Romain Fournier

Chief Editor
Having worked in the British, French and Swiss financial press, Romain is able to report on local and international issues, as comfortable in French as in the language of Shakespeare, Romain Fournier leads the editorial team at Marketscreener. Fine connoisseur of the English-speaking markets, Romain delivers an editorial every day on US and UK markets.

Elon challenges disrupts traditional finance

11/08/2021 | 10:32am EDT
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US equity markets are still flying from record to record, thanks to a very strong earnings season, and other factors, including central banks postponing any aggressive rate hike, and solid statistics in the US.

The week started with the US Congress voting in favor of Joe Biden's infrastructure plan. A success for the American president. Inflation remains at the center of the game as the end-of-year holidays approach, with major statistics expected this week in the United States, in particular the evolution of consumer prices in October which will be known on Wednesday. Meanwhile, the Chinese Communist Party, is meeting its central committee for four days starting today. The opportunity to learn more about the future of the doctrine of "common prosperity" dear to Xi Jinping, which has mostly shown its repressive face so far.

For a long time, making an investment decision on stock markets was the prerogative of a minority of knowledgeable or pseudo knowledgeable people. Modern tools have largely democratized the process by giving individuals the ability to interact directly with markets, for example by offering competitive brokerage solutions or improved access to information. For the most part, these self-directed investors were replicating rather traditional techniques or strategies, on the grounds that what has worked before should continue to pay off in the future, despite the adage that past performance is no guide to future performance.

But something has changed. New practices are disrupting the established order. The financial industry is not impervious to innovation, but it has a harder time with external innovations that shake up the way it works, such as crypto-currencies. Or the power of communities capable of realizing self-fulfilling prophecies, like those that brought GameStop or AMC Entertainment to prominence earlier this year.

Elon Musk is probably part of this budding stock market pop-culture. Whether you like the Tesla boss or not, it is impossible to deny his ability to break the codes. This weekend, he once again occupied the media space by launching a poll on Twitter: "Lately, there is a lot of talk about unrealized capital gains as a way to avoid taxes. So I propose to sell 10% of my Tesla shares". The final result after 3.5 million votes in less than two days and 57.9% in favor of the sale. Musk committed to respect the results of the consultation at 20.8 billion dollars. He owns 170.5 million Tesla shares (about 17.2% of the capital), which would be equivalent to selling 17.05 million shares currently quoted at USD 1222.

This use of social networks shows the weight of media coverage and influencers in investment. Given the habits of the younger generation, this trend is not likely to slow down. It is forcing the financial industry to reinvent itself and embrace new practices. Which it is currently doing rather poorly or with a comical delay. But it would be foolish not to take this into account.

 

Economic highlights of the day:

There will be no major indicators today. However, many U.S. central bankers, including the first of them Jerome Powell, will be speaking. Yesterday, China reported stronger than expected exports in October (+27.1% vs. consensus 22.8%) but lower than expected imports (+20.6% vs. consensus 26.2%).

The dollar is trading at EUR 0.8636. The ounce of gold gained a few cents to USD 1821. Oil rebounds to USD 83.22 per barrel for Brent and USD 81.70 for WTI. On the sovereign debt market, it is the relaxation: the US 10-year falls to 1.46% while the Bund shows -0.28%. Bitcoin is up 4.3% to USD 65,680

 

On markets:

* A majority of people following Elon Musk on Twitter voted on Sunday in favor of the sale of 10% of the Tesla boss's shares in the U.S. carmaker. The founder of the group, by launching this consultation, had assured that he would comply with the result. The Tesla share lost 5.4% and the stock listed in Frankfurt has dropped to almost 9%.

* The Boeing Company - Current and former Boeing board members accused of failing to meet their obligations on the safety of the 737 MAX have reached an agreement with the aircraft manufacturer's shareholders to receive a compensation of $237.5 million.

* Many international travelers flocked to the U.S. by air and road Monday after the country lifted most border restrictions imposed in early 2020 as part of the fight against the COVID-19 pandemic.

* Coty on Monday raised its organic growth forecast for the current fiscal year on the back of a recovery in air traffic, which should boost its duty-free cosmetics sales. The group also announced its intention to sell a 4.7% stake in Wella to KKR for approximately $215.7 million. Coty's shares are up 7.6% in pre-market trading.

* Berkshire Hathaway reported a lower-than-expected quarterly profit on Saturday as disruptions to global supply chains and costs related to Hurricane Ida in the U.S. and flooding in Europe hurt its insurance business.

* Australia begins administering the booster dose of Pfizer's COVID-19 vaccine on Monday.

