The Fed confirmed, in minutes published yesterday, a pragmatic approach towards the normalization of its monetary policy. As for the ECB, it announced today it would set a new inflation target of 2%, compared with its previous target of "below but close to 2%".
The Fed minutes were eagerly awaited, because they were from the infamous June 15-16 meeting, when the central bank started to prepare markets for a change in the course of monetary policy, switching to a less generous model and gradually returning to more conventional methods. There is a lot of work to be done.
Yesterday, there were slight gains for the SP&500, the Dow Jones and the Nasdaq 100, which shows that the communication exercise went rather well, even if the Federal Reserve did not state anything new. Specifically, the minutes of the meeting show that the economic momentum is good and that the signals needed for effective policy change are not yet all there. It sort of said: to watch out, it will happen. But very gently, we promise, and everything will be stopped if it goes to hell, we swear.
The Fed is simply applying its communication doctrine, which consists of giving indications of its long-term intentions, while adapting to the reality of the economic data at its disposal. While this pragmatism has been a hallmark of central bank action since 2008 (give or take a couple of blips), investors seem to need a reminder that central bankers are not going to suddenly remove all support for the world’s economies starting next week.
With regards to the ECB, although the change to an inflation target of 2%, from "below but close to 2%", seems small, it is a real change, as the central bank is setting a new target while allowing itself enough leeway to avoid reacting too abruptly when consumer prices rise above that level.
In other news, oil is still under pressure as experts struggle to read the tactics of the United Arab Emirates, which scuppered a deal within OPEC+. The symbolic milestone of 4 million deaths from covid-19 worldwide was reached yesterday. Finally, China continues to tighten its grip on payment companies, which will not escape a fate like Ant Group if they stray from the right path, said a senior PBOC official.
The S&P Dow Jones Indices and FTSE Russell yesterday decided to remove more Chinese companies from their indexes after an executive order from the Biden administration forbidding U.S. investment in firms with alleged ties to China's military.
Economic highlights of the day:
U.S. weekly jobless claims and oil inventories are released today.
The dollar is under pressure at EUR 0.8448, while the ounce of gold has risen over USD 1800 again. Oil is stabilizing after two sessions of correction, with North Sea Brent at USD 73.16 and WTI at USD 71.8. U.S. debt offers a 10-year yield of 1.32%. Bitcoin is losing altitude to under USD 33,000.
The Boeing Company - Pobeda, a subsidiary of Aeroflot, has cancelled an order for 20 737 MAX aircraft, according to information reported by the Russian media RBC.
Didi - the Chinese Uber, is still falling by more than 5% on Thursday in pre-opening US equity markets, as well as those of other Chinese giants, such as Alibaba or Baidu, after the Communist party’s crackdown on the tech sector in China.
Alphabet - Attorneys general in 36 U.S. states filed a lawsuit Wednesday against Alphabet and several subsidiaries. They believe that the company's Android app store is violating antitrust laws.
- Apollo Global Management : Goldman Sachs adjusts pt to $70 from $64, maintains buy rating
- The Bank of Nova Scotia : Credit Suisse keeps neutral rating, $85 tp
- Blackstone : Goldman Sachs raises pt to $105 from $96, maintains buy rating
- BHP: Berenberg upgrades from hold to buy targeting GBp 2700.
- BlackRock : Goldman Sachs adjusts pt to $1,000 from $940, maintains buy rating
- Brinker International : Wedbush initiates coverage with outperform rating, $81 price target
- Chesapeake Energy : Wells Fargo adjusts price target to $61 from $60, keeps overweight rating
- Croda: HSBC upgrades from hold to buy targeting GBp 8,600.
- EOG Resources : Wells Fargo adjusts price target to $91 from $87, keeps equalweight rating
- Gem Diamonds: Berenberg upgrades from Buy to Hold, targeting GBp 70.
- J Sainsbury: Bernstein starts tracking at Underperform.
- Marathon Oil : Wells Fargo adjusts price target to $18 from $17, keeps overweight rating
- Ocado: Bernstein upgrades rating to Outperform.
- PDC Energy : Wells Fargo adjusts price target to $57 from $54, keeps overweight rating
- Polymetal: Berenberg remains Buy with a price target raised from GBP 2,100 to 2,400.
- Range Resources : Wells Fargo adjusts price target to $18 from $16, keeps equalweight rating
- Renishaw: Panmure Gordon upgrades from Sell to Buy with a target of GBp 5649.
- Rio Tinto: Berenberg remains a hold with a target price raised from GBp 6400 to GBp 6900.
- Southwestern Energy : Wells Fargo adjusts price target to $8 from $7, keeps equalweight rating
- TechTarget : Sidoti & Co initiates coverage with buy rating, $97 price target
- Valero Energy : JPMorgan adjusts price target to $83 from $93, maintains overweight rating
- Virgin Galactic : Cowen raises price target to $51 from $23, maintains outperform rating