Markets seem to have a memory as short as Boris Johnson's when he has to remember his last birthday party. The week before, things were so bad on stock markets that my office neighbor, usually so quick to announce a rebound, was on the verge of a nervous breakdown. To his credit, I think I heard him say on Friday "this time, it's the rebound". I like to tease him, even if it is a bit easy: at a certain point, we all adopt postures that turn us into caricatures. Especially when markets start to rock. I had fun listing a few typical investor profiles that I have met since I started working in the profession, about 20 years ago. If you are interested in financial markets or if you are a professional in the sector, I am pretty sure that you are able to put names to some or all of the following profiles. Maybe even your own name?

The frustrated voice of doom: He's been saying for 30 years that everything is going to fall apart, even though markets have been his bread and butter for years. He wins small victories at every stock market crash, but he has always lost the war since stock markets still exist.

The anxious one: He has a good nose for things, but always hesitates to change his strategy, for fear of making a mistake. And when he does, it is already too late and he is usually upside down in the market.

The stoic comedian: Others don't understand how he can be so calm, while markets are collapsing even though he reminds them that it's because he's seen it all before, the experience… All that. In reality, he is terribly distressed, but he manages to hide it all.

The hindsight is 20/20: He is able to explain in great detail why markets fell apart and what should have been done about it. But always after they have fallen, which makes him much less useful to the community.

The slavish statistician: At each jolt, he can cite a precedent and its consequences. Like "the decline will continue because in 1976, the market lost 17% when the full moon fell on the second Thursday of the month, like this year". Often wrong, but with figures, which is much more elegant.

The unabashed mythomaniac: He usually explains that he sold at the top and by some kind of cosmic rebalancing, he also bought back at the bottom. Unless it's just talent. Or it never happened.

Getting back to a more serious topic, the powerful buying streak that got U.S. tech stocks back on track last Friday continued on Monday and yesterday and are heading in the same direction today. To be perfectly accurate, technology continued to climb, but it was other sectors that took the lead, notably energy and commodities. The quality of the quarterly results seems to have clearly regained the ascendancy over risk aversion of investors, who should still benefit this morning from the traction effect of AMD's very good figures and Alphabet's indecent profits. The exception that proves the rule is PayPal, with a plunge in sight at the opening of Wall Street against the backdrop of forecasts that are far below expectations, still weighed down by increased competition and eBay's decision to sideline the company.

On the eve of the ECB and BoE's dual monetary policy decisions, which investors seem to care about for the time being, it's best to continue scrutinizing company results to take the pulse of the market. And in this respect, there is a lot of activity with Meta, Alibaba, AbbVie, Novo Nordisk, Qualcomm, Novartis, Sony, Banco Santander, Vodafone or Orsted today, to name but a few.

 

Economic highlights of the day:

A bit of calm before the double meeting of central banks tomorrow, but two important statistics anyway. European inflation for January and the ADP survey on US employment. Private payrolls fell by 301,000 jobs last month. Data for December was revised lower to show 776,000 jobs added instead of the initially reported 807,000. A Reuters consensus had forecast an increase of 207,000 jobs.

The dollar/euro pair is trading at EUR 0.8838. The gold ounce is stagnating at just above USD 1800. Oil is up with WTI at USD 89.45 and Brent at USD 90.18. US debt yields are up slightly to 1.79% over 10 years. Bitcoin is losing 1% to USD 38,500.

 

On markets:

* Alphabet - Google's parent company reported record and better-than-expected quarterly revenue Tuesday as online advertising and cloud business benefited from a surge in online commerce during the holiday season. The stock is up 10.7% in pre-market trading.

* Advanced Micro Devices - The semiconductor maker issued a better-than-expected sales forecast for this year on Tuesday night.

* General Motors - The automaker announced plans to invest more than the $35 billion initially planned by 2025 to accelerate the launch of new electric vehicles. In addition, Cruise, its autonomous vehicle subsidiary, has raised $1.35 billion from SoftBank's Vision Fund . GM stock is up 1.5% in pre-market trading.

* Ford Motor - The U.S. automaker's stock gained 1.2% in premarket trading in response to a Bloomberg report that it plans to invest up to $20 billion in electric vehicles within five to 10 years.

* AbbVie expects full-year adjusted earnings above market expectations on strong quarterly sales of Botox and its new psoriasis treatment, Skyrizi.

* PayPal said Tuesday night it expects to report lower-than-expected revenue and profit for the current quarter due in part to a $600 million shortfall in the first half related to its breakup with Ebay.

* Electronic Arts - The video game publisher on Tuesday issued a lower-than-expected adjusted revenue forecast for the full year amid easing health restrictions that don't favor entertainment. The stock fell 5.7% in after-hours trading.

* Starbucks - The coffee chain, which reported lower-than-expected fourth-quarter profit and like-for-like sales, announced plans to raise rates this year and cut some expenses to offset higher costs. The stock was down slightly after the close on Wall Street.

* Match Group - The owner of the dating site Tinder on Tuesday lowered its full-year revenue growth forecast due to the spread of the Omicron variant of the coronavirus in several regions, including Asia. The stock is down 3% in pre-market trading.

* Ferrari said it expects operating profit to rise this year after posting strong financial results in 2021 with record deliveries of 11,155 vehicles.

* Gilead Sciences - British drugmaker GlaxoSmithKline said Tuesday it will receive $1.25 billion from Gilead to settle a dispute between the two groups over an AIDS treatment. Gilead also reported a lower-than-expected quarterly profit. The stock is down 3.7% in after-hours trading.

 

Analyst recommendations:

  • Advanced Micro Devices: JP Morgan remains neutral.  The target price has been raised to USD 140 from USD 135.
  • Ally Financial: Morgan Stanley adjusts PT to $73 from $75, reiterates Overweight rating
  • Alphabet A: RBC keeps Buy rating on the stock. The target price is set at 3500 versus 3400 USD.
  • Amdocs: J.P. Morgan downgrades to neutral from overweight. PT up 17% to $90
  • Beyond Meat: BMO Capital Markets initiated coverage with a recommendation of market perform. PT up 1.7% to $68.
  • Colgate-Palmolive: Bernstein upgrades Colgate-Palmolive to market perform. PT up 1.3% to $83
  • Entegris: Mizuho Securities raised the recommendation to buy from neutral. PT up 23% to $158
  • Exxon Mobil: JP Morgan keeps Buy rating. The target price has been lifted and is now set at USD 87 compared to USD 83 before.
  • Ferguson: Jefferies keeps Buy rating and raises PT from GBp 15,212 to GBp 15,708.
  • Kimberly-Clark: Bernstein cut its recommendation to underperform. PT down 8.2% to $126
  • Ocado: Credit Suisse upgrades from Underperform to Outperform with a target of GBp 1750.
  • Sage: AlphaValue remains to accumulate with a price target reduced from GBp 787 to GBp 784.
  • Southwest Airlines: Susquehanna adjusts PT to $45 From $50, maintains Neutral rating
  • The Clorox Company: Bernstein downgrades to underperform. PT down 8.1% to $155.
  • Webster Financial: Piper Sandler upgrades to overweight from neutral. PT up 20% to $72