In addition, the President of the St. Louis Federal Reserve, James Bullard, told CNBC that he believes a 100-basis point rate hike was needed by June to reach the Fed's 2% inflation target.

On the geopolitical front, Russian Foreign Minister Sergei Lavrov said that his country is willing to continue along the diplomatic path to avoid war. But concerns, of course, remain. Volatility, symbolized by the VIX index is soaring. While geopolitics and the macroeconomy are worrying, earnings reports tend to reassure investors, at least for the time being, since we know that the global turmoil will eventually catch up with the real economy. In concrete terms, the results of the 72% of US companies in the S&P500 index that have released their figures look like this:

First, the number of companies exceeding earnings-per-share estimates is above the five-year average, but the proportion exceeding is in line with the five-year average. Simply put, results are good (i.e. they are as usual higher than the analysts' always too cautious forecasts) but there are not exuberant, like we saw in the previous quarters.

More interestingly, the valuation multiple of stocks by earnings, the famous PER, stands at 19.8 times the expected results in one year. This is still higher than the 5-year (18.6) and 10-year (16.7) averages, but it represents a substantial reduction from the 21.3 times level posted at the end of 2021. Lower stock prices and somewhat higher earnings expectations explain this reduction in multiples.

 

Economic highlights of the day:

Today on the agenda, we have the December industrial production in Europe, James Bullard's speech and another speech from ECB head Christine Lagarde.  The Fed has planned a "Closed Board Meeting" this morning, which raises some questions and speculation.

The dollar/euro pair is trading at EUR 0.8847, while the ounce of gold is rising to USD 1866. Oil rallied sharply over the weekend, with Brent crude at USD 94.0 and WTI close to USD 92.96. US debt yields fell to 1.95% over the weekend, after rising to over 2% on the 10-year. Bitcoin is up to USD 42580.

 

On markets:

* Tesla - The U.S. automaker sold 59,845 electric vehicles produced at its Shanghai plant in January, the China Passenger Car Association (CPCA), the industry's Chinese federation, announced Monday.

* Cisco Systems - The network equipment specialist is offering more than $20 billion to acquire software company Splunk, the Wall Street Journal reported Friday, citing sources close to the matter.

* Global chip sales in 2021 hit a record $555.9 billion, up 26.2% year-over-year, the Semiconductor Industry Association (SIA), an industry federation, announced Monday, forecasting another 8.8% increase this year.

* Australian casino operator Crown Resorts said Monday it has accepted Blackstone's new $6.3 billion takeover offer, which is 10.5 percent higher than the U.S. private equity firm's first proposal.

* Lockheed Martin announced on Sunday that it was abandoning its plan to buy Aerojet Rocketdyne Holdings for $4.4 billion due to opposition from antitrust authorities.

*Apple has decided to raise employee pay at its U.S. Apple stores by 2 percent to 10 percent, Bloomberg reported Friday night.

* The Boeing Company - The U.S. aircraft maker said Monday it wasn't worried about a possible disruption in supplies of titanium, a metal widely used in aircraft manufacturing, because of tensions over Ukraine but said it was closely monitoring other things that could cause problems.

* Pfizer - China on Saturday gave the green light for the use of Paxlovid, the oral treatment for COVID-19 developed by Pfizer.

* Apollo Global Management will invest $1.4 billion in Abu Dhabi, United Arab Emirates-based property developer Aldar Properties, the two groups announced Monday.

 

Analyst recommendations:

  • Aveva: Morgan Stanley upgrades from Overweight to Overweight with a target of GBp 3250.
  • Barclays: KWB upgrades from Outperform to Market Perform targeting GBp 215 .
  • Comerica: Jefferies upgrades to buy from hold. PT up 16% to $114.
  • DZS: B Riley Securities upgrades price target to $25 from $22. Maintains buy rating.
  • Goodyear: J.P. Morgan upgrades to overweight from neutral. PT rises 46% to $23.
  • JPMorgan: Jefferies downgrades to hold from buy. PT up 0.7% to $155.
  • Prudential Plc: Goldman Sachs starts tracking as Buy, targeting GBp 1761.
  • Triumph Group: Jefferies upgrades to buy from hold. PT up 24% to $26.
  • Tyson: Barclays downgrades to equal-weight from overweight. PT up 2.1% to $100.
  • Under Armour: Telsey Advisory Group lowers PT to $25 from $28. Maintains outperform rating.
  • US Bancorp: Jefferies downgrades to hold from buy. PT up 9.3% to $64.
  • Watsco: KeyBanc Capital Markets upgrades to overweight from sector weight. PT up 22% to $320.