Last week was a fine one for equities, with gains of between 2% and 3% for many indices, including the S&P500 the Stoxx Europe 600. Investors are playing the tried-and-tested game of buying equities in the period between the peak and the first rate cut by the US central bank. In doing so, they more or less consciously assume the risk of being wrong about the date of the rate peak, and also being wrong about the imminence of the first rate cut. Most of the doubts about the rate peak have been dispelled by the latest inflation data and comments from central bankers. The date of the first rate cut is more uncertain, because the central bank keeps warning that rates will remain high for a long time, and also because investors are pretty sure that the Fed is bluffing and that there will be a first cut as early as spring.
The bullish camp has clearly pulverized the skeptical one, and November is well on its way to ending three consecutive months of declining stock market indices. Special mentions go to the Nasdaq 100, up 9.9% since the start of the month, and Japan's Nikkei 225, which gained a good 9% and beat its 33-year peak of last June during this morning's trading session.
In other news, there’s been lots of drama at OpenAI. The artificial intelligence specialist's CEO and co-founder, Sam Altman, was dismissed by his board of directors on Friday evening. Since then, frenzied rumors have been circulating about this mini-earthquake in Silicon Valley. OpenAI apparently tried to get him back under pressure from investors, then not. Then that the board would be dismissed. Finally, the news came today that Microsoft hired Altman to lead its AI research team.
Thursday is Thanksgiving and Friday is Black Friday, which traditionally marks the start of the Christmas sales in the USA. Thanksgiving is always on the 4th Thursday in November, but Black Friday goes well beyond its original date, with discounts appearing as early as the beginning of November. On Wall Street, this translates into a Thursday holiday and a Friday that is generally not very active.
Argentina elected a new president: Javier Milei won in the second round of voting against Economy Minister Sergio Massa. Milei describes himself as anarcho-capitalist and some commentators said that he’s “Trump on steroids”.
After oil fell sharply on Thursday, amid fears of oversupply as the global economy slows, it rebounded on Friday after a few cleverly orchestrated leaks suggesting that OPEC might step up its production cuts. The cartel meets on November 26 in Vienna, at the organization's headquarters. Brent crude oil returned to above USD 82 a barrel, after hitting a July low of around USD 77.50 on Friday.
Several media outlets reported that Israel, the United States and Hamas had reached a provisional agreement to free dozens of hostages in Gaza in exchange for a five-day pause in the fighting, but no confirmation has yet been given.
On Tuesday, the Fed will publish the minutes of its latest meeting. The market will also be interested in October's durable goods orders on Wednesday and the leading PMI indicators for the major economies on Thursday, with the exception of the United States, where the publication will take place on Friday, due to the Thanksgiving holiday. In Europe, ECB President Christine Lagarde is scheduled to speak on Tuesday and Friday. On the corporate front, Nvidia's results on Tuesday evening are the most eagerly awaited. The group truly embodies the rise of artificial intelligence, with market expectations very high.
Wall Street futures were slightly in the green in premarket trading. Looking ahead in the week, investors will also be closely watching the release of the minutes of the Fed's most recent policy session at 2 pm ET on Tuesday, searching for clues about monetary policy.
Today's economic highlights:
No important economic data is published today. The dollar is slightly down to EUR 0.9149 and GBP 0.8017. An ounce of gold trades at USD 1968. Oil recovers, with North Sea Brent at USD 82.30 a barrel and US light crude WTI at USD 77.80. The yield on 10-year US debt reached 4.45%. Bitcoin is trading at around USD 37,100.
In corporate news:
- Microsoft advanced 2.5% in pre-market trading after announcing the arrival of former OpenAI director Sam Altman and company co-founder Greg Brockman to head a new artificial intelligence (AI) research team.
- Meta Platforms has split its Responsible AI team, which worked on understanding and preventing harm associated with the artificial intelligence technology it develops, The Information reported on Saturday.
- Blackstone is the favorite to win the $17 billion portfolio of commercial real estate loans resulting from the sale of Signature Bank debt by the Federal Deposit Insurance Corp, Bloomberg reported on Sunday.
- Bristol-Myers Squibb lost 4% in pre-market trading in the wake of Bayer's collapse on Sunday, when it announced the abandonment of a major clinical trial on a new anticoagulant treatment, asundexian, due to lack of efficacy.
