Meanwhile, today is the day the Fed will release its much-awaited monetary policy decision. There has been a lot of noise, a lot of assumptions and a lot of interpretations, already. And as usual, we will have to wait for the dust to settle to have a good vision of the consequences of the decision.
The Fed is expected to raise its key rates by a quarter point tonight to start fighting inflation. This is the overwhelming market forecast. A few weeks ago, some thought a more aggressive 50 basis point hike would be a better remedy, but they seem to have evaporated into thin air. Meanwhile, the war in Ukraine has shaken up the analysis, even if it has only amplified the problem of rising prices. So, to avoid causing market fear and too much of an economic shock, the central bank should stick to the baseline scenario.
Today is also the day that Moscow must make an interest payment on its debt. Russia plans to do so in rubles and not in dollars, which would constitute a sovereign default, Fitch warned. However, despite the headlines about the Russian state bankruptcy that will not fail to appear, March 16 is not a cut-off date because there is a tolerance of several weeks in this area to catch up. But it will still be an event with a strong symbolic impact.
Just a side note to mention an interesting statistic that I found in The Intelligencer, an offshoot of New York magazine. It published a long paper titled "Modern capitalism is stranger than you think" and subtitled "It doesn't work as advertised anymore either". Read it here. The article states that the three biggest US asset managers - Blackrock, Vanguard and State Street - own 22% of the average S&P500 index company! This is up from 13.5% in 2008. It's an understatement to say that these have a huge amount of power. One could call these three entities passive asset managers, because their strategies are essentially index-based, via ETFs. As the author of the article writes, "they own a significant portion of virtually everything", so "there is no precedent for this extraordinary form of power". These behemoths have no vested interest in the performance of the companies in which they are invested, since they are paid in fees and it is their clients who are exposed to asset returns. They still have an interest in the system working, otherwise they would have no clients, but this is mainly achieved through high asset prices... and therefore through a very accommodating approach to monetary policy…
Economic highlights of the day:
Today, the focus in the United States with the February retail sales (which rose slightly in February), the NAHB housing index for March, January business inventories and the weekly oil inventories, and finally the FOMC decision.
The dollar/euro pair is trading at EUR 0.9062. The ounce of gold is worth USD 1908. Oil prices continues to decline, with North Sea Brent crude at USD 99.34 and U.S. light crude WTI at USD 96.36. US debt yields hold their recent peaks at 2.14% over 10 years, while German debt stabilizes at 0.36% over the same duration. Bitcoin is hovering around USD 40,995. The LME is resuming nickel trading today, which was halted last week after an episode of insane volatility.
* Apple supplier Foxconn announced Wednesday that it has restarted some production at its Shenzhen plant in southern China after meeting government requirements by setting up a "closed-loop" system in which employees live and work in a bubble.
* Tesla suspended operations at its Shanghai plant, which produces an average of 2,018 vehicles a day, for two days amid a resurgent COVID-19 outbreak in China, an internal memo to employees and suppliers shows.
* The Competition and Markets Authority (CMA) expressed concern Wednesday about the $8.6 billion takeover of Avast by U.S. cybersecurity firm NortonLifeLock, saying the move could harm competition. NortonLifeLock shares fall 7% in pre-market trading.
* Pfizer, Moderna - Japan will buy a total of 145 million doses of the two companies' COVID-19 vaccines for a second booster shot, Kyodo news agency reported Wednesday, citing a government source.
* Seagen - Sanofi announced Wednesday an exclusive partnership with the U.S. company to develop antibody-drug conjugates (ADCs) that can target up to three forms of cancer.
* Alibaba Group- Chinese online retail giant and internet and mobile services group Tencent Holdings is set to cut a total of tens of thousands of jobs this year as Chinese authorities tighten regulations in the sector, sources said.
- Bunge: Goldman Sachs raises price target to $145 from $135, maintains buy rating.
- CF Industries Holding: Goldman Sachs raises price target to $131 from $91, maintains buy rating.
- Corteva: Goldman Sachs adjusts price target to $55 from $53, maintains neutral rating.
- Dollar General: Oppenheimer adjusts price target to $240 from $270, maintains outperform rating
- Gitlab: JPMorgan adjusts price target to $81 from $99, maintains overweight rating
- Host Hotels: Raised to Outperform at Raymond James; PT $21
- Imperial Brands: Jefferies remains "Hold" with a price target reduced from GBp 1616 to GBp 1595.
- Magna International: Raymond James upgrades to market perform from underperform; price target is $68
- Micron: Bernstein upgrades to outperform. PT up 29% to $94.
- Mosaic: Goldman Sachs upgrades to buy from neutral and increased the price target to $83 from $50.
- Nutrien: Goldman Sachs adjusts price target to $121 from $85, maintains buy rating
- On the Beach: Jefferies upgrades from Underperform to Hold with a target of GBp 240.
- Realty: Wolfe Research upgrades to outperform from peerperform. PT up 28% to $84.
- SentinelOne: Piper Sandler adjusts price target to $35 from $50, maintains neutral rating
- SmartSheet: KeyBanc adjusts price target to $58 from $100, reiterates overweight rating
- Starbucks: J.P. Morgan upgrades to overweight from neutral. PT up 22% to $101.
- Twitter: UBS adjusts price target to $37 from $40, maintains neutral rating.
- UDR: Wolfe Research upgrades to outperform from peerperform. PT up 26% to $71.