Who will capitulate first?

Who will capitulate first?

US stock indices just put a fourth straight red pearl on their losing collar, to the point where the Nasdaq 100 closed the session at its lowest level since late September 2020. Also, if you don’t like the different shades red, better move on. We are entitled to a nice reddish color in Japan and Korea this morning (-2.3%), while India and Australia were more carmine (-0.3%). We had scarlet red for the Nasdaq (-1%) and alizarin red for the S&P500 (-0.7%). In Europe, France and Switzerland pulled Adrianople red (-0.45%), while Germany took its Bismarck red to the max (-0.00%). I specify that I did not know the terms Alizarin and Adrianople before this morning, nor that Bismarck had given his name to a color. But given the head of the indices, as much as to expand the color chart.

We remain in the warm colors with the small fires that tend to multiply around the main inflationary-geopolitical-monetary focus. hell than the arson fire station the central bankers are trying to contain it somehow. For example, the tightening of rules for the export of high-tech equipment from the United States to China has made the highly strategic and closely watched semiconductor sector desperate, which is moving from the status of an Eldorado sanctuary to that of a scapegoat for the destruction . globalization.(Nvidia -60% in the year but it is still generously valued. I remind you that to compensate for -60%, you need +150%). Hence another bout of weakness yesterday for the US tech index, and a new low since March 2020 at the close of Cathie Wood’s ARK Innovation fund, which epitomizes the ultra-aggressive investing that has performed so well during the supercycle now under way. in 2009.

Another place, another disaster, the British bond market broke out again yesterday, despite the efforts of the Bank of England to contain it. The return on the 10-year Gilts reached 4.46%, just below the Italian debt (4.62%). This crisis within a crisis is described by former Indian central bank governor Raghuram Rajan as a consequence of the glut of free money, which turned pension funds into hedge funds. Savvy enough in theory, probably even boring to some financiers seeking the adrenaline rush of volatility, pension funds have ended up adopting so-called liability-driven strategies. Rajan explains that to compensate for the low return of Gilts in the long term (caused by quantitative easing policies), these funds have increased the risk profile of their other assets by using higher leverage but hedging their interest rate risk with derivatives. In the current configuration of the market, the cost of this protection has skyrocketed, giving rise to considerable margin calls that have required the sale of certain assets, whose assets had no buyers, for which the Bank of England had to face again with your checkbook. . Financial crises have multiple causes, but the original sin is invariable: greed. Rajan’s article on liquidity has been translated into French here.

Among the more exotic disorders and with the sole intention of relaxing them a bit, I note that China would consider prohibiting civil servants from drinking alcohol during and after work, to increase their productivity. An unconfirmed announcement that, in parallel to rather mediocre tourist figures during the Chinese “Golden Week”, yesterday lowered Pernod Ricard, Rémy Cointreau and others on the stock market. Finally, I think we should salute the Scandinavian humor after Ben Bernanke co-won the Nobel Prize for economics-which-should-not-be-called-that-because-it-was-not-originally-planned-by-Alfred-Nobel -but-it-does-n’t-give-the-Nobel-of-the-jury-that-grants-it. Winner for several years of the award for the most groomed beard in the sector, Ben Bernanke chaired the Fed from 2006 to 2014. The Swedish Academy chose to reward him, along with two of his compatriots, for his work on financial crises. A bold choice when it is known that he was in charge before the 2008 crisis hit and that he is the father of quantitative easing policy. That monetary interventionism that some consider essential to preserve financial stability while others see it as the origin of many of today’s ills.

The main European indicators are not really showing any signs of recovery this morning. We clearly have a feeling that investors are in a capitulation phase. The real question that arises now is which of the stock and bond holders or the central banks will capitulate first. The answer is not as obvious as it seems, but I put a small coin to the monetary authorities. Whether it’s for better or worse remains to be seen.

In Asia Pacific, red is well established as I indicated above. Mainland China seems to be trying to resist, but we know that the Shanghai Stock Exchange seems to have a life of its own. Finally, the IMF is due to release its report on the global economic outlook and financial stability later in the day. And it won’t be pretty, as long as the IMF still has some impact on financial markets, which I doubt. The CAC40 lost 0.8% below 5,800 points at the open.

The highlights of the economic day

Today there will be no important macroeconomic indicators. Some speeches by central bankers are on view, but rather at night. All the macro diary here.

The euro fell back to $0.9690. The ounce of gold plummets to 1665 USD. Oil is leveling off, with North Sea Brent at $95.86 a barrel and US WTI Light Crude at $90.75. The yield on US 10-year debt has risen to around 4%. Bitcoin goes back around 19,000 USD per unit.