- Medtronic - The U.S. Food and Drug Administration (FDA) on Friday approved the use of the group's treatment device in renal denervation surgery for patients whose hypertension cannot be controlled by medication, the company said.
- Merck - The FDA said Friday that it lacked sufficient evidence to demonstrate the clinical benefit for patients of one of the group's chronic cough drugs.
- Mastercard - China's central bank said on Sunday that it had granted a clearing license to a joint venture set up by the group. The joint venture, established in China by MasterCard and NetsUnion Clearing Corporation, can authorize its member institutions to issue MasterCard-branded yuan bank cards in China, the People's Bank of China said.
- General Motors - Kyle Vogt, general manager of GM's Cruise autonomous car division, has resigned from the company, according to an e-mail sent to employees and accessed by Reuters on Sunday. A spokesman confirmed the resignation.
- Airbnb, Inc.: Baptista Research downgrades to hold from underperform with a target price of USD 143.60.
- Applied Materials, Inc.: DZ Bank AG Research downgrades to hold from buy with a price target reduced from USD 165 to USD 145.
- Ashtead Group Plc: Peel Hunt maintains its add recommendation and reduces the target price from GBX 6000 to GBX 5000.
- Astrazeneca Plc: Carnegie Group maintains its buy recommendation and reduces the target price from 1590 to SEK 1550.
- Burberry Group Plc: Citigroup remains neutral recommendation with a price target reduced from GBP 20 to GBP 16.90.
- Caterpillar Inc.: HSBC initiates a Hold recommendation with a target price of USD 250.
- Coca-Cola Hellenic: Redburn Atlantic maintains a neutral recommendation with a price target reduced from GBX 2528 to GBX 2278.
- Compass Group Plc: Morningstar downgrades to hold from buy with a target price of USD 27.80.
- Costco Wholesale Corporation: Loop Capital Markets maintains its buy recommendation and raises the target price from USD 630 to USD 660.
- Crowdstrike Holdings, Inc.: Morgan Stanley maintains its market weight recommendation and raises the target price from USD 175 to USD 187.
- Cvs Health Corporation: Baptista Research upgrades to outperform from buy with a price target reduced from USD 91.90 to USD 82.90.
- Enphase Energy, Inc.: Morgan Stanley maintains its market weight recommendation and reduces the target price from USD 135 to USD 94.
- Glencore Plc: Morgan Stanley downgrades to equal weight from overweight with a target price of ZAR 11900.
- Mondelez International, Inc.: Baptista Research maintains its hold recommendation with a price target reduced from USD 81.10 to USD 74.30.
- Morgan Stanley: BNP Paribas Exane downgrades to neutral from outperform with a price target reduced from USD 110 to USD 85.
- Msci, Inc.: Baptista Research maintains its hold recommendation with a price target raised from USD 545.10 to USD 561.30.
- Netflix, Inc.: Guotai Junan Securities Co., Ltd. initiates an overweight recommendation with a target price of USD 544.
- Nutrien Ltd.: HSBC maintains its hold recommendation with a price target reduced from USD 72 to USD 63.
- Paycom Software, Inc.: Baptista Research upgrades to outperform from buy with a price target reduced from USD 391.10 to USD 210.
- Qualcomm, Inc.: Baptista Research downgrades to hold from buy with a price target raised from USD 140.50 to USD 148.50.
- Sage Group Plc: Societe Generale maintains its sell recommendation with a price target raised from GBX 811 to GBX 914.
- Sirius Xm Holdings Inc.: Baptista Research downgrades to underperform from outperform with a price target raised from USD 5 to USD 5.40.
- The Home Depot, Inc.: Daiwa Securities maintains a neutral recommendation with a price target reduced from USD 328 to USD 313.
- Transunion: Redburn Atlantic maintains its buy recommendation and raises the target price from USD 53 to USD 70.
- Unitedhealth Group Inc.: Jefferies maintains its hold recommendation with a price target reduced from USD 565 to USD 503.
- Walmart Inc.: CTBC Securities Investment Service Co LTD downgrades to neutral from add with a price target reduced from USD 173 to USD 160.
- Zebra Technologies Corporation: Baptista Research upgrades to outperform from hold with a price target reduced from USD 298 to USD 251.