* Amazon - Rivian Automotive, in which the e-commerce giant is a shareholder, on Friday raised the indicative price range for its IPO, which now values it at around $65 billion and could make it one of the largest IPOs in the past decade.

* AC Immune - Andrea Pfeifer, the chief executive of the Swiss Alzheimer's drugmaker, told Germany's Wirtschaftswoche magazine on Sunday that she expects the number of people suffering from the disease to nearly triple to 150 million by 2050.

* ConocoPhillips on Monday presented a 12.5 billion Norwegian kroner development project for the Tommeliten A gas and condensate field in Norway, whose reserves are estimated at 125 million barrels of oil equivalent.

 

Analyst recommendations:

  • AirBnB: Piper Sandler adjusts price target to $215 from $175, reiterates overweight rating
  • American Water Works Company: DA Davidson downgrades American Water Works to Neutral from Buy/Add, price target is $178
  • AvalonBay: Morgan Stanley raised its recommendation to overweight from equal-weight. PT up 11% to $265
  • Clarkson: J.P. Morgan downgrades to neutral from overweight. PT up 6.1% to 4,302 pence
  • Continental Resources: Citi resumed coverage with a recommendation of buy. PT up 17% to $54
  • Fair Isaac: Jefferies upgrades to buy from hold. PT up 37% to $522
  • First Industrial Realty: SMBC Nikko raised the recommendation to neutral from underperform. PT up 5.4% to $63
  • Formula One Group: Pivotal Research lifts price target to $75 from $60, buy rating kept
  • GitLab: KeyBanc starts GitLab at Overweight with $144 price target
  • Hill-Rom: Stifel downgrades to Hold from Buy, adjusts price target to $156 from $155
  • IHS: Cowen starts IHS at Outperform with $27 price target
  • International Consolidated Airlines: Bernstein upgraded from Outperform to Market Perform with a target of GBP 180. 
  • Pioneer Natural Resources: Citi resumed coverage with a recommendation of buy. PT set to $216
  • Tesla: Northeast Securities raised its recommendation to buy from add. PT up 13% to $1,380
  • Uber Technologies: Stifel adjusts price target to $55 from $58, reiterates buy rating
  • Wizz Air: HSBC downgrades to 3,900 pence from 4,100 pence. Maintains reduce rating.

ę MarketScreener.com 2021
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Stocks mentioned in the article
ChangeLast1st jan.
AC IMMUNE SA 3.68% 3.1 Delayed Quote.-37.37%
AIRBNB, INC. 2.67% 117.5 Delayed Quote.-29.43%
AMAZON.COM, INC. 4.11% 2307.37 Delayed Quote.-30.80%
AMERICAN WATER WORKS COMPANY, INC. 0.30% 146.41 Delayed Quote.-22.48%
AVALONBAY COMMUNITIES, INC. 1.46% 207.84 Delayed Quote.-17.72%
BERKSHIRE HATHAWAY INC. 1.60% 471670 Delayed Quote.4.66%
CLARKSON PLC 0.00% 3280 Delayed Quote.-15.46%
CONOCOPHILLIPS 1.44% 107.02 Delayed Quote.48.27%
CONTINENTAL RESOURCES, INC. 3.03% 61.27 Delayed Quote.36.89%
COTY INC. 5.11% 6.58 Delayed Quote.-37.33%
FAIR ISAAC CORPORATION 4.17% 379.6 Delayed Quote.-12.47%
FIRST INDUSTRIAL REALTY TRUST, INC. 0.02% 53.29 Delayed Quote.-19.52%
FORMULA ONE GROUP 1.99% 61.42 Delayed Quote.-2.88%
GITLAB INC. 0.88% 40.21 Delayed Quote.-53.78%
INTERNATIONAL CONSOLIDATED AIRLINES GROUP, S.A. -0.47% 123.96 Delayed Quote.-12.75%
PFIZER, INC. 1.32% 51.34 Delayed Quote.-13.06%
PIONEER NATURAL RESOURCES COMPANY 2.88% 276.53 Delayed Quote.52.04%
S&P 500 2.02% 4088.85 Real-time Quote.-15.91%
TESLA, INC. 5.14% 761.61 Delayed Quote.-27.93%
THE BOEING COMPANY 6.45% 132.05 Delayed Quote.-38.38%
UBER TECHNOLOGIES, INC. 2.59% 24.2 Delayed Quote.-42.28%
WIZZ AIR HOLDINGS PLC -0.36% 3073 Delayed Quote.-26.17%
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