When I talk about a decline, I am talking about a relatively moderate decline: we are still a long way from the sharp drops of the summer of 2022. Investors have been showing some restraint for a few days. Let's take advantage of this to make a quick assessment. On the Western markets, highly leveraged indexes have exploded to the upside - understanding those that overreact to periods of increase - like the gains of more than 12% made since January 1st by the American Nasdaq 100 or the Italian FTSE MIB. The German DAX, the French CAC and the American S&P500 are all up between 6 and 10%. At the back of the pack, but still in the green, are the more defensive indexes such as the Scandinavian OMX Nordic 40 or the Swiss SMI.

Ranking of a few indexes since the beginning of January

After a strong start to the year, the stock markets stalled last week, having already shown signs of losing steam in early February. Investors no longer seem as convinced that the US central bank will return to a more accommodative policy. in the coming months regarding its rate policy. The Fed wants to slow the economy to make sure that inflation is under control, but some indicators remain consistently strong. The central bank still believes that it is better to have a momentarily slow economy and dissipating inflation than a strong economy with high inflation. Economics is subject to varying interpretations and theories. But we have to go along with it, since it is the prevailing trend.

The return of fears about the Fed's monetary intentions is visible in the bond market. It was a little slow to react, but the yield on the 10-year US government bond has risen to 3.73%. It had fallen to 3.3% less than a month ago, when investors stopped listening to the cautious words of the US central bank to focus on their own scenario. The same can be said for the dollar, which is back on its one-month highs. This tension will probably find an outlet tomorrow with the release of the US inflation figures for January. Economists expect the pace of annual price increases to slow from 6.5% to 6.2%. However, there will be a subtlety to keep in mind. While prices are falling over the course of a year, they should have risen between December and January. There are several reasons for this, including seasonality and some changes in the weights of official components. Psychologically, the figures released tomorrow at 8:30 am are therefore likely to have a greater impact, especially if they help to invalidate the "blue sky" scenario that investors took on at the beginning of the year. Personally, I have no idea what kind of sauce we will be served. But neither do most intelligent people, so there is a real element of uncertainty to this release, perhaps more so than in previous weeks when data was piling up in support of inflationary de-escalation.

I complete with some important information to start the week:
  • The human toll from the earthquake that struck Turkey and Syria a week ago has risen to over 30,000 dead.
  • In North America, a new object was shot down on the border between the United States and Canada, possibly an observation balloon. Washington said it had strengthened and refined its radar capabilities to explain the increase in interceptions. Taiwan has indicated that it frequently encounters balloons of Chinese origin in its airspace.
  • In Cyprus, the former head of diplomacy Nikos Christodoulides won the presidential election.
  • In Germany, Olaf Scholz' party was defeated in a local election in Berlin.
  • In Ukraine, Russia is tightening its grip on Bakhmut, apparently at the cost of heavy casualties.
  • Oil is stabilizing after rallying late last week on news of a Russian production cut, which boosted stocks in the sector.
  • The agenda of corporate results is still very full with some great names this week, including, in chronological order, Coca-Cola, Airbnb, Zoetis, Cisco, Glencore, Kering, Heineken, Nestlé, Airbus, Schneider, Applied Materials, Air Liquide, Pernod Ricard, Hermès or Mercedes.

Economic highlights of the day:

No major statistics in sight today. All the agenda here.

The dollar is up to 0.9368 EUR. Gold is trading at 1860 USD per ounce. Oil remains firm, with North Sea Brent crude at USD 86.07 a barrel and US WTI light crude at USD 79.60. The yield on 10-year US debt is back up to 3.73%. Bitcoin has fallen back below 22,000 USD.
In corporate news:

* Boeing - Air India has sealed a landmark order from the U.S. aircraft manufacturer and Airbus for about 500 aircraft worth more than $100 billion at list price.
* Meta, Facebook's parent company, delayed finalizing budgets for several of its teams as it prepares for another round of job cuts.
* Tesla - The U.S. Department of Transportation is expected to pressure Tesla to unlock its network of electric vehicle chargers in the U.S. to take advantage of the subsidies, as part of an effort to equip the country with 500,000 electric vehicle chargers in the coming years.
* PayPal has suspended work on its stablecoin cryptocurrency, which it had hoped to launch in the coming weeks, as regulators step up scrutiny of cryptoassets and a key partner in the project faces an investigation by the New York State Department of Financial Services.
* Ford is expected to announce plans as early as Monday to build a $3.5 billion lithium iron phosphate (LFP) battery plant in Michigan with China's CATL Group.
* Jetblue Airways, Spirit Airlines - The U.S. Department of Justice (DOJ) is likely to file a lawsuit to block the merger between the two airlines, Politico reported Friday, citing five people familiar with the matter. 

Analyst recommendations:
  • Advance Auto Parts: Roth MKM downgrades to neutral from buy. PT down 7.8% to $140.
  • Capri Holdings:Cowen cut the recommendation to market perform from outperform. PT down 10% to $55.
  • Caterpillar: Baird downgrades its recommendation to neutral from outperform. Price target set to $230.
  • Crest Nicholson: Deutsche Bank cut the recommendation to hold from buy. PT set to 243 pence.
  • Expedia: Susquehanna Financial raised the target to $116 from $100. Maintains neutral rating.
  • Masco: Deutsche Bank upped the goal to hold from sell. Price target set to $56.
  • Persimmon: Deutsche Bank decrease its price target by 15% to 1,267 pence.
  • Ralph Lauren: BofA Global Research raised the recommendation to buy from neutral. PT set to $145.
  • Vesuvius: Panmure Gordon & Co Limited initiated coverage with a recommendation of buy. PT increases by 41%, set to 565 pence
  • XPO: Morgan Stanley moved to equal-weight from overweight. PT upgrades 22% to $43.