Today on Wall Street: Investors breathe sigh of relief

08/12/2021 | 08:49am

Wall Street scores a new series of records after yesterday’s inflation figures came out slightly lower-than-expected. In addition, new weekly jobless claims decreased again last week, in line with consensus, to 375,000. Continuing claims for the week ended July 31 reached 2.866 million vs. 2.900 million expected.

Unlike the previous four months, July inflation figures in the US did not blow up the charts. Prices are still rising, but in a more contained way (5.4% over one year, anyway). Core inflation, which excludes food and energy, is even slightly less vigorous than expected. The market's interpretation of this is as follows: the moderation of price increases reduces inflationary pressures, allowing the US central bank to remain accommodating until the threat of the pandemic on the job market and the economy disappears. To some extent, this was the perfect statistic to numb recent fears. Given the timing, August's data should not be a problem either, and economists will likely look to September's data for confirmation that the inflation spike has passed.

The largest price increase between June and July was for gasoline (+2.4% over one month, +41.8% over one year). A trend that does not please Washington, which has made it known to OPEC through U.S. National Security Advisor Jake Sullivan, who yesterday accused the cartel of artificially maintaining high prices. As Sullivan is no newbie, he knows full well that this is the raison d'etre of Opec, the only organization with any standing that can boast of manipulating prices without being worried. But it is a message sent by the Biden administration. When the announcement was made, the price of oil fell, but only briefly. It may take the U.S. president himself to spread the word for the major producing countries to react. Biden's political position on the subject is complicated, since he advocates energy transition and pressurizes (a little) his oil industry on the one hand, and wants low gasoline prices on the other.

Earnings season is almost over. But today's session is a reminder that there are still some big names left, including Walt Disney, Deutsche Telekom, Airbnb, Orsted, Henkel or Zurich Insurance.


Economic highlights of the day:

In Europe, the British Q2 GDP came at +4.8% Q/Q, as expected. The US producer prices and weekly unemployment figures where the main indicators of the day.

The euro is slightly up at EUR 0.8521. The ounce of gold is climbing back to reach USD 1750. Oil is inching down to USD 71.14 a barrel of North Sea Brent and USD 68.84 a barrel of U.S. light crude WTI. US debt is paying 1.33% over 10 years and German debt -0.47%. Bitcoin is moving under USD 44,885.


On markets:

* Facebook - Britain may require Facebook to sell GIF platform Giphy after the U.K.'s competition authority said Thursday that its investigation found the deal between the two groups would hurt competition in the display advertising market.

* eBay on Wednesday issued a revenue forecast for the current quarter below market expectations as online sales slowed. The stock was down 1.7% in pre-market trading.

* Tesla - The supply chain is extremely limited when it comes to some standard automotive chips, founder and group executive Elon Musk said Thursday. At the same time, the CEO made clear how important it is for the company to keep to the schedule for building its European "gigafactory" in the German state of Brandenburg, German Economy Minister Joerg Steinbach said Thursday.

* DoorDash - The meal delivery group has been in talks over the past two months to buy rival Instacart for an estimated $40 billion to $50 billion, The Information reported Thursday.

* Didi - The Chinese chauffeur-driven vehicle giant denied Thursday rumors of a possible management change.

* Baidu - The New York-listed Chinese internet giant reported better-than-expected quarterly results Thursday, with the group benefiting from a rebound in advertising revenue and strong demand for artificial intelligence and cloud products.


Analyst recommendations:

  • American Express: Daiwa Securities cut its recommendation to neutral from outperform. PT up 5.5% to $180
  • Aspen Technology: J.P. Morgan downgrades. to underweight from neutral. PT inches up 0.9% to $144
  • AstraZeneca: JP Morgan increases his rating from Sell to Buy. The target price is unchanged at GBp 10000.
  • Elementis: Morgan Stanley upgraded from Overweight to Overweight, targeting GBp 161.
  • Grocery Outlet : Morgan Stanley adjusts pt to $35 from $38, maintains equal weight rating
  • HollyFrontier: Wells Fargo Securities downgrades to equal-weight from underweight. PT up 3.6% to $31
  • Lyft: Northcoast Research upgrades to buy from neutral. PT up 21% to $65
  • Magna International : Credit Suisse maintains outperform, but trims PT to US$115
  • Mastercard: Daiwa Securities cut the recommendation to neutral from outperform. PT up 5.7% to $385
  • Micron: Morgan Stanley downgrades Micron Technology to equal-weight from overweight. PT unchanged at $75
  • Poshmark : Cowen adjusts price target to $42 from $55, maintains outperform rating
  • NatWest: Investec upgraded from Hold to Sell targeting GBp 200. 
  • Southwest Airlines : Goldman Sachs adjusts price target to $64 from $66, keeps buy rating
  • Visa: Daiwa Securities downgrades to neutral from outperform. PT up 6.4% to $250
  • Walmart : Credit Suisse raises price target to $158 from $150, maintains outperform rating
  • WW International : Morgan Stanley adjusts pt to $31 from $34, maintains equal weight rating
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