Investors are still euphoric. A host of American central bankers spoke out yesterday, but investors are listening even less than before. They're trying to calm financial ardor, but without really succeeding. Investors still expect the Fed to ease credit conditions as early as March, with a 70% chance of a 25 basis point cut at the March 24 meeting, according to the CME FedWatch tool.

And to top it all up, England and the eurozone both released inflation data that was well below expectations. Investors are now awaiting consumer confidence data, due later in the day.

The buying trend continues unabated on Western equity markets in December, with gains of 3 to 5% for the main indices. The Christmas rally may have started early this year with a blazing November, but it's still going strong. It's time for the year to come to an end, at least for me, because I don't have much more to tell you. Almost all indices are rising, and those that are rising the most are the riskiest. There are a number of markers on the financial markets to show this. Take, for example, the basket of non-profitable technology stocks that Goldman Sachs tracks. In recent days, its chart looks like the Sierra Nevada. As for the Russell 2000 index of small and mid-cap US stocks, it's up almost 12% since the start of the month and is another indication of the market's appetite for risk. It gained almost 2% yesterday, compared with 0.7% for the Nasdaq.

The VIX volatility index is at historically low levels, between 12 and 13 points, a sign that the market has little to fear. So now may be a good time to worry, even if in the short term, it's hard to see how a grain of sand could get in the way of this upward momentum.

According to Bank of America's monthly survey of global money managers, the professionals ranked a sharp economic downturn as the number 1 risk in December. In November, the main threat was a major geopolitical deterioration (as a result of the Hamas attack and the Israeli response). These two risks mark a departure from the previous 36 months, which were largely dominated by fear of the consequences of high interest rates. The survey also shows that the most consensual bets of the moment are, in order, "go long on the Magnificent Seven" (Apple, Microsoft, Amazon, Alphabet, Nvidia, Tesla, Meta), ahead of "go short on Chinese stocks" and "go long on Japanese stocks". Nothing original there. A little more interestingly, BofA asked managers to list the assets that would offer the best returns if the Fed were to start cutting rates in the first half of 2024. The most frequent answer was "go long on 30-year T-Bonds", followed by "go long on technology stocks with very long duration" (biotechs and renewable energy players, for example). In third place, the managers think we should be "long on value" (banking, real estate and small caps). Next come "be long on emerging markets" and "be long on the magnificent seven", which are decidedly indestructible.

We will continue to monitor the situation in the Red Sea, where shipping routes are being disrupted by fears of pirate attacks from Yemen. The eagerness of logisticians to claim that all is well, despite the longer distances and times involved, is a little suspect. Finally, Fedex disappointed yesterday with its results and outlook, which were poorly received after the close on Wall Street.

Meanwhile, the rise continues in Asia this morning, except in mainland China. Japan gained 1.4%, Hong Kong 1%, South Korea 1.8%, India 0.3% and Australia 0.7%. European leading indicators are looking up.

Economic highlights of the day:

UK inflation, the US Conference Board consumer confidence and existing home sales, as well as DOE crude inventories are on the agenda today. 

The dollar is regaining a bit of ground at EUR 0.9130 and GBP 0.7901. The ounce of gold rises to USD 2031. Oil is holding up well, with North Sea Brent at USD 80.24 a barrel and US light crude WTI at USD 74.98. The yield on 10-year US debt is 3.91%. Bitcoin is trading at 43,700.

In corporate news:

  • Fedex lowered its annual sales forecast on Tuesday, after United Parcel Service attracted some of Fedex's customers during the group's tumultuous wage negotiations. The share price fell by 10% before the opening. UPS fell by 3.4% before the opening in the wake of Fedex.
  • Aon said Wednesday it would buy NFP, a property and casualty insurance broker, in a $13.4 billion deal.
  • Alphabet - Google plans to reorganize a large part of its 30,000-strong advertising division, The Information reported on Tuesday.
  • US carmakers voiced their opposition on Tuesday to a request by the US Federal Highway Safety Administration to recall 52 million airbag systems.
  • General Mills lowered its annual sales forecast on Wednesday, penalized by slowing demand for its higher-priced cereals, snacks and pet food products. The stock lost 1.6% before the opening.
  • Paypal has undertaken to amend its terms and conditions to comply fully with EU consumer protection rules, the EU said in a statement on Wednesday.
  • Boeing - The Federal Aviation Administration has no "specific timetable" for certifying the Boeing 737 MAX 7, the agency's top official told Reuters on Tuesday, although the aircraft manufacturer expected this to happen by the end of the year.
  • Tesla will not offer merit bonuses to its employees this year, Bloomberg News reported on Tuesday.
  • SouthWest Airlines - The pilots' union has reached an agreement in principle with the company for new wage conditions, the union announced on Tuesday.

Analyst recommendations:

  • Abbvie: HSBC downgrades to hold from buy with a price target reduced from USD 167 to USD 156.
  • Bank Of Montreal: National Bank Financial upgrades to outperform from sector perform with a price target raised from CAD 117 to CAD 141.
  • Block: Jefferies maintains its buy recommendation and raises the target price from USD 60 to USD 90.
  • Crowdstrike Holdings: Wells Fargo maintains its overweight rating and raises the target price from USD 250 to USD 315.
  • Discover Financial Services: Citi upgrades to buy from neutral with a price target raised from USD 93 to USD 133.
  • Heico: Morgan Stanley downgrades to underweight from equal weight with a price target reduced from USD 184 to USD 174. Truist Securities maintains its buy recommendation and raises the target price from USD 190 to USD 229.
  • Intertek Group: BNP Paribas Exane upgrades to outperform from underperform with a price target raised from GBX 3800 to GBX 5000.
  • Lowe's Companies: Stifel downgrades to hold from buy and raises the target price from USD 235 to USD 240.
  • Rentokil Initial: Peel Hunt maintains its hold recommendation and reduces the target price from GBX 629 to GBX 454.
  • Rocket Companies: Jefferies maintains its hold recommendation with a price target raised from USD 9.50 to USD 15.
  • Royal Bank Of Canada: National Bank Financial maintains its outperform rating and raises the target price from CAD 135 to CAD 148.
  • Royal Caribbean Group: Wolfe Research maintains its outperform recommendation and raises the target price from USD 94 to USD 146.
  • Salesforce.com: Wells Fargo downgrades to equalweight from overweight with a target price of USD 280.
  • Unitedhealth Group: HSBC downgrades to reduce from hold with a price target reduced from USD 550 to USD 480.
  • W.w. Grainger: Jefferies downgrades to hold from buy with a target price of USD 825.
  • Zoom Video Communications: Wells Fargo downgrades to underweight from equalweight with a target price of USD 70.
  • Zscaler: Wells Fargo maintains its overweight recommendation and raises the target price from USD 225 to USD 275.