As soon as the fearmongers come up with a new argument to suggest that the party is over, they are immediately drowned out by a shower of counter-fire. Will central banks cut back their support? Growth is robust and above average. Will rates have to go up? Inflation is transitory. Valuation multiples are high? So are growth rates. Public debt has exploded? Austerity policies are so outdated... The list is long, of course, but it illustrates the current state of mind and probably also the fact that investors are now living in the myth of divine intervention by central bankers in case of hard times.
Media coverage also plays an important role in this. When I say media, I mean both the "mainstream" channels, i.e. the traditional financial press, and social networks, which have become huge breeding grounds for ideas and influence. They often distill an optimism that is more widespread than in the traditional columns, which are quicker to draw out opposing points of view, through a kind of "contrarian" snobbery. These networks help to feed the FOMO (Fear of Missing Out), and the rise feeds the rise. The stock market has almost become entertainment, but entertainment that can pay off. It's not so far from gambling, in a slightly more sophisticated version.
We are out of the Q3 earnings season. Not quite, actually, but the matter has been put to bed: the numbers were very good and helped to erase the spleen seen in September. We need to find a new reason for enthusiasm now, to pulverize the chronic doubts about the accommodative policies of central banks and the trajectories of key rates. It could be consumption. In fact, we are beginning to see news reports on the subject. The latest consumption figures are good, savings reserves are high. As such, Amazon's "Black Friday" and its slew of sequels will begin on November 26. But there is now also a "Black Friday before its time" that started this week. In a few years, it may start as early as September 1st, at the same time as Easter chocolates are put on the shelves. Still, it's consumption that could be the next index catalyst, so keep an eye on the numbers for the upcoming e-commerce orgy.
China is once again in the news this morning, with the announcement of a (small) sale of the troubled developer China Evergrande Group, and the difficulties in its technology segment, illustrated by Baidu and Bilibili, which have fallen after results close to expectations, but which raise questions about the strength of the advertising market. In Japan, indiscretions suggest that the economic support plan will be endowed with 55.7 billion yen, which did not have a particular impact on the indices, which closed slightly lower.
Today’s economic highlights:
In the United States, the Philly Fed index for November and weekly jobless claims are followed by the index of leading indicators for October.
The dollar is up to EUR 0.8823, while the ounce of gold is rising towards USD 1865. Oil has been under pressure for the past few days, with Brent crude just above USD 80 per barrel and WTI around USD 78.29. Slight easing on US 10-year debt, paying 1.58%, while the Bund remains stoic at -0.25%. Bitcoin is back down slightly below USD 60,000.
* Cisco Systems said Wednesday it expects revenue growth for the current quarter to fall short of Wall Street expectations because of supply chain strains that are eating into its costs. The stock fell 6.6% in after-hours trading.
* NVidia said Wednesday it expects fourth-quarter revenue to be above analysts' expectations, as the company expects strong growth in its data center business due to ongoing corporate investments in artificial intelligence and the metaverse, a virtual world touted as the future of the Internet. The stock was up 6.5% in pre-market trading and at least 12 analysts raised their price targets.
* Alibaba - The Wall Street-listed stock of the Chinese online shopping giant is down 3.8% in premarket trading after reporting below-consensus quarterly revenue and the lowest annual sales growth forecast since 2014.
* Amazon is considering dropping its credit card partnership with Visa in the U.S. after deciding Wednesday not to accept Visa-issued cards in Britain starting in 2022, calling the fees too high. The Amazon share is up 0.6% in pre-market trading on Thursday, while Visa is up 0.5% after giving up 4.7% the day before.
* Agence France-Presse (AFP) and Google, a subsidiary of Alphabet, announced Thursday the signing of an agreement on the remuneration of neighboring rights after several months of negotiations.
* Macy’s raised its full-year revenue and profit forecasts on Thursday, despite fears of shortages due to supply chain tensions. The stock is up 3% in pre-market trading.
* Kohl’s raised its full-year sales outlook Thursday, sending the retailer's stock up 6.2% in pre-market trading.
* Coty on Thursday said it expects like-for-like annual sales growth of 6% to 8% over the next three fiscal years. The fragrance and beauty products group also raised its fiscal 2022 earnings forecast to a range of 20 to 24 cents per share, up from 19 to 23 cents, compared with analysts' consensus of 24 cents. The stock is up 1% in pre-market trading.
* JD.Com - The Chinese e-commerce group on Thursday reported revenue and profit for the quarter ended in September that beat Wall Street analysts' forecasts. The stock is up 1% in pre-market trading.
* AstraZeneca, which competes with Pfizer and Regeneron in monoclonal antibody treatments for COVID-19, released encouraging new efficacy data Thursday for its antibody cocktail, with six-month follow-up showing an 83% reduction in the risk of symptomatic COVID-19 compared with placebo.
* Starbucks opened its first cashierless coffee shop in New York on Thursday in partnership with Amazon, and the two groups plan to open at least three more in the U.S. by 2022. The new concept, based on technology developed for Amazon Go automated stores, is meant to address the labor shortage.
* Carlyle Group - The U.S. private equity firm announced Thursday that discussions for a possible takeover bid for British bank Metro Bank had failed.
- Activision Blizzard: J.P. Morgan downgrades to neutral from overweight. PT rises 37% to $88
- American Airlines Group: Exane PNB Paribas adjusts price target to $22 from $23, maintains neutral rating
- Autoliv: Goldman Sachs adjusts pt to $121 from $113, maintains buy rating
- ConocoPhillips: Scotiabank adjusts price target to $90 from $85, keeps sector outperform rating
- Delta Air Lines: Exane PNB Paribas adjusts price target to $63 from $62, maintains outperform rating
- Global Payments: UBS starts at buy with $161 price target
- Hilton Grand Vacations: Jefferies upgrades to buy from hold. PT up 19% to $62
- Lucid Group: Morgan Stanley raises pt to $16 from $12, keeps underweight rating
- Palo Alto Networks: Jefferies adjusts price target to $615 from $550, keeps buy rating
- Qualcomm: JPMorgan raises price target to $225 from $200, maintains overweight rating
- Sage Group: Jefferies remains Buy with price target raised to GBP 900 from GBP 820.
- Square: UBS starts Square at Buy with $322 PT
- The Scotts Miracle-Gro Company: Barclays initiated coverage with a recommendation of overweight. PT set to $205
- The Boeing Company: J.P. Morgan raised the recommendation to overweight from neutral. PT up 21% to $275
- The Hain Celestial Group: Evercore ISI raised the recommendation to outperform from inline. PT rises 18% to $48.
- The Home Depot: Guggenheim adjusts pt to $425 from $350, maintains buy rating
- Vodafone: UBS is keeping its Buy rating. The target price has been modified and is now set at GBp 188 compared to GBp 187.
- Walt Disney: President Capital Management raised the recommendation to buy from neutral. PT up 21% to $190