Paris Stock Exchange: Inflation leaves or doubles

Stock indices fell yesterday, with rare exceptions. The results were -0.5% in Paris, -0.3% in Zurich, -1.1% in Frankfurt and -0.4% in New York for the S&P500. The decline in technology stocks was underlined by cautious, forward-looking comments from semiconductor stars Nvidia and Micron. The session was typical of a small return of risk aversion with three sectors in the green sector, health, utilities and oil. Suffice it to say that the adventurers didn’t really go out on August 9, which I learned this morning was Saint Amor’s Day. So no love to risk (sorry).

I’ll expand a bit on the topic of inflation today, because it’s trendy, by giving some clues to understanding the situation in the US (Europe is following closely, however, even if political shock absorbers – traditional social media have helped limit the damage somewhat ). For this interpretation, I rely on the press release detailing the figures for consumer price development for the month of June, available on the website of the United States Bureau of Labor Statistics. Prices are up 1.3% between May 2022 and June 2022, which is a big deal. To give you an idea, a €1 product that experienced a year of monthly increases in this type of product would be worth about €1.17 a year later, roughly 17% more. That wasn’t exactly what happened in the US in one year, but prices continued to rise by 9.1%. It’s the energy products that have made the most progress in one year (take 60% gasoline for example), but food products have also been overheated: +12.2%. At the bottom of the scale, the price of services rose only 5.5% if I may say so, apart from those related to transportation that have gone through higher energy prices. Investors keep track of both core inflation, which I just talked about, and so-called “core” or “core” inflation as we sometimes say in French, that is, price increases excluding food and energy, which are the two most volatile components. Core inflation in the US was 0.7% between May and June 2022 and 5.9% over one year.

What do you expect this afternoon? According to the consensus, to the slowdown in inflation, through the economic slowdown and the decline in raw materials, whether energy or minerals. Economists estimate that monthly inflation will fall from 1.3% in June to 0.2% in July for the base, and from 0.7% in June to 0.5% in July for the “core” portion.

And how should the market react (note the condition)? With regard to this inflation statistic, we will not apply the recently popular principle”It’s good news for the economy but bad news for the stock marketsIndeed, if the price rise slows as expected, households will be happy that the erosion of their purchasing power will abate. And financiers will be happy because it will mean that the US central bank is on course to win its fight against inflation and that higher interest rates will stop accumulating sooner. A little more than expected.It will be a rather disastrous scenario today (note the condition), we will understand a larger than expected upward divergence in prices, which could raise fears for a more punitive monetary policy, and thus increase the risk of an economic exit out of the way.The consequences seem more binary than The usual, in my view (note the lack of a subjunctive but “enjoy”). Judgment at 2:30 p.m.

As for the news of the association, it’s not as scanty as it looks on August 10 (it’s Saint Laurent, of which I have two representatives on my team, that won’t be sanctified unless they bring back the croissants this morning.). Consequently, some quarterly results are still circulating in the diaries (Walt Disney, Ahold Delhees, Prudential, ABN Amro or Vistas in particular). The Comedy Situation Award goes to the French Electricity Company, which filed a legal appeal against the state’s decision to compel the energy company to resell more electricity at a discounted price to its competitors in order to face the high electricity prices. individually. EDF is claiming €8.34 billion in compensation from the State Council. This case focuses on the schizophrenia in French energy policy: we complain about the state of the EDF’s energy complex by sweetening its resources to support a competitive sector that has not fulfilled its part of the development contract, production assets. It’s a very simplistic look, of course – the situation is more complicated – but we have to think about putting a little common sense into it. Removing the EDF from the label to help take the emotion out of the debate is a good first step, but there is still a lot of work to do to come up with something coherent.

Another news that dominated the nightly media and the financial sphere was the announcement of Elon Musk’s sale of $6.9 billion in Tesla shares. The billionaire needs fresh money if justice forces him to buy Twitter, after he unilaterally abandoned the operation by accusing the social network of having Pipeauté in possession of the number of real users by ignoring the true stake of fake accounts on the platform. Musk believes that doing so is safer than rushing into the action, which he hopes.UnlikelyWhere he will lose in court. Posting an explanation on… Twitter is clear.

