Apart from the decorum that surrounds him, is a central banker so different from an influencer? For the stock market world, not really. Of course, Jerome Powell's tweets are not as fun as Elon Musk's, but each of his public outings is followed with devotion by the financial community, which wants to know if it must follow Warren Buffett's strategy or take a risky bet on an unknown tech start-up.

Let's start with yesterday's session. U.S. stocks rebounded strongly after a series of depressing sessions, led by the more cyclical segments of the market. Only oil stocks lagged, with the brief return of WTI light crude oil to below the symbolic USD 80 per barrel, the first time this has happened since January. The Nasdaq 100 recovered more than 2% with only 5 declines for 95 increases recorded.

It was Lael Brainard, the Fed's vice-chairwoman, who helped cement Wall Street's rebound. In a speech yesterday, she provided a benevolent touch by warning the central bank against the risks of excessive monetary tightening. In recent weeks, Fed members had instead suggested that they should hit inflation as hard as