Shares of Netflix dropped 6% pre-bell after the streaming giant issued a disappointing outlook for the second quarter, although it did post stronger-than-expected membership growth in the first quarter.

Yesterday, the S&P500 posted its fifth consecutive session in the red, which doesn't happen so often. The previous time was last October, and the penultimate was in December 2022. Investor' are longing to see the Fed's key rate leave its current high (5.33% to be precise), but it looks like it’s not gonna happen anytime soon. Inflation is still too strong. The hawks of the US central bank were out in force yesterday. Atlanta Fed boss Raphael Bostic does not believe in a rate cut this year. His Minneapolis peer, Neel Kashkari, was no different, predicting that current rates will be maintained in 2024. Even New York Fed President John Williams, closer to the dove camp, refused to rule out that the next move would be a rate hike and not a rate cut, even though this is not his favorite hypothesis.

This paradigm shift has forced investors to recalculate and raise the risk premium, because the environment is becoming less benign than they had anticipated. The cushy little path that used to take us along the royal road of an economy that is accelerating again, while benefiting from increasingly easy access to liquidity thanks to rate cuts, is now obstructed. Something else must be found.

What's more, the situation between Israel and Iran is getting out of hand. Overnight, Israel retaliated to the Iranian attack of the previous week by striking targets in Iran. A not unexpected riposte that nonetheless pushed markets lower, boosted oil prices and strengthened the greenback and safe-haven assets, from the Swiss franc to gold. At this stage, the two countries have engaged in a relatively measured action-reaction strategy. Forecasting geopolitics with precision is a perilous exercise, but it's easy to identify certain transmission belts to the economy. For example, an acceleration in oil prices towards USD 100 a barrel would certainly be perceived by the market as an inflationary factor that everyone could do without. Note that at this stage, oil has regained the ground lost in recent days, but has not gone the distance above USD 90 a barrel for Brent. Perhaps because Iran has downplayed Israel's retaliation.

Back to corporate news, after initially boosting indices, superconductor giant Taiwan Semiconductor Manufacturing Company dropped 6% yesterday at the end of the session. The world's largest chip supplier published solid quarterly results, but it revised its market forecasts downwards. As we know, when TSMC suffers, the pain is felt by the rest of the sector. Particularly in the United States, where semiconductors have gained unprecedented influence since the market fell in love with Nvidia and AI.

In the Far East and Oceania, indices were all in the red. Japan fell by 2.6%, South Korea by 1.9% and Australia and Hong Kong by 1%. India managed to end in the green. Taiwan is paying a heavy price for TSMC: TAIEX loses over 4% during the session. European leading indicators are bright red, with the FTSE 100 down 0.5% and the Stoxx Eu 600 down 0.3%. Standard & Poor's 500 futures inched down 0.2%, the Dow Jones Industrial Average dipped 0.2% and the Nasdaq was down 0.3% in premarket activity.

Economic highlights of the day:

The dollar is worth EUR 0.9389 and GBP 0.8041. The ounce of gold stands at USD 2378. Oil rebounds, with North Sea Brent at USD 86.07 a barrel and US light crude WTI at USD 81.64. The yield on 10-year US debt falls to 4.56%. Bitcoin is trading at USD 64,968.

In corporate news:

