Over the weekend, US officials tried to mitigate comments by President Joe Biden that Vladimir Putin “cannot remain in power”. They stressed that the US is not seeking “regime change” in Russia but an end to the invasion. The Russian army seems to have stalled on most fronts, although it is close to take Mariupol and said it would now focus on the Donbas region. Peace talks being Ukraine and Russia are currently held in Istanbul. Volodymir Zelensky has confirmed that his country is ready to discuss neutrality on the international stage to allow the talks to move forward.
U.S. stock indexes were mixed to start the day, after a positive week thanks to strong economic data and gains in growth stocks, despite hawkish comments from Fed policymakers. Sectoral performances were much less clear-cut than in previous weeks: energy and technology led the rise, whereas the two sectors had been rather divergent since the beginning of the year. Commodities also rose. More defensive sectors such as healthcare and utilities led the way.
The broad U.S. S&P500 index is now only 4.7% behind its price at the end of 2021. Two important statistics are due this week the PCE inflation for February (Thursday) and the employment figures for March (Friday). It seems clear that Jerome Powell and his peers intend to accelerate their fight against inflation, trying not to derail the economic momentum. The reaction of investors since the beginning of last week shows that they have a lot of confidence in them, even if they are subject to criticism for being too slow to react.
Joe Biden was in the news yesterday afternoon, rightly or wrongly. After a very successful European tour, according to those who know how to measure such things, the American president came out with a little phrase that caused a stir: "For God's sake, this man cannot stay in power." He was obviously talking about Vladimir Putin. Did he make a blunder by saying out loud what part of the world is thinking? That's the opinion of the experts, who have been raving about Joe Biden's propensity to communicate his thoughts in public, even when he shouldn't.
On financial markets, the US bond market is very agitated, with a continued selling movement, which is pushing up yields. The 10-year maturity is paying 2.52% (+5 points), below the 2-year which is at 2.62% (+9 points). The 5-year and the 30-year are tied at 2.62%, apparently a first since 2006. The rate curve inversions are signals of economic prudence. But especially between short and long rates, especially between the 3-month and 10-year. The short end of the curve is still low at 0.48% for the time being. So watch out, because while equity markets are following the Fed, the bond market seems to be playing a different tune.
Economic highlights of the day:
Only one statistic expected today, the US wholesale inventories in February.
The dollar is trading at EUR 0.9114. The gold ounce is down to USD 1937. Oil is also down, with North Sea Brent at USD 112.1 and US WTI light crude at USD 105.5. The yield on US debt is up to 2.52% over 10 years, while German debt offers a coupon of 0.58% over the same duration and the French OAT is back above the 1% mark. Bitcoin is trading at around USD 47,000.
* Apple lost 1.8% in early trading after Japanese news agency Nikkei cited sources as saying the company plans to cut production of several of its products, including the iPhone, in the second quarter.
* Tesla gained nearly 4% in pre-market trading after announcing on Monday that it would propose to its shareholders to vote at the annual general meeting on an increase in the number of shares to carry out a new stock split.
*Before this announcement, the electric car manufacturer was slightly down before the stock market after Reuters obtained information from two sources, according to which the group decided to suspend for four days the production of its factory in Shanghai because of the containment measures taken by the Chinese authorities to carry out a massive campaign of tests for COVID-19.
* Uber Technologies announced on Saturday that it has been granted a new 30-month license in London, after years of tension and negotiations with the authorities in the British capital.
* KKR - Telecom Italia confirmed it has received a non-binding offer from CVC Capital Partners for a minority stake in its business services business while continuing discussions with KKR, a candidate to buy the entire Italian operator.
* Walmart has stopped selling cigarettes in some of its U.S. stores after years of debate among its executives, the Wall Street Journal reported Monday.
- Advanced Micro Devices: Goldman Sachs removes buy-rated amd from conviction list; price target is $127.
- Altria: RBC Capital Markets downgrades to sector perform from outperform. PT down 1.2% to $53.
- Bank of America: Morgan Stanley upgrades to equal-weight from underweight. PT up 12% to $49.
- Beyond Meat: Piper Sandler downgrades to underweight from neutral. PT drops 40% to $29.
- BNY Mellon: Morgan Stanley uprages to equal-weight from underweight. PT up 10% to $58.
- Campbell Soup: RBC Capital Markets downgrades to sector perform from outperform. PT up 3.3% to $46.
- Citigroup: Morgan Stanley downgrades to underweight from equal-weight. PT up 5.7% to $60.
- Deere: J.P. Morgan upgrades to neutral from underweight. PT inches up 0.8% to $440.
- Deliveroo: Jefferies remains Buy with a target reduced from GBp 435 to GBp 240.
- Fifth Third: Morgan Stanley downgrades to equal-weight from overweight. PT up 6.9% to $50.
- Illinois Tool: J.P. Morgan analyst upgrades to overweight from neutral. PT rises 20% to $255.
- Intel: Goldman Sachs retains his negative opinion on the stock with a Sell rating. Previously set at USD 44, the target price is lowered to USD 41.
- Kennametal: J.P. Morgan downgrades to underweight from neutral. PT up 4.1% to $31.
- KLA Corp.: Goldman Sachs upgrades to buy from neutral. PT up 17% to $430.
- Knights Group: Berenberg remains "Hold" with a price target reduced from GBp 410 to GBp 165.
- Microchip: Goldman Sachs downgrades to neutral from buy. PT up 2.4% to $79.
- M&T Bank: Morgan Stanley downgrades to underweight from equal-weight. PT down 2.5% to $179.
- Qorvo: Goldman Sachs downgrades to neutral from buy; price target is $138
- Roblox Corporation: Daiwa Securities starts at outperform with $56 price target.
- SEI Investments: Goldman Sachs downgrades to neutral from buy. PT up 7.5% to $65.
- Teradyne: Goldman Sachs downgrades to neutral from buy. PT up 2.4% to $127.
- Trex: Exane BNP Paribas downgrades to underperform from neutral. PT up 17% to $81.
- Unilever: Jefferies remains Buy with a target cut from GBp 4,700 to GBp 4,130.