Any growth is useful for stock markets at the moment, even when it is difficult to find its origin. Stock markets developed yesterday, sometimes moderately, as in Switzerland or the UK, a little stronger in France and Germany and vigorously in the United States. Investors are buying files that have been upset in recent weeks so as not to miss the boat if the situation stabilizes. They seem to have barely listened to Fed boss Jerome Powell, who seems to like the falcon costume he wore a few months ago. Jay is unstable, unless he is a volatile Jay, he even went so far as to say that the central bank will not hesitate to move to neutral interest rates if inflation remains high. Normally, such signs should have caused a wave of caution on stocks, but they only, and logically, increased the yield on government bonds. This can be seen as a sign that equity investors are beginning to get used to the new monetary situation. Or just that they needed to breathe a little.
Because the climate remains quite alarming, according to the latest monthly survey conducted by Bank of America among asset managers who responded between May 6 and 12 (about 330 professionals who manage nearly $ 1,000 billion). Well, I must emphasize that this very recent period has had everything to exacerbate the depression of financiers. The Nasdaq index fell 5% in one day on May 5 and led to May 12, five more sessions in the red. Suffice it to say that managers had a morale when they returned to form. I quote some mixed teachings because they offer a good overview of the current beliefs of professionals:
- More and more managers want managers to strengthen their balance sheets and reduce their capital expenditures.
- Managers are breaking away from the most stingy bet in the last decade: buying everything that resembles technology stocks. They are currently underestimating the sector by 12% in their allocations, a record since 2006.
- Managers have never been so pessimistic since 1994 (when BofA surveys began) about growth prospects. 77% call the term “stagflation” the best way to describe their economic expectations for the next 12 months.
- The main risk at this point, managers called the resilience of central banks (31%) to anticipate the global recession (27%) and inflation (18%). They confuse causes and effects a bit, but it also illustrates the fact that the financial world and the real economy do not necessarily develop in the same time capsule.
- Managers are overweight (ie utilities and / or medical and / or basic consumer products) – 43%. At the peak of horror in 2020 and 2011 we had more than 50%, and at the peak of 2008 – 90%. In fact, they are mainly about health and basic consumption.
- Managers are overweight, healthcare, raw materials and energy and underweight bonds, eurozone stocks, discretionary consumer stocks and emerging stocks. This is a bit paradoxical, because European markets have finally withstood the shock better.
- The most consistent position is to be an oil buyer and a seller of US Treasury bonds.
- Managers believe that the greatest risk of default now in the markets is associated with speculative technologies.
- Finally, according to managers, “Fed Put” is at 3529 points on the S & P500. Fed Put is a level that experts believe the US Federal Reserve would be forced to take measures to target the stock market to avoid a cataclysm. With the S & P500 at 4,088 points at the time of writing, the Fed Put is down 13.7% (however, the U.S. index fell to 3,858 points last week when managers responded to the survey).
It didn’t look like Prever’s list at all, and I hope I’m not too tired of those numbers, but they give you a good idea of the level of pessimism around you and the behavior associated with it. The chart, published this morning in a Bloomberg article, shows that the average PER of global technology stocks has just exceeded the average PER of consumer stocks of commodities, about 20 times higher than expected in 12 months. A few weeks ago, technology played more with the 27/30 zone. The most infamous noted that Walmart’s results released yesterday show that basic consumption is not necessarily a good idea to hide: the title has fallen 11%, unheard of since 1987, after lowering its targets under the pressure of full cost growth. . .
This morning, European markets are expected to be around equilibrium with a slight bullish bias. In the Asia-Pacific region, Japan and Australia rose from 0.5 to 1%. In China, by contrast, indices are falling, economic performance is still mediocre, and doubts about a systematic containment policy remain.
Economic moments of the day
The April consumer price index in the EU should be published at 11:00, before the beginning of April housing and building permits in the US at 14:30. The whole macro diary is here. This morning, Japan announced a reduction in its GDP in the first quarter, which was a sharper slowdown than expected.
