Last week was a wake-up call for investors, reminding them that equity markets can also fall. But the doomsday preachers were proven wrong as indexes rebounded at the end of the week and are looking like they're going the same way Monday morning. Bloomberg writes that cheap buybacks are fueling the rebound. Get used to it, in 2021, any correction, no matter how small, is often blamed on cheap buybacks. Journalists also mention "risk aversion" when there is no better explanation…

Friday's rise on Wall Street was fueled by technology, again, but less so by highly cyclical issues, a sign that investors are being a little less aggressive in their allocations.

All eyes are on the end of the week and the Jackson Hole symposium, the Davos of central bankers. There could be some news on the timing of the Fed's tapering at this event, although economists believe the big announcements will come on September 22, after the Federal Reserve's Monetary Policy Committee meeting. A less spendy Fed means less money in circulation, so less money on financial markets to boost the economy. On the other hand, there is no shortage of arguments in favor of reducing support, the most important of which is to clean up an economy that has been on steroids for a very long time. Two new pieces of information about Jackson Hole. First, the fact that Janet Yellen, the current head of the US Treasury, is said to be in favor of reappointing Jerome Powell as head of the Fed when his term expires in February, even though the left wing of the Democratic Party is said to be lashing out. Second, the "virtualization" of the summit. Originally planned to be face-to-face, the symposium will ultimately be remote, because of Covid.

In China, authorities recorded no new cases of Covid-19 infection on August 22, the first in several weeks. Investors have their eyes on the spread of the Delta variant there as they fear that China's economic momentum will slow down too much. This health announcement is not unrelated to the good performance of Shanghai and Hong Kong earlier this morning. At the same time, Beijing continues to tighten regulation everywhere. The latest offensive to date, some 40 IPOs have been frozen in mainland China after the opening of an investigation into several financial intermediaries, including the investment bank China Dragon Securities. On Friday, authorities had targeted the alcoholic beverage sector.

 

Economic highlights of the day:

The August PMI indicators will dominate the calendar today, along with the release of the Chicago Fed index and the housing market figures. The recovery of the U.S. economy picked up speed in July. The Chicago Fed National Activity Index rose to 0.53 in July from minus 0.01 in June, above the 0.15 consensus by economists polled by FactSet.

The dollar is slightly down to EUR 0.8523, while gold is approaching USD 1800 per ounce. Oil rebounds strongly to USD 64.15 per barrel WTI and USD 67.32 per barrel Brent. The U.S. government bond yield rises to 1.27% over 10 years, while the Bund yield falls to -0.5%. Bitcoin is back above the USD 50,000 mark.

 

On markets:

* Pfizer - BioNTech - The U.S. Food and Drug Administration (FDA) expects to give final approval this Monday to the COVID-19 vaccine developed by Pfizer and BioNTech, The New York Times reported Friday. Pfizer also announced that it will buy the remaining stake in Trillium Therapeutics at a valuation of $2.26 billion. Pfizer shares gained 3.1% in pre-market trading after the announcement.

* General Motors announced Friday that it will spend $1 billion to recall about 73,000 Chevrolet Bolt electric vehicles due to fire hazards and will seek reimbursement from its battery supplier LG. The stock lost 2.1% in pre-market trading.

* Uber and, Lyft lose more than 5% after a California judge ruled Friday that a 2020 referendum labeling VTC drivers as self-employed rather than employees is unconstitutional.

* Intel announced Monday that it has won a contract with the U.S. Department of Defense to provide semiconductor services. The stock gained 1.7% in pre-market trading.

* Walt Disney gained about 1% in premarket trading. The group announced that it had generated $125 million in revenue from the online release of the movie "Black Widow" simultaneously with its theatrical release last month.

* JD.com - The Chinese online shopping group reported on Monday a better-than-expected adjusted quarterly profit thanks to a 26% growth in revenue.

* PayPal Holdings - The U.S. online payment group announced Monday it is expanding its cryptocurrency service outside the U.S. by allowing customers in the U.K. to buy, sell and hold digital currencies starting this week.

* The UK competition authority announced Monday that it has opened an investigation into the proposed $44 billion takeover of IHS Markit by financial data provider S&P Global.

 

Analyst recommendations:

  • Adobe : Baird lowers price target to $750 from $575, keeps outperform rating
  • Auto Trader: Jefferies remains Hold with target raised to GBp 590 from GBp 530.
  • Baozun : JPMorgan adjusts pt to $29 from $35, maintains overweight rating
  • Bath & Body Works : Cowen & Co raises pt to $70 from $56.57, maintains market perform rating
  • BJ Wholesale Club Holdings : Deutsche Bank adjusts pt to $52 from $49 following strong q2 results, maintains hold rating
  • CDK Global : Barrington Research lowers price target range to $55-$60 from $72, reiterates outperform rating
  • Farfetch : Goldman Sachs adjusts pt to $68 from $71, maintains buy rating
  • Hydro One : Credit Suisse Raises Hydro One PT to $33
  • Kindred Biosciences : Stifel Nicolaus downgrades to hold from buy, keeps $9 price target
  • Marvell Technology : Oppenheimer raises pt to $70 from $60, maintains outperform rating
  • Ontrak : Canaccord Genuity downgrades to hold from buy, adjusts price target to $15 from $38
  • Pearson: J.P. Morgan upgraded to Overweight from Neutral with a target of GBP 960.
  • Pennon: Credit Suisse cut its recommendation to underperform from neutral. PT down by 22% to 1,020 pence
  • Sharps Compliance : Barrington Research lowers price target to $13 from $18, reiterates outperform rating
  • Virgin Galactic : BofA Securities lowers virgin galactic holdings pt to $25 from $41, maintains underperform rating
  • Vitec: Jefferies remains Buy with target raised to GBp 1,875 from GBp 1,665.