022 to drop yesterday, the oil sector, whose fall was added to that of the technological compartment. American investors have gone to curl up on the health and the big value of a good father, from PepsiCo to Kellogg via Johnson & Johnson.
Asia-Pacific markets are largely bearish this morning, with the exception of Shanghai. Tokyo lost 0.6% while Hong Kong fell 2.2%. China is still facing the disorders of the zero-covid policy, which, for example, is forcing Tesla to stop production at its Shanghai factory for lack of parts. In a completely different register, the current context does not prevent Philip Morris from negotiating the takeover of its Swedish counterpart Swedish Match, which currently weighs nearly €11 billion. Finally, note that the yield on US 10-year debt deflated a little to 3.03%, while risky assets are still suffering: bitcoin even made a brief incursion below USD 30,000 last month. unit at night. European leading indicators are hesitant but with a bullish bias as of this writing.
Economic highlights of the day
The ZEW index will, at 10:00 am, take the pulse of German investors. All the “macro” agenda here.
The euro recovered slightly to 1.0574 USD. The ounce of gold drops to 1860 USD. Oil is also losing ground, with Brent from the North Sea at 103.55 USD a barrel and US light crude WTI at 101.33 USD. The yield on US 10-year debt fell slightly to 3.03%. Bitcoin retreats below $30,743.
The main changes in recommendations
- Airbus: Societe Generale goes from holding to buying, aiming for EUR 132.
- Alstom: Stifel starts the follow-up to keep by targeting 23 EUR.
- BioArctic: RBC starts outperform tracking by targeting SEK 230.
- BMW: Berenberg goes from holding to buying, targeting EUR 110.
- DBV Technologies: Goldman Sachs goes from buying a neutral aiming for three euros.
- EQT: Citigroup goes from sell to neutral, targeting 260 SEK.
- Fresenius: HSBC goes from buying to keeping, aiming for 39 EUR.
- GlaxoSmithKline: Berenberg remains long with a price target raised from 1700 to 1850 GBp.
- Henkel: Societe Generale goes from buying to keeping, aiming for EUR 66.
- Renault: Berenberg remains to be kept with a target price reduced from 62 to 27 EUR.
- Schroders: Citigroup goes from neutral to buy, targeting 2900 GBp.
- Shop Apotheke: Barclays resumes overweight tracking targeting EUR 138.
- Stadler Rail: Stifel starts monitoring for purchase by targeting 44 CHF.
- Stellantis: Berenberg starts long tracking targeting EUR 21.
- Swedish Match: JP Morgan goes from underweight to neutral by targeting 81 SEK.
- Volkswagen: Berenberg goes from selling to keeping, aiming for 175 EUR.
- Zur Rose: Barclays resumes overweight tracking by targeting CHF 178.
In France
Important (and less important) announcements
- Airbus recorded 98 orders in April.
- Vinci Construction wins a €255 million contract in Australia.
- Geely Automobile Holdings will acquire 34.02% of Renault Korea Motors shares from Renault. The group is also announcing the transformation of its captive finance company RCI Bank into “Mobilize”, which will offer car financing and leasing.
- Veolia sells its mobile water services activities in Europe to Saur for €190 million.
- JCDecaux signs a street furniture contract in Dresden.
- Maurel was able to bring the production up a little to Ezanga.
- Quantum Genomics announces the end of patient recruitment for the pivotal Phase III study, FRESH.
- Trigano, Lacroix, Nyxoah have published their accounts.
In the world
Important announcements (and others)
- Philip Morris is in talks to buy Swedish Match.
- Tesla halts production at the Shanghai factory due to supply issues.
- The Carlyle Group is to acquire NSM Insurance from White Mountains for $1.78 billion.
- Microstrategy sinks 25% due to its Bitcoin exposure.
- Saipem is working to carry out a capital increase of €2 billion in the summer.
- Gay dating app Grindr will go public via SPAC Tiga Acquisition.
- Main results publications of the day: Sony, Bayer, Occidental Petroleum, Suncor, Nintendo, Mitsubishi Corporation, Daikin, Alcon, Porsche, Eiffage… The whole agenda here.
Readings