The search for bullish catalysts is stalling
|05/24/2021 | 09:45am|
Financial markets remain turbulent. US technology stocks ended with a symbolically positive weekly performance after four consecutive weeks in the red. Volatility is always easy to find in cryptocurrencies and commodities. The beginning of the week is looking slightly bullish.
Investors have already integrated good corporate results, boosted by the reopening of economies after the pandemic episode. Well, during the pandemic episode would be more appropriate, as the most advanced economies are leaving a red zone in which many countries are still operating.
International trade is not concerned with which part of the world has recovered and which is still suffering: the violent economic recovery has created a huge surge in commodities. From the most basic, such as raw materials, to the most sophisticated, such as electronic chips.
This has a cost. And the bill is rather high. Which explains the fears of over-inflation. In some parts of the economy, the fear stage has already been passed. The US central bank, which sets the tone for Wall Street and, by extension, for the rest of the world's markets, has decided to let prices rise in the short term, so as not to jeopardize the economic recovery. A game considered dangerous by some, who fears that the Fed will have to act too brutally to avoid being overwhelmed. Nobel Prize-winning economist Paul Krugman emphasized that a central bank needs to "credibly promise to be irresponsible" in order to maximize its communication and impact on markets. So far, this strategy has not worked too badly, but the Fed knows that it will have its work cut out for it when the series of overinflationary episodes follow one another in the coming months.
The mood this week is cautiously optimistic. The weekend was again marked by very nervous crypto-currencies, as Beijing's pressure on the sector continues to fuel worries. The latest example is that crypto miners are leaving China, where they are persona non grata, for other horizons. The omnipresence of bitcoin and its peers in the media (even in this column), contributes to making it an asset that investors now look at on a daily basis, whether they own it or not. It is a form of institutionalization, just like its acceptance as a means of payment by some companies in search of a communication coup.
This morning, the commodities market is correcting after a new stance from Beijing, which summoned several executives of major metals companies on Sunday to make them understand that they should avoid overzealous pricing. I'm not sure how the message got through, but the reports are that it was pretty tough talk.
Economic highlights of the day
The Federal Reserve Bank of Chicago showed today that the National Activity Index (CFNAI) declined to 0.24 in April from 1.71 in March.
The euro/dollar pair is little changed at EUR 0.8192. In the gold market, the ounce is stable at USD 1879. Oil rebounds slightly to USD 67.46 per barrel of Brent and USD 64 per barrel of WTI. U.S. debt offers a 10-year yield of 1.62%. Bitcoin recovers slightly after another drop to USD 38,024.
*Johnson & Johnson has filed for approval of its Covid-19 vaccine in Japan.
*Virgin Galactic has successfully completed its third space flight
- Adient : BofA Securities adjusts price target to $47 From $45, maintains Underperform rating
- Aptiv : BofA Securities change PT to $130 from $132, stays Underperform
- Applied Materials: Bernstein raises PT to $170 from $160, keeps Outperform rating
- Britvic: Societe Generale changes its buy rating to hold from buy with a target of GBP 925.
- Cairn Energy: HSBC upgrades from hold to buy with a GBP 205 target.
- Diageo: Jefferies remains Buy with a price target raised from GBp3,600 to GBp3,800.
- easyJet: Credit Suisse retains his positive opinion on the stock with a Buy rating. The target price is still set at GBp 1200.
- Fisker: BofA Securities amend PT to $27 From $31, maintains Buy rating
- Gentex Corporation: BofA Securities adjusts PT to $33 from $32, maintains Underperform rating
- Genuit: Berenberg remains a hold with a price target raised from GBp 610 to GBp 630.
- Glacier Bancorp: Piper Sandler raises target to $61 from $57, maintains Neutral rating
- Group 1 Automotive : BofA Securities lifts price to $305 from $270, keeps Buy rating
- Pfizer: Goldman Sachs stays Neutral. The target price remains set at USD 45.
- Premier Foods: Jefferies remains Buy with a price target raised from GBP 110 to GBP 130.
- Ralph Lauren : Barclays adjusts PT to $111 from $109, maintains Equal Weight rating
- Ross Stores : MKM Partners raises PT to $153 From $138, keeps Buy rating
- The Boeing Company: Goldman Sachs retains its Buy rating. The target price remains unchanged at USD 307.