The euro rose again to 1.0532 US dollars. An ounce of gold fell to $ 1,808. Solid oil: North Sea Brent costs $ 112.34 per barrel and US WTI light oil costs $ 111.32. The yield on 10-year US debt rose to 2.96%. Bitcoin is trading at about $ 30,500.
The main changes in the recommendations
- Ahold Delhaize: JP Morgan is moving from neutral to overweight, focusing on 32.50 euros.
- Barry Callebo: Baader Helvea is moving from accumulation to decline, aiming for 2,300 Swiss francs.
- Crédit Agricole: Berenberg is still maintained, and the price has been reduced from 12.30 to 11.50 euros.
- Forsee Power: Berenberg is moving from a purchase to a holding company, focusing on 4.50 euros.
- Inventiva: Jefferies remains long, the target price is reduced from 19.50 to 18 euros.
- ITM Power: Bernstein begins to track performance overruns.
- Land Securities: Jefferies is moving from low to holding, focusing on 690 GBp.
- Logitech: UBS is moving from neutral to buying, focusing on 73 Swiss francs.
- Nel ASA: Bernstein starts tracking with the win.
- Rational AG: HSBC is moving from holding to buying, focusing on 670 euros.
- Records: Jeffries still remains, and the target price has been reduced from 43.20 to 39 euros.
- Repsol: HSBC moves from holding to buying, focusing on 16.70 euros.
- Royal Boskalis: AlphaValue goes from decline to accumulation, focusing on 38.90 euros.
- Sonova: JP Morgan lowers the target price from 399 to 346 Swiss francs.
- Zalando: Baader Helvea goes from buying to saving, aiming for 41 euros.
Publication of results:
- Elior: The group expects organic income to grow by at least 16% in 2021-2022 and EBITA is close to break-even according to adjusted data. He will leave the “junk food” industry in the United States. The indicative margin for 2023/2024 has been revised downwards.
- Euronext: organic growth reached 6% in the first quarter. This year, costs will be lower than expected.
Important (and less important) ads
- Frederic Udea, CEO of Société Générale, who has been in office since 2008, will not seek to renew his term in June 2023.
- The consortium, which includes Alstom, won the green line project for the Tel Aviv metro for 2.6 billion euros, including 858 million euros for the group.
- L’Oréal is launching its third shareholding operation.
- Stellantis sees India as a lucrative emerging market for the automotive industry.
- Bouygues issues 2 billion euros in bonds.
- Air France-KLM and CMA CGM join forces in air transportation.
- The state of the Electricité de France nuclear fleet remains a matter of concern.
- According to La Lettre A, the failed reorganization of Atos cost 300 million euros.
- Valeo is completing a share repurchase program.
- Elis is investing € 300 million in EMTN bonds.
- New drawdown on Pharnext’s OCEANE-BSA dilution line.
- Boostheat is expanding its line of diluted financing with Iris Capital.
- published their accounts.
In the world
Important Ads (and others)
- According to Bloomberg, Siemens Energy could quickly shut down Siemens Games.
- Unicredit and Commerzbank would discuss the merger in early 2022 before giving up, according to the Financial Times.
- Following a profit warning, Walmart fell 11.4% at the time of the close, a sharp annual drop since 1987.
- Netflix is being released to cope with the slowdown.
- JPMorgan Chase shareholders support only 31% of Jamie Damon’s compensation. Intel shareholders did the same last week.
- Facebook (Meta Platforms) celebrates 10 years of trading.
- SIG Group raised 204 million euros.
- Sika opens a new factory in Bolivia.
- Key publications of the day: Tencent, Cisco, Lowe’s, Target, Analog Devices, Experian, Aviva, Hal Trust, ABN Amro, Elia, Burberry, Rockwool, Vallourec… The whole agenda is here.