The first important event of the week is approaching. We'll be eagerly awaiting the release of US inflation figures for August at 8:30 am. To provide some context, Europeans release their inflation estimates at the end of the prior month, with Germany typically doing so around the last day of that month. In contrast, Americans have to wait an additional two weeks. Economists expect that US prices have picked up between July and August, driven by seasonal and comparative factors. They are predicting a 0.6% increase in monthly inflation and a 3.6% rise in year-on-year inflation, compared to July's figures of 0.2% and 3.2%, respectively. Meanwhile, core inflation, which excludes the most volatile price components, is anticipated to remain stable at 0.2% between July and August. Investors will be closely monitoring this core inflation figure to gauge the US central bank's potential actions regarding interest rates next week.

Currently, CME's FedWatch tool indicates a 93% probability of Fed Funds staying within the 5.25% to 5.50% range. Additionally, the market assigns a 59% probability to a continuation of the current status at the upcoming meeting on November 1. These probabilities will be influenced by the data released in the coming weeks, starting with today's announcement.

The prevalence of macroeconomic data, sharing the spotlight with technology companies' presumed or proven prowess, is a noticeable trend. However, this is somewhat paradoxical because this data is becoming increasingly abundant and not always reliable. Moreover, these data points often influence each other, which can be problematic given their reliability concerns. This issue was succinctly highlighted by James Mackintosh, an experienced editorial writer who spent six years at the Wall Street Journal and twenty years at the Financial Times. His primary concern is that the constant influx of data generates stories that can turn out to be inaccurate upon closer examination. Investors are eager for the most up-to-date and forward-looking statistics to aid in predicting the future. However, this data, processed through various economic models, drives investment decisions, impacts the bond market, shapes media narratives, and carries significant consequences. When revised and refined data is released a few days later, its impact is naturally diminished, given all the initial actions it set in motion. However, it sometimes differs, and can even be, more rarely, heavily corrected.

In his article, Mackintosh points to the recent British GDP update as an example. Initial reports portrayed a narrative of the UK in decline, struggling to recover and falling behind Germany, France, and Italy. However, the actual situation turned out to be different, not to the extent of being a robust growth period in the UK, but enough to make the reality less gloomy than the initial estimates suggested. Another instance comes from the United States, specifically regarding certain employment data. Paul Donovan, the chief economist at UBS Global Wealth Management, as quoted in the WSJ article, highlights that labor market reports haven't adapted to new practices like telecommuting, and company responses have decreased significantly. Approximately 60% of companies participated in the US salary survey five years ago, but now only 42% do, which is less than half. Similarly, the job vacancy and labor turnover indicator is now based on responses from only 32% of surveyed companies. In essence, the reliability of these statistics is questionable, despite the fact that they often have a significant impact when initially published, triggering various financial, and sometimes even monetary and political, reactions.

This raises some important considerations. Now, shifting from Mackintosh to Macintosh, Apple is facing challenging times. The company's stock declined yesterday, echoing the 1.1% drop in the Nasdaq. It experienced a 1.7% decrease following its back-to-school conference, where innovations, including the iPhone 15, were unveiled. On the hardware front, there were no major surprises, except for Apple's adoption of the "USB-C" standard due to European pressure. Persistent rumors that Beijing has urged government agencies and state-owned enterprises to avoid iPhones continue to weigh on the stock. Additionally, US indexes were impacted by Oracle's unprecedented 14% decline, its first in 20 years, as the software company grappled with disappointing outlook figures.

In Europe, stock indexes showed a mix of minor gains and modest losses, with all eyes on tomorrow's European Central Bank decision. Overall, there isn't much to report from today's session, except for the notable increase in oil prices. Brent crude has climbed back above USD 92 per barrel, marking its highest level since November 2022. This surge in energy prices is unlikely to assist central banks in their ongoing efforts to combat inflation.

This morning, another mixed session in Asia Pacific, with slight gains in Japan (+0.15%), stability in South Korea and losses in Australia (-0.6%). Mainland China suffered (-1% in Shanghai), while Hong Kong held up better, but was down 0.1%. European leading indicators are losing some ground with the CAC40 at -0.83% to 7,193 points and the SMI which is losing -0.75% around 10,905 points.

Economic highlights of the day:

Today, financial markets will focus on the US consumer price index for August, scheduled for 8:30 a.m and earlier this morning on the European industrial production for July; announced at 5:00 a.m. Full agenda here.

