This time of the year is traditionally a bit calm on markets, because of the Thanksgiving holiday, when markets are closed for a day and a half on Thursday and Friday.

Yesterday, equity markets reversed Monday's decline, helped by the rebound in technology and oil stocks. Wall Street's three main indexes recovered more than 1%. Investors followed the oil movement on energy-related stocks, as in Europe, but the rise was reinforced by the good behavior of quality technology stocks, i.e. essentially the safe havens of the compartment. Caution still reigns over the former stock market favorites, which are fed on easy money but have no prospect of profitability in a reasonable time frame. I should also mention the surges in the prices of big old names Best Buy and Abercrombie & Fitch, following unexpected financial performances that showed consumer spending still has a bright future ahead of it in the US. 

Today, the PMIs are being released across the developed economies. This is "the world's most closely watched statistic", according to its promoter, Standards & Poor's (which bought IHS Markit, the original provider). It's true that these indicators are very effective in measuring the real-time economic dynamics of major economies.

The flash PMI for the month of November in the euro zone rose to 47.8 from 47.3 in October, but remains below 50, in contraction zone.

But the big surprise came from the US. Business activity in the manufacturing sector contracted sharply in early November: The PMI tumbled to 47.6 from 50.4 in October. This is much below expectations of 50. "Contributing to the decrease in the headline figure was a renewed fall in output and a sharper decline in new orders," S&P Global said. This data will please those who expect that a slowdown in the job market will push the Fed towards a dovish stance

Job data was also due today, The number of Americans filing new claims for unemployment benefits rose more than expected last week. Initial claims for state unemployment benefits climbed 17,000 to a seasonally 240,000 for the week ended Nov. 19, the Labor Department said, versus 225,000 expected in a Reuters consensus. However, the job market remains very strong.

On the energy side, the G7 is looking at a cap on Russian oil prices.

At 2 pm ET, the Fed will release the minutes of its latest monetary policy meeting. I don't know if the market will find any material to feed its scenario for the path of key rates. Let's just say that in the last few days, the members of the U.S. central bank have been working to calm the expectations of investors, who thought that monetary austerity would soon end. The Fed remains perfectly in its role of moderation. That doesn't necessarily mean that it knows itself where it is going, nor at what pace.

Evercore ISI's experienced macro boss Krishna Guha had an excellent formula yesterday in a note to his clients. He thinks Fed management wants to get off what he calls "the hamster wheel of 75 basis point hikes" per meeting, even though it's struggling to do so while maintaining control of financial conditions. He adds that the Fed is likely to attempt a "hawkish slowdown" and that for investors, it's the slowdown part that matters most. In other words, Jerome Powell will keep a tough appearance, while loosening its monetary policy just a little. After the release of the "minutes", the market will have two hours left, before the close, to form a more precise opinion before Thanksgiving. All this on the 14th anniversary of the launch of the Fed's famous quantitative easing program in 2008, which helped pull the world's finances out of the rut and shaped the next decade by flooding markets with free money.

 

Economic highlights of the day:

The manufacturing PMI indices are on the agenda today for the major economies. We also have the US weekly unemployment figures and durable goods orders, New Home Sales, and the consumer confidence index from the University of Michigan, before the publication of the minutes of the last Fed meeting. All the macro agenda is here

The dollar is down 0.2% against the euro to EUR 0.9676 and loses 0.7% against the pound to GBP 0.8351. The ounce of gold is worth 1738 dollars. Oil is down after the G7 nations looked at a price cap on Russian oil, with North Sea Brent crude at USD 85.12 per barrel and U.S. light crude WTI at USD 78.3. The yield on 10-year US debt is falling back to 3.76%. Bitcoin is trading not far from 16,000 dollars.

 

In corporate news:

* Apple - Several hundred employees of a Foxconn factory making iPhones in China protested Wednesday at the site, show images posted on social networks. Apple shares were down 0.3% in pre-market trading.

* HP Inc announced Tuesday that it plans to cut up to 6,000 jobs by the end of its 2025 fiscal year, which will amount to a 12 percent reduction in its workforce, citing a slowdown in the PC market. Its profit forecast for the current quarter is also lower than expected. The stock gained 1.4% in pre-market trading.

* Nordstrom - The department store group reported a slowdown in sales over the past two months and lowered its net profit forecast for the full year to the end of January. The stock fell nearly 10% in pre-market trading.

* Deere & Co - The agricultural machinery manufacturer reported a 75% year-on-year increase in quarterly profit on Wednesday, as price increases due to shortages helped offset rising costs. The stock was up 2.8% in pre-market trading and headed for a high of more than seven months.

* Autodesk fell nearly 9% in after-hours trading Tuesday as its current-quarter guidance fell short of market expectations.

* Vmware - The enterprise software company's stock was down about 1.4% in after-hours trading as its quarterly revenue and earnings per share came in below the Refinitiv IBES consensus.

 

Analyst recommendations:

  • Air Products: BMO Capital Markets lifts price target to $390 from $339. Maintained outperform rating.
  • Best Buy: Truist Securities raises Best Buy's PT to $80 From $69, Maintains Hold rating.
  • Denbury: Roth Capital Partners upgrades to buy from neutral. PT jumps 20% to $108.
  • Glencore: Bernstein upgrades from Market Perform to Outperform targeting GBp 770.
  • Medtronic: Citi cut its recommendation to neutral from buy. PT up 9.1% to $85.
  • Sage: Deutsche Bank upgrades from sell to hold, targeting GBp 800.
  • Stanley Black & Decker: Wolfe Research upgrades to outperform from peerperform. PT down 10% to $73.
  • Urban Outfitters: UBS raises the price target to $25 from $21. Maintains neutral rating.