Equity markets are clearly digesting the recent gains that took them to record highs, as evidenced by the very modest moves in the major indexes yesterday, both up and down. Tuesday's session started with a more cautious bias as investors continue to speculate about central banks. On their intentions in terms of monetary policy of course, but also on the identity of the future boss of the most powerful of them, the US Fed.
Alphabet just joined - briefly - Microsoft and Apple in the $2,000 billion capitalization club, while bitcoin ventured into terra incognita beyond $68,000 per unit.
The Fed just published its Financial Stability Report, a bi-annual compilation of the risks weighing on the US economy and, by extension, the world economy. The major threats are generally known, but what is striking is rather the sum of the small elements of volatility over which the US central bank implicitly recognizes that it has no real control. We also note that the institution seems to be comfortable with its job as a pyromaniac firefighter, since it is alarmed by high prices reached by risky assets, even though this situation is partly the consequence of ultra-accommodating monetary policies..
The November 2021 Financial Stability Report mentions, in no particular order, the development of stablecoins, which really seem to be bothering central bankers, as well as the proliferation of retail investors, especially young people, and their appetite for "meme" stocks. And Chinese real estate, which is listed among the six "short-term risks that could affect the financial system", while Jerome Powell was busy explaining in September that it was an epiphenomenon for the United States.
In simple terms, the Fed continues to navigate by sight, like its counterparts around the world, without knowing how to get out of a system that it is constantly feeding.
If the Fed is alarmed by the unpreparedness of financial institutions to manage the risk of "the new high-risk investment approach" of retail investors, they clearly have some concerns about the security of their data. Under the modest title of "Robinhood announces data security incident", America's favorite youth brokerage revealed that it was hacked on the night of November 3. The intruders recovered 5 million email addresses, including two million with full usernames, but apparently no other data except for a small amount of customers. Robinhood will say more once a thorough analysis is done.
Finally, bond yields got a little churned up in the evening on news of a meeting between Joe Biden and Lael Brainard, who sits on the Board of Governors and who experts say could be a serious rival to Jerome Powell. The majority of economists believe that the current chairman of the Federal Reserve will be reappointed by the White House when his term expires next February, but Brainard has long been mentioned as his successor. The final choice, expected shortly, will be both economic and political. Lael Brainard is said to be even more accommodating than Jerome Powell, who is nevertheless a moderate within the institution. This adds to the suspense surrounding future monetary policy. Which in the very short term will be guided by the October inflation data in the US, published tomorrow.
Today's economic highlights:
The ZEW survey of German financial sentiment in November and US producer prices for October are on the agenda today.
The dollar is up to EUR 0.8626. The ounce of gold is firm at USD 1824. Oil is down slightly at USD 82.67 per barrel WTI and USD 83.76 per barrel Brent. Ten-year bond yields reach 1.47% on the T-Bond and -0.25% on the Bund. Bitcoin has surpassed its all-time highs, settling at USD 68,500 earlier today.
* General Electric announced on Tuesday that it would split into three listed companies, focusing on its aviation, healthcare and energy businesses respectively. The stock gained more than 10% in pre-market trading.
* Tesla - The automaker's stock is up 1.4 percent in premarket trading after falling nearly 5 percent on speculation that boss Elon Musk will sell a 10 percent stake in the company following a Twitter poll.
* Merck & Co is up 1.6% in pre-opening trading after the lab announced an additional order for 1.4 million doses of its COVID-19 treatment from the U.S. government. Total U.S. orders for molnupiravir now stand at about 3.1 million treatments, Merck said.
* PayPal Holdings on Monday night reported adjusted third-quarter earnings that beat Wall Street forecasts, but its third-quarter revenue came in below consensus. Several intermediaries, such as Credit Suisse, J.P. Morgan, Jefferies and Berenberg, lowered their price target on the payment services group.
* The Boeing Company - The number of employees of the U.S. aircraft manufacturer claiming exemption from the COVID-19 vaccine for religious or medical reasons exceeds 11,000, or nearly 9% of the group's workforce, a level well above management's estimates, sources close to the matter told Reuters.
* Meta - Carrefour announced on Tuesday a strategic partnership with Meta, the parent company of Facebook, which ranges from internal communication to employee experience, customer relations, digital advertising and leaflet digitization, local communication and commerce.
* Robinhood is down 3.1% in pre-market trading after the group announced Monday night a security breach that allowed access to the email addresses of more than five million users and the full names of nearly two million others on the brokerage platform.
* NVidia unveiled new automotive technologies at its Omniverse conference on Tuesday, including a virtual driving assistant that can park a standard vehicle on its own, and tools dedicated to the metaverse, a virtual world touted as the future of the Internet.
* AMC Entertainment - Adam Aron, the movie theater chain's chief executive, said Monday he is studying the use of bitcoin as a payment method, as the group prepares to launch its own cryptocurrency. The stock is down 4.6 percent in pre-market trading, with Adam Aron also saying that many challenges lie ahead for the group despite a lower-than-expected net loss in the third quarter.
- Airbnb: JPMorgan adjusts Airbnb's PT to $195 from $170, maintains Neutral rating
- Ceres Power: Jefferies reiterates a Hold rating with a target of GBp 1,150. HSBC starts to monitor the company at light, targeting GBp 1,000.
- First Bancorp: Wells Fargo Securities initiated coverage with a recommendation of overweight. PT up 13% to $16
- Host Hotels: Compass Point Research & Trading LLC raised the recommendation to buy from neutral. PT up 20% to $22
- Ingredion: Barclays reinstated coverage with a recommendation of overweight. PT up 16% to $115
- Intercontinental Exchange: Barrington Research adjusts pt to $118 from $108, maintains outperform rating
- ITM Power: Jefferies starts tracking as Buy with a target of GBp 800.
- LSI Industries: Canaccord Genuity reinstated coverage with a recommendation of buy. PT set to $10
- Moderna: Wolfe Research starts Moderna at Outperform with $304 price target
- OFG Bancorp: Wells Fargo Securities initiated coverage with a recommendation of overweight. PT set to $31
- Old Dominion: Morgan Stanley downgrades to equal-weight from overweight. PT down 6.1% to $330
- Petrofac: Jefferies upgraded from Hold to Buy with a target of GBp 180.
- Popular: Wells Fargo Securities reinstated coverage with a recommendation of overweight. PT up 39% to $115
- Qualcomm: DA Davidson lifts price target to $204 From $191, Buy/Add rating kept
- Royal Dutch Shell: HSBC upgraded from hold to buy, targeting GBp 1,890.
- TE Connectivity: Wolfe Research raised the recommendation to outperform from peerperform. PT up 20% to $190
- Telus Corporation: RBC Capital keeps Outperform, $32 PT