The dollar is stable at EUR 0.9317 and GBP 0.8023. The ounce of gold is trading around 1911 USD. Oil rises, with North Sea Brent at 92.49 USD a barrel and US light crude WTI at 88.72 USD. The yield on 10-year US debt stands at 4.29%. Bitcoin trades at 26,115 USD.

In corporate news:

  • Ford gained 1.8% in pre-market trading after the automaker announced plans to double production of its F-150 hybrid pickup by 2024.
  • General Motors was up 1.1% in pre-market trading after UBS announced that it was monitoring the stock, with a "buy" recommendation.
  • Wall Street-listed Chinese automakers Li Auto, Nio and Xpeng were down 1.7% to 3.1% in pre-market trading, after the European Commission announced on Wednesday that it had opened an investigation into massive subsidies granted by China to its electric vehicle manufacturers, enabling them to undercut prices on the European market.
  • Moderna announced on Wednesday that it was cutting production of its COVID-19 vaccine, an updated version of which was approved by the US authorities this week, in order to take account of lower demand and achieve its gross margin target more quickly. The Group also announced that its mRNA-1010 flu vaccine had met its primary endpoint in a clinical trial. The share gained 2.5% in pre-market trading.
  • Spirit Airlines announced on Wednesday that it had revised its third-quarter revenue forecasts downwards to take account of higher fuel prices.
  • MGM Resorts International was down 1% in pre-market trading after the group announced on Tuesday evening that it had identified a cybersecurity problem affecting some of its systems.
  • Oracle - JP Morgan lowers its recommendation from "overweight" to "neutral".
  • Match Group - JP Morgan adds the stock to its focus list.
  • Mondelez - TD Cowen begins tracking at "outperform".
  • Beyond Meat - TD Cowen begins tracking at "Underperform".
  • Campbell Soup - TD Cowen begins tracking at "performance in line with market".

Analyst recommendations:

  • Adobe: JP Morgan maintains a neutral rating. Previously set at USD 490, the target price has been raised to USD 530.
  • Albemarle: Haitong International Research upgrades to outperform. PT remains unchanged at USD 240.
  • Apple: Goldman Sachs downgrades to hold from buy. PT reduced from USD 222 to USD 216.
  • Campbell: Deutsche Bank downgrades to hold. PT reduced from USD 48 to USD 44.
  • Citizens Financial: Zacks upgrades to neutral from underperform. PT up 36.4% to USD 30.
  • Dominion Energy: RBC Capital maintains its sector perform rating. PT reduced from USD 71 to USD 53.
  • Estee Lauder: Deutsche Bank downgrades to hold. PT up 3.3% to USD 192.
  • Etsy: Guggenheim downgrades to hold from buy. PT reduced by 36% to USD 80.
  • Intercontinental: Morningstar maintains its Buy recommendation on the stock. The target price has been slightly increased from $136 to $137.
  • Kellogg: Deutsche Bank downgrades to hold. PT down 11.3% to USD 63.
  • Keurig: Morningstar maintains its hold recommendation on the stock. The target price has been increased from USD 34 to USD 35.
  • Kimberly-Clark: Deutsche Bank downgrades to hold. PT down 4.5% to USD 127.
  • Match Group: Evercore ISI downgrades to neutral from outperform. PT down 16.7% to USD 50.
  • McCormick: Deutsche Bank downgrades to hold. PT reduced by 4.7% to USD 82.
  • Mondelez: Deutsche Bank downgrades to hold. PT reduced by 3.6% to USD 80.
  • Oracle: JP Morgan downgrades to neutral from overweight. PT down 10.7% to USD 100.
  • Palo Alto network: BTIG upgrades to buy from hold. PT up 8.1% to USD 292.
  • Pepsico: Deutsche Bank maintains its hold recommendation. PT reduced by 3.6% to USD 188.
  • Procter & Gamble: Deutsche Bank downgrades to hold. PT down 3.5% to USD 167.
  • Progressive: Zacks maintains a neutral recommendation on the stock with a target price increase from $143 to $148.
  • Raymond James: Zacks maintains a neutral recommendation and lowers the target price from USD 114 to USD 112.
  • Rtx: JP Morgan downgrades to neutral from overweight. PT reduced by 13% to USD 87.
  • Schlumberger: Griffin Securities upgrades to buy from hold. PT up 7.7% to USD 70.
  • United parcel: Daiwa Securities downgrades to hold from outperform. PT reduced by 7.7% to USD 180.