In Asia Pacific, everything is red this morning and China the most. Cyclical stocks and big technology affect Hong Kong and Shanghai. Beijing announced last night that consumer prices rose 2.7% year-on-year, less than expected. Producer prices rose 4.2% but are also lower than expected. It is difficult to draw conclusions. The major European indices are bearish this morning, but not excessively. However, tension is likely to rise as we approach 2:30pm. The CAC 40 index started the session down 0.3% to 6,469 points.

Today’s major economic events

Thus, the bulk of the day is US inflation for July at 2:30 PM. The whole macro diary is here. This morning, China reports lower-than-expected inflation in July at 2.7% (consensus 2.9%). Producer prices rose by 4.2% but also less than expected (4.9%).

The euro rose to 1.0213 USD. An ounce of gold hangs at $1,790. Oil is losing some of its gains, with Brent from the North Sea at $96 a barrel and WTI at $90.15. The yield on US 10-year debt is 2.80%. Bitcoin is back below $23,000.

Major changes in recommendations

  • Acerinox: Morgan Stanley starts the follow-up holding with a target of €11.
  • Aperam: Morgan Stanley starts the follow-up holding on with a target of €29.
  • Auto store: SpareBank goes from neutral to selling by targeting NOK 14.
  • Azelis: Jefferies is still to be held with the target price raised from 22 to 26 EUR.
  • Evotec: Morgan Stanley goes from overweight to underweight by targeting €32.
  • Genmab: AlphaValue has yet to accumulate with target price raised from 2,769 to 3,090 DKK.
  • Hugo Boss: Jefferies remains long with a price target of €64 to €66.
  • Lonza: Morgan Stanley goes from linear weight to overweight by targeting CHF800.
  • Norsk Hydro: AlphaValue remains to be aggregated with price target raised from 75.50 to NOK 75.60.
  • Outokumpu: Morgan Stanley begins tracking weight gain by targeting €6.
  • Pets in the House: Jefferies begins pursuing a purchase by targeting 425 Gbps.
  • Prismian: Intesa is moving from accumulation to buying, targeting 39.20 euros.
  • Safestore: HSBC is going from owning to buying, aiming for £1,414.
  • SGL Carbon: Kepler Cheuvreux switched from holding to long with a target of €8.20.
  • Signify: Morgan Stanley goes from underweight to underweight online by targeting €35.
  • XP Power: HSBC is going from buying to keeping, aiming for 2,434 Gbps.

in France

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In the world

Company results

  • ABN Amro: Quarterly earnings are higher than expected, despite higher bank costs.
  • Ahold Delhaize: Bol’s IPO project has been postponed. The distributor raises earnings per share and free cash flow forecasts.
  • Alcon: The group is lowering its forecast for 2022.
  • Coinbase: Headline loses 5% off session after missing turnover consensus.
  • Evonik: The German chemical company announced Ebitda for €728 million in the second quarter, slightly above expectations.
  • Honda: The manufacturer posted a 9% drop in profit in the first fiscal quarter but beat estimates.
  • Roblox: The title loses 10% out of the session after its quarterly rollout.
  • Toshiba: The Japanese reported a surprising quarterly operating loss due to higher material costs.
  • Vestas: The wind turbine manufacturer is posting lower-than-expected results in the second quarter.

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  • Elon Musk is selling 7.92 million Tesla shares worth $6.9 billion and is specifying that he will not sell them at this time and that he will buy them back if Twitter does not go through.
  • Ferrovial is studying options for its 25% stake in Heathrow Airport.
  • Sika’s acquisition of MBCC was delayed after a British investigation.
  • Taiwan wants Foxconn to give up its stake in China’s Tsinghua.
  • Orthopedic treatments are combined with Medsenic.
  • The main publications of the day: The Walt Disney Company, Commonwealth Bank of Australia, Hon Hai Precision, Honda Motor, Kupang, Prudential, Ahold Delhis, Vistas, Genmap, Fujifilm, Evonik, ABN Amr … the entire agenda is here.

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