Yesterday, Wall Street managed to break its downward cycle. The S&P500 and the Nasdaq 100 had just accumulated four consecutive down sessions, but both indices regained 0.9% on Monday, despite the misfortunes of Tesla and Apple. The carmaker lost 2% after announcing a change of CFO. Investors don't really like when the person holding a company's purse strings leaves, because there's always the suspicion of a disagreement, bad news, an escape before a catastrophe or whatever. Apple's results were disappointing last week, and the stock has now fallen 5 consecutive sessions, something that hasn't happened for a long time. This means that $275 billion in capitalization have just been wiped out!

But that didn't stop Wall Street from bouncing back, nor did Moody's downgrading of the rating of ten small U.S. banks, or the looming major federal debt offering. On the plus side, Berkshire Hathaway set an all-time high in the wake of its latest results. Its share rose 3.4% and is now worth USD 551,920, which is all the more astonishing given that Berkshire's biggest line is Apple. Must be the Buffett magic.

As I mentioned, Moody's today cut the ratings of 10 lenders by one notch and placed six large banks on review for potential downgrades, including Bank of New York Mellon , US Bancorp, State Street and Truist Financial.

Beijing also unveiled yet another weak macro data. In July, Chinese exports fell by 14.5% year-on-year, while imports contracted by 12.4%. This is even worse than economists had predicted, i.e. a 12.5% drop in exports and a 5% fall in imports. The figures illustrate both sluggish international trade and weak domestic demand. As a result, fears of deflation are mounting, ahead of the release of the country's inflation figures tomorrow.

In other news worthy of a mention, Zoom Video Communications, one of the biggest bubbles at the start of the pandemic and a champion of remote working, is fed up with work from home. The company is asking its staff to return to the office two days a week. It's called a "structured hybrid approach", according to Zoom management. But it's funny all the same. On a completely different note, the Italian government unveiled a surprise super-tax on bank profits last night. Rome will levy a 40% tax on profits for 2022 and 2023, on the portion exceeding the previous year's profits. According to rumors circulating, the state coffers could thus recover some €2 billion. Spain had already announced an exceptional tax on its banks.

In premarket trading, all three Wall Street indices were in the red.

 

Today's economic highlights:

Germany’s refined inflation estimate, the US trade balance and wholesale inventories are on the agenda today. The full agenda is here. 

The dollar is getting stronger at EUR 0.9128 and GBP 0.7869. The ounce of gold is little changed at USD 1928. Oil retreats slightly, with North Sea Brent at USD 84.26 a barrel and US light crude WTI at USD 80.64. The yield on 10-year US debt reached 4.06%. Bitcoin is trading at around USD 29,200.

 

In corporate news:

  • UPS lowered its sales forecast for 2023 on Tuesday, due to slowing demand and the repercussions of a wage agreement to avoid a major strike.
  • Eli Lilly gained 4% in premarket trading on the heels of Denmark's Novo Nordisk, which jumped 10% after its anti-obesity drug Wegovy showed in a late-stage study a 20% reduction in the risk of major cardiovascular problems in overweight or obese people with a history of heart disease.
  • Palantir Technologies advanced 2% before the opening, after raising its annual sales forecast and announcing a share buyback program worth up to $1 billion.
  • Apollo Global Management was down 2% after the close, having launched its $1 billion share issue.
  • AMC Entertainment was up 3.3% before the opening, after publishing its second-quarter results.
  • RingCentral was down 12.4% before the opening, after publishing its second-quarter results. The group also announced that its CEO would be replaced.
  • Dish Network was up 1.2% before the opening, as the group was close to finalizing its merger with Echostar. Echostar shares were suspended.
  • Novavax shares advance 24.8% before the opening after reporting second-quarter results.
  • ADT advances 1.8% before the opening after releasing its second-quarter results.
  • Under Armour advances 1.9% before the opening after releasing its second-quarter results.
  • Coterra Energy declines by 2.9% before the opening after a drop in second-quarter profits.
  • Datadog down 15% before the opening after reporting second-quarter results.
  • Lucid maintained its annual production target on Monday, sending its share price up by around 4% after the close.
  • Alteryx fell 21.37% after lowering its full-year targets and reporting a third-quarter loss.
  • Beyond Meat was down 14.3% before the opening after the company lowered its annual sales forecast.

 

Analyst recommendations:

  • Ametek: Seaport Global Securities initiated coverage with a recommendation of buy. PT set to $195.
  • BAE Systems: Barclays remains Overweight with price target raised from 2020 to 1250 GBp.
  • Biogen: Oppenheimer & Co cut the target on Biogen Inc. to $290 from $360. Maintains outperform rating.
  • Booking: Argus Research Corp raised the target to $3,677 from $3,080. Maintains buy rating.
  • DaVita: UBS raised the recommendation on DaVita Inc. to buy from neutral.
  • DS Smith: Barclays resumes coverage with in line rating, targeting GBp 310.
  • FirstEnergy: UBS cut its recommendation to neutral from buy. PT up 10% to $40.
  • GSK: LBW remains Buy with a price target reduced from 1700 to 1600 GBp.
  • Haleon: Investec upgrades from sell to hold, targeting GBp 320.
  • Informa: Goldman Sachs remains Buy with a price target raised from 892 to 986 GBp.
  • International flavors: Stifel downgrades to hold from buy. PT up 5.8% to $85.
  • Mondi: Barclays resumes coverage with in line rating,  targeting GBp 1300.
  • Papa John's: CFRA downgrades to sell from hold. PT down 14% to $70.
  • Pearson: Goldman Sachs remains Buy with price target raised from 2115 to 1176 GBp.
  • Rolls-Royce: Citigroup remains Buy with a price target raised from GBp 255 to GBp 294.
  • WPP: Deutsche Bank downgrades from buy to hold, targeting GBp 1030.
  • XPO: UBS raised the target to $83 from $71. Maintains buy rating.