  • Netflix - Shares in the American streaming giant fell by 6.2% in premarket trading after the company unexpectedly announced that it would no longer provide subscriber numbers, while its sales forecasts for the second quarter disappointed expectations.
  • Walt Disney and Roku declined by 1.3% and 1.5% respectively in the wake of Netflix.
  • Procter & Gamble raised its annual profit forecast on Friday, thanks to price increases and strong demand for its cleaning and maintenance products in the US and Europe. The group now expects its core profit to grow by 10% to 11% during 2024, up from 8% to 9% previously.
  • American Express reported quarterly earnings of $3.33 per share on Friday, ahead of estimates, helped by an affluent customer base that increased spending as recession fears faded.
  • Paramount Global - The stock is up over 10% in pre-market trading after Reuters reported that Sony Pictures Entertainment and Apollo Global Management are discussing a joint bid to acquire the company. Paramount is currently in exclusive talks with independent studio Skydance Media, although some investors have urged it to consider other options.
  • Bentley Systems - Schneider Electric announced on Friday that it had entered into discussions with the American engineering software company concerning "a potential strategic transaction". Reuters had reported on Thursday that Bentley Systems was considering expressions of interest including a possible sale.
  • Tesla will recall 3,878 Cybertrucks, its electric pickup truck, due to a defect in the accelerator pedal cushion, which could detach and become lodged in the interior trim, increasing the risk of an accident, the U.S. National Highway Traffic Safety Administration (NHTSA) said on Friday.
  • Apple said on Friday it had withdrawn the WhatsApp and Threads applications, both belonging to the Meta group, from its App Store in China, on the orders of the Chinese government, which cited national security reasons.
  • Alphabet - The UK's Data Protection Authority believes that Google's proposed cookie replacement technology is not sufficient to protect consumer privacy, the Wall Street Journal reported late Thursday, citing internal documents.
  • Blackstone - The private equity firm is close to closing a deal to sell its majority stake in South Korean pharmaceutical wholesaler Geo-Young to Seoul-based fund MBK Partners for more than $1 billion, according to three sources familiar with the matter.
  • Goldman Sachs - Norway's sovereign wealth fund said on Friday it would support a resolution calling on Goldman Sachs to separate the roles of chief executive and chairman of the board, two positions currently held by David Solomon, at the US bank's annual meeting scheduled for April 24.
  • Smith & Wesson Brands, Strum Ruger & Co - The U.S. arms manufacturers asked the U.S. Supreme Court on Thursday to hear their petition in the $10 billion lawsuit brought by Mexico to hold them liable for facilitating arms trafficking to drug cartels along the U.S.-Mexico border.
  • Nordstrom said the department store chain's founding family had expressed interest in a possible delisting, prompting the company's board to form a special committee of independent directors to evaluate any proposal.

Analyst recommendations:

  • Bank Of America Corporation: Wolfe Research upgrades to outperform from peerperform with a target price of USD 42.
  • First Solar, Inc.: Wells Fargo upgrades to overweight from equalweight with a price target raised from USD 187 to USD 250.
  • Lam Research Corporation: B Riley Securities Inc. upgrades to buy from neutral with a price target raised from USD 870 to USD 1100.
  • Netflix, Inc.: Canaccord Genuity downgrades to hold from buy with a price target reduced from USD 720 to USD 585.
  • Nike, Inc.: Baptista Research downgrades to buy from outperform with a price target reduced from USD 123.40 to USD 116.80.
  • On Semiconductor Corporation: BNP Paribas Exane downgrades to underperform from neutral with a price target reduced from USD 74 to USD 55.
  • The Hershey Company: Edward Jones downgrades to hold from buy.
  • Ulta Beauty, Inc.: Jefferies downgrades to hold from buy with a target price of USD 438.
  • Diamondback Energy, Inc.: TD Cowen maintains its buy recommendation and raises the target price from USD 185 to USD 258.
  • On Semiconductor Corporation: BNP Paribas Exane downgrades to underperform from neutral with a price target reduced from USD 74 to USD 55.
  • United Airlines Holdings, Inc.: Bernstein maintains its outperform recommendation and raises the target price from USD 59 to USD 72.
  • Doordash, Inc.: Loop Capital Markets initiates a Buy recommendation with a target price of USD 170.
  • Ds Smith Plc: Numis downgrades to hold from buy with a price target raised from GBX 385 to GBX 415.
  • Intertek Group Plc: Redburn Atlantic upgrades to buy from neutral with a price target raised from GBX 3800 to GBX 6000.
  • Man Group Plc: Numis upgrades to add from buy with a price target reduced from GBX 315 to GBX 300.
  • Shopify Inc.: Morgan Stanley upgrades to overweight from equalwt with a price target raised from USD 74 to USD 85.
  • Suncor Energy Inc.: National Bank Financial maintains its outperform recommendation and raises the target price from CAD 57 to CAD 75.