(Boursier.com) – Wall Street is now falling this Friday, after the intervention of the President of the Fed, Jerome Powell, within the framework of the Jackson Hole symposium. In summary, the head of the American central bank estimated that controlling inflation was going to take time and that some economic pain (don’t say recession!) was going to be necessary. The Dow Jones is currently correcting 1.22% to 32,884 pts, while the S&P 500 drops 1.49% to 4,136 pts and the Nasdaq is down 1.88% to 12,402 pts. On the Nymex, a barrel of WTI crude fell 1% to $91.6. The ounce of gold declined by 1.1% to $1,752. The dollar index returned 0.2% against a basket of currencies.
Fed Chairman Jerome Powell, speaking today at the Jackson Hole symposium, a meeting of central bankers in Wyoming, promised that the US central bank would “use its tools forcefully” to curb inflation. , still close to its highest level in more than 40 years. “We must continue until the job is done,” said the leader of the Fed, with an inflation target of around 2%. The Fed must therefore continue to raise rates and keep them at a higher level until it is convinced that inflation is under control, says Powell again.
“Our decision at the September meeting will depend on the totality of incoming data and the evolution of the outlook,” added the leader. For now, according to the CME Group’s FedWatch tool, the probability of another 75 basis point rate hike on September 21, which would be the third consecutive one of such magnitude, is more than 51% ( range 3-3.25%), while the probability of a rate increase of 50 basis points is 48.5% (range 2.75-3%).
Powell added that the US economy, households and businesses should expect “a bit of pain” given this necessary monetary tightening. He notes that the US economy is also slowing down, although it still shows strong momentum. The labor market remains solid for the time being and the demand for workers greatly exceeds the supply. The monetary policy stance is currently close to neutral, but Powell suggests further tightening is needed as long as inflation remains high.
Powell suggests that bigger rate hikes are still likely “for a while” to finally get inflation under control…”Although higher interest rates, slower growth and weaker conditions on the labor market will reduce inflation, they will also hurt households and businesses”… “These are the unfortunate costs of reducing inflation, but a failure to restore price stability would mean far greater pain “, indicated the leader of the Fed, intractable.
The personal income of American households for the month of July 2022 appreciated by 0.2% compared to the previous month, against a consensus of +0.6% and an increase of 0.7% a month before. Personal consumption expenditure for the month of July increased by 0.1%, against 0.4% consensus and 1% in June. The good news comes from the ‘core PCE’ price index, closely followed by the Fed, which stood at +0.3% in July compared to the previous month, against 0.6% consensus. This adjusted price index rose 4.7% year-on-year, against 4.8% market consensus.
The balance of international trade in goods (advanced reading) for the month of July showed a deficit of $89.1 billion, against a consensus of -97.5 billion and a revised level of -98.6 billion. dollars a month earlier.
The final index of US consumer sentiment measured by the University of Michigan for the month of August came out at 58.2, against 55.1 consensus.
Chinese stocks listed on Wall Street should do well this Friday, as Beijing and Washington have just reached an agreement. The US audit regulator said on Friday it had signed an agreement with Chinese regulators, taking a first step towards inspecting accounting firms registered in China and Hong Kong. The Public Company Accounting Oversight Board (PCAOB) said it was the most detailed and prescriptive agreement the PCAOB has ever entered into with China.
Values
Electronic Arts takes 5% on Wall Street, while the title Amazon loses 2%. The American e-commerce giant could indeed announce an agreement to acquire the video game publisher. According to USA Today, rumors have swirled online about Jeff Bezos’ potential takeover of EA. Apple and waltz disney would also be considered as possible suitors for the game publisher. Such a deal would not be strategically absurd, after a comparable move of Microsoft who offered himself Activision Blizzard for $69 billion.
Amazon recently announced the acquisition of iRobot, the designer of the Roomba household robot. Electronic Arts would be a bigger piece with its $35 billion market value.
The Amazon / EA rumor remains to be taken with a grain of salt. On CNBC, David Faber, citing his own sources, believes that Amazon is not about to make an offer on EA.
KKR (-3%) withdraws its offer of 88 Australian dollars per share on Ramsay Health Care, indicates the Australian Financial Review (AFR), reporting that the American investment fund would have sent a letter to the board of directors of Ramsay, in order to to signify that the offer was abandoned. Instead, KKR would intend to acquire Ramsay’s Australian operations and leave Ramsay’s France operations to Ramsay Health investors… Ramsay Health Care’s board would be keen to engage with KKR, but they believe that the all-cash offer should be respected or that the terms of the alternative proposal should be improved.
Merck (steady). The American acquisition talks Merck with his compatriot seagen would be stalled, due to a disagreement on the price, reports Bloomberg. People familiar with the matter quoted by the agency say that while talks could still resume, Merck and Seagen have not been able to agree on a price so far. Last month, the Wall Street Journal mentioned negotiations around a potential price of more than $200 per Seagen share. The American pharmaceutical giant has been studying the acquisition of the biotechnology firm for some time now. Seagen currently weighs 30 billion dollars on Wall Street, against 228 billion dollars for Merck & Co. The newspaper then added that difficulties could also be encountered with regulators.
Moderna (-1%) continues Pfizer (-1%) and its German partner BioNTech for patent infringement in the development of the first Covid-19 vaccine approved in the United States, alleging that they copied technology that Moderna developed years before the pandemic. The lawsuit, which seeks indeterminate damages, was filed in the U.S. District Court in Massachusetts and the Düsseldorf Regional Court in Germany, Moderna said in a press release Friday.
“We are filing these lawsuits to protect the innovative mRNA technology platform that we pioneered, invested billions of dollars in creating, and patented in the decade before the pandemic,” the director said. General of Moderna, Stéphane Bancel.
marvel (-6%), the American chip designer, corrects on Wall Street after guidance deemed disappointing for the third quarter, and despite a solid second quarter supported by data center activities.
Bed Bath & Beyond (+3%), the struggling American retailer, crumbling under massive debt and recently let go by investor Ryan Cohen, boss of GameStop, will share its strategy next week.
Affirm (-18%), the American fintech group, plunges on Wall Street. The just disclosed quarterly loss came out much heavier than expected. The forecasts are also flat.
Ulta Beauty (+1%), the American beauty products chain, raised its annual revenue and profit targets, with consumer demand still strong.
gap (-1%), the American retailer, posted a positive adjusted profit and exceeded market expectations. Revenues also beat the consensus. The title benefits today on Wall Street. Gap, however, withdraws its annual guidance, against a backdrop of the search for a new CEO and economic uncertainty.
Dell Technologies (-9%) revealed revenue forecasts below expectations last night, after recording its weakest growth in activity in more than a year and a half in the second quarter, due to inflation, the strong dollar and the epidemic in China.