The main changes in the recommendations.

  • Adidas: Goldman Sachs remains neutral with a reduced price target from €170 to €145.
  • Anheuser-Busch Inbev: Goldman Sachs remains neutral with a price target reduced from EUR61 to EUR59.
  • Arkema: Jefferies remains on the buy side with a price target reduced from EUR142 to EUR130.
  • Banco de Sabadell: Kepler Cheuvreux resumed monitoring the purchase, target of 0.80 euros.
  • Bankinter: Kepler Cheuvreux resumes monitoring of purchases, target of EUR 7.10.
  • BB Biotech: Kepler Cheuvreux remains long with a reduced target of CHF 94 to CHF 86.
  • CaixaBank: Kepler Cheuvreux resumes monitoring to maintain with a target of EUR 3.45.
  • Centrica: Citigroup goes from neutral to buy, targeting 81 GBp.
  • Mainland: Berenberg remains to be held with a target reduced from EUR80 to EUR59.
  • Credit Suisse: Jefferies remains with a reduced price target of CHF 5 to CHF 4.40.
  • Evonik: Morgan Stanley moved from overweight to online weight targeting EUR25.
  • Kingfisher: Numis goes from reducing to selling, targeting 150 GBp.
  • Lanxess: Goldman Sachs remains neutral with a price target reduced from EUR35 to EUR33.
  • Nacon: Berenberg remains long with a reduced target of €10 to €7.
  • Nexity: Barclays starts tracking towards overweight by targeting EUR25.
  • Next: Numis moves from holding to buying, targeting 6,800 GBp.
  • PowerCell: Jefferies moves from buying to holding with the SEK 135 target.
  • Roche – Intron Health moves from hold to buy targeting CHF 360.
  • Schneider Electric: Jefferies remains with a reduced target price of €120 to €115. By
  • Siemens: Goldman Sachs remains long with a reduced price target of €186 to €162.
  • Temenos: Julius Bär goes from buying to holding with a target of CHF 70.
  • UBS: Credit Suisse continues to outperform with a reduced price target of CHF 22.50 to CHF 22.
  • UniCredit: Jefferies remains long with a high price target of EUR17 to EUR17.50.
  • Valeo: Berenberg remains on the buy side with a target reduced from EUR24 to EUR22.
  • VAT Group: Research Partners remains with a reduced target price of CHF 300 to CHF 250.

In France

Important (and less important) announcements

  • Airbus delivered a total of 437 aircraft during the January to September period.
  • A decision by BBVA frustrates the projects of BNP Paribas and Crédit Agricole in Spain, according to Les Echos.
  • Sanofi obtains positive phase III data with Dupixent for eosinophilic esophagitis in children.
  • Vinci invests in H2 Mobility.
  • Electricité de France is reinforcing its arsenal of recommendations and its offers in anticipation of winter.
  • JCDecaux reinforces its energy sobriety measures.
  • Somfy, historical partner of the French biathlon, renews its collaboration with the FFS and the French Nordic ski teams.
  • Claranova offers the Scanner application.
  • Getlink has released its traffic figures for September.
  • Pixium Vision announces publication in the Journal of Neural Engineering of peer-reviewed clinical data on the efficacy of the Prima System in patients with dry AMD.
  • AB Science has received the green light from three European health agencies for a confirmatory phase III study with masitinib in Alzheimer’s disease.
  • Cnova (Cdiscount) appoints new CFO.
  • Lacroix launches his shareholders’ club.
  • Eurobio has published its accounts.

In the world

Important (and less important) announcements

  • Denbury goes up in flames after rumors of acquisition by Exxon Mobil.
  • Samsung Electronics and Taiwan Semiconductor fell after Washington’s decision to restrict exports to China.
  • Chinese electric vehicle battery maker Contemporary Amperex (CATL) expects third-quarter profit to almost triple.
  • Meta Platforms organizes a conference on augmented reality.
  • Solvay signs a memorandum of understanding to obtain rare earth carbonates.
  • Givaudan confirms its annual forecasts despite somewhat weak organic growth.
  • Bio-Rad and Qiagen are considering a merger, according to the Wall Street Journal.
  • Royal Boskalis will delist from Euronext Amsterdam in early November.
  • AstraZeneca’s nasal COVID-19 vaccine does not elicit a strong immune response in the phase I study.
  • PureTech Health ends merger negotiations with Nektar Therapeutics.
  • Skanska wins a $150 million contract to improve subway stations in the United States.
  • Leonteq falls after suspicions of aiding money laundering revealed by the Financial Times.
  • Main publications of the day: LVMH, Givaudan, About You… All the agenda here.



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