Joe Biden is working on his relations in the Asia-Pacific area with a two-day visit to Japan, where he will lay the foundations for an economic agreement with the archipelago, Australia and India.
"We did not impose these tariff barriers," he said in Tokyo, adding that their lifting was "under consideration." US tariffs on $350 billion of imports from China will automatically expire on July 6, and the Biden administration is under pressure to remove them amid record inflation in the US, as small businesses often have no alternative sources of supply and bear the brunt of the tariffs.
In addition, in the context of shortages caused by the war in Ukraine, lowering trade barriers would certainly help the situation.
The beginning of the year is still difficult for investors. The context that has dominated the last few weeks is still present, except perhaps that stocks have returned to less exuberant valuation levels more in line with their long-term trend: about 20 times earnings for US technology stocks. Some see this as a buy signal in the market's great quest for the bottom. Keep in mind that this is an average, which implies that it synthesizes stronger periods (we are coming out of it) and weaker periods. ING's strategy team is explaining this morning that while this is an important step on the way to the floor, it does not guarantee that we are there yet. At the same time, they are navigating the same pea soup as we are, so you are free to disbelieve them.
Roughly speaking, there are two main paths in the minds of investors right now, although there are dozens of paths. Either the major economies avoid a recession and see inflation subside, in which case the market looks cheap. Or the economy goes off the rails and hard times are ahead, so stocks are still valued too optimistically. Since investors have forgotten the great cyclical pains of the past few years - the youngest ones never even experienced them - pessimism is the current dominant mood. In fact, there is also a third way, which consists of positioning oneself on the good stocks that have returned to more reasonable valuation levels. But at this stage, it still requires a good dose of coolness and an acute awareness of the short-term risk involved.
Among other financial highlights at the beginning of the week, the news that semiconductor specialist Broadcom is ready to buy software publisher VMWare for a rumored $50 billion. The macroeconomic agenda is also packed this week: May PMI activity indicators (Tuesday), US durable goods orders and Fed minutes (Wednesday), a new estimate of Q1 GDP (Thursday) and PCE inflation (Friday).
Economic highlights of the day:
The Chicago Fed activity index is today's main indicator.
The dollar is down to EUR 0.9378. The ounce of gold is trading slightly higher at USD 1855. Oil is still firm, with North Sea Brent at USD 112.65 per barrel and US WTI light crude at USD 110.19. The yield on 10-year U.S. debt stands at 2.82%. Bitcoin is trading around USD 30,100.
* Semiconductor maker Broadcom is in talks to buy software maker VMware, sources close to the matter told Reuters. In pre-market trading, VMware gained 21.2% while Broadcom gave up 5.2%.
* Apple has told some of its suppliers it wants to increase production outside China, the Wall Street Journal reported Saturday, citing sources close to the matter.
* JPMorgan Chase & Co gained 1.6 percent in premarket trading after updating its financial guidance at an investor presentation day. The banking group confirmed it is targeting a 17% return on tangible equity (ROTCE), a goal that could be achieved as early as this year, and raised its 2022 net interest income (excluding markets) forecast to $56 billion.
* Bank of America announced Monday that it will raise the minimum hourly wage for its employees to $22, continuing a move that began in 2017, when it was set at $17, and is set to rise to $25 by 2025.
* Pfizer and BioNTech on Monday released clinical trial results for their Covid-19 vaccine for children under five showing that it generates a strong immune response and is safe and well tolerated. In addition, SVB Securities begins tracking Pfizer at "in-line performance."
* Advanced Micro Devices gains 0.3% in pre-market trading after the presentation of the next generation of its flagship Ryzen processor.
- AbbVie: SVB reinstated coverage with a recommendation of underperform. PT down 7.3% to $140.
- Amgen: SVB reinstated coverage with a recommendation of market perform. PT up 3.4% to $256.
- Aston Martin Lagonda: Jefferies remains Hold with a price target reduced from GBp 2,000 to GBp 750.
- Autodesk: Deutsche Bank downgrades to hold from buy. PT up 18% to $225.
- Aviva: Jefferies maintains a Hold rating with a target reduction from GBp 460 to GBp 435.
- Caterpillar: Tigress Financial lifts caterpillar's price target to $282 from $278, buy rating kept.
- Cubesmart: Raymond James upgrades cubesmart to strong buy from outperform, adjusts price target to $52 from $60.
- Experian: Jefferies remains a Hold with a target raised from GBp 1900 to GBp 2650.
- Gilead: SVB reinstated coverage with a recommendation of market perform. PT set to $68.
- HP Inc.: Citigroup lowers hp to neutral from buy, price target to $38 from $40.
- Hunting: J.P. Morgan downgrades from Overweight to Neutral targeting GBp 310.
- LyondellBasell: Piper Sandler downgrades to neutral from overweight. PT up 6.6% to $115.
- Nike: KGI Securities cut its recommendation on Nike Inc. Class B to neutral from outperform. PT down 1.9% to $106.
- Pfizer: SVB reinstated coverage with a recommendation of market perform. PT up 4.8% to $55.
- Reckitt: Jefferies remains Underperform with a price target raised from GBp 5000 to GBp 5425.
- Walt Disney: KGI Securities initiated coverage of Walt Disney Co. with a recommendation of outperform. PT set to $145.
- WPP: Morgan Stanley downgrades from Overweight to Underweight, targeting GBp 850.