In Germany, negotiations have started to form a coalition capable of supporting a new chancellor. Olaf Scholz's SPD won 25.7% of the vote and Armin Laschet's CDU 24.1%. The two leaders will have to court the Greens, the Liberals and other parties to form a government. It will probably take a few weeks before we know who will succeed Angela Merkel.
On Wall Street, investor sentiment is high and Futures are rising. There is an unusual spike in energy prices. After gas, it's oil that's going up. Not in the same proportions, fortunately, but the return of the barrel to symbolic levels (USD 80 for Brent, USD 75 for WTI) is causing a certain amount of excitement. But as the machine seems to be getting a little too excited, there is a fear of a "power crunch", which could hit the wallets of companies and households, with a snowball effect. Opec+, which meets next week, will have to decide whether to take advantage of the movement to reopen the valves or whether to simply accompany it so as not to destabilize prices.
The jump in energy prices is part of a more global context of volatility that has been affecting commodity prices for months, against a backdrop of disrupted supply chains and shortages that are hitting everywhere. Numerous press articles in recent days have expressed concern about the lengthening delays in the supply of a wide range of products, while the most optimistic were hoping that things would return to normal from the second half of 2021. The situation relates to the distribution of production sites around the world and the way in which raw, semi-finished or finished products are transported from these sites to the rest of the world. It is clear that the disorders caused by the coronavirus have still not been resolved. And now, we need to add China's policy to curb polluting emissions, which is weighing on the country's energy production and on the activity of industries forced to comply with new constraints.
Let's stay in China, where Evergrande's agony continues, even if it is a little less omnipresent in the financial media (the proof is that its Google Trends "score" has dropped from 100 to 15 in four days). But let's not minimize the impact of this case on the Chinese economy. I quote economist Erik Nielsen, who devoted a long Sunday explanation to this subject. Debt-financed real estate bubbles are dangerous, and when they start to collapse, he explains, it almost always happens faster and more severely than forecasters think. And while China is a special case because of its interventionist setup, "I wouldn't bet on its ability to walk on water," Nielsen adds. China's growth trajectory should probably be the main focus of investors' attention right now.
With the arrival of autumn, speeches by central bankers are being picked up in spades. The calendars list about 20 of them over the next five days, with a slew of them starting today. Other highlights include US durable goods orders later today and US inflation figures. In between, China will have released its latest PMI indicators on Wednesday, which will be closely watched as they have been flirting with the contraction zone lately. Finally, US congressmen must proceed to the final vote on the $1000 billion infrastructure investment plan, which will apparently not be a pleasure for the Biden camp. The other $3.5 trillion plan, even more controversial, is still being negotiated, but there is every chance that it will have to undergo many cuts before it can be considered for approval on Capitol Hill.
Today’s economic highlights:
US Durable Goods Orders for August in the United States increased by 0.7% in August. This reading was well above market expectations pointing to a 0.5% growth.
The dollar/euro pair is still stagnating around EUR 0.8549. The gold ounce is hovering around USD 1749. Oil remains high at USD 79.60 per barrel for Brent and USD 75.50 per barrel for WTI. The T-Bond yield is coming in at 1.44% on 10-years and the Bund at -0.23%. Bitcoin is trading at USD 43,750.
* Raytheon - Rolls-Royce's F-130 engines have been chosen to replace those of Pratt & Whitney, a Raytheon subsidiary, in a contract won by the British group for the US Air Force's B-52 bombers, which could be worth up to 2.6 billion dollars.
* Apple, Tesla - Several suppliers of the two groups based in China, such as Unimicron Technology, Eson Precision and Concraft Holding, have suspended production for several days to comply with new rules on energy consumption and emissions, creating tensions in supply chains.
* Amazon.com will offer insurance services to small and medium-sized businesses in Britain, its first foray into the sector, brokerage firm Superscript announced Monday.
* Alphabet - Google, the company's main subsidiary, will cut its commission on software sales on its cloud marketplace to 3 percent from 20 percent, CNBC reported, citing a source.
* Gores Guggenheim takes 8.1% in pre-market trading to $10.79. Swedish electric vehicle maker Polestar, a subsidiary of China's Geely and Volvo Car Group, announced plans Monday to go public by merging with Gores Guggenheim in a deal valued at $20 billion, including debt.
* Pfizer, BioNTech, Moderna - The European Commission is proposing to extend its mechanism for monitoring and limiting exports of COVID-19 vaccines outside the European Union (EU) that is due to end this week, a spokesman for the EU executive told Reuters on Monday.
* MGM Resorts International - The group's Chinese subsidiary, MGM China, plunged 10.42 percent to 4.90 Hong Kong dollars on Monday on the Hong Kong Stock Exchange after hitting an all-time low in trading. Analysts at Citigroup believe that preventive measures against the COVID-19 pandemic are expected to remain in place in Macau, a Chinese special administrative region, until mid-October, which would impact the "Golden Week", a crucial vacation period in China.
* Citi on Monday launched a technology hub in Bahrain, the first of its kind in the region, with the ambition to recruit 1,000 coders over the next 10 years, who will initially work on the bank's two main platforms, Citi Velocity and Citi FX Policy.
- Accenture: JP Morgan adjusts pt to $377 from $364, keeps overweight rating
- Avery Dennison : UBS adjusts price target to $230 from $225, maintains neutral rating
- Costco Wholesale : BofA Securities raises price target to $500 from $490, maintains buy rating
- HCA Healthcare: SVB Leerink initiated coverage of HCA Healthcare Inc. with a recommendation of outperform. PT set to $320
- Icon: J.P. Morgan cut the recommendation to underweight from neutral. PT down 10% to $12
- Medica: Liberum remains Buy with target raised to GBP 245 from GBP 235.
- National Instruments: Goldman Sachs raised the recommendation to buy from neutral. PT lifted 17% to $48
- Nike : BofA Securities drops price objective to $160 from $168, keeps neutral rating
- Quanta Services: UBS adjusts price target on quanta services to $139 from $122, maintains buy rating
- Salesforce.com: UBS adjusts price target on salesforce.com to $330 from $300, maintains buy rating
- Universal Health Services: UBS downgrades universal health services to sell rating from buy, adjusts price target to $136 from $140
- Workday: Daiwa Securities starts Workday at Buy with $320 Price Target
- Zymergen: J.P. Morgan cut the recommendation to underweight from neutral. PT down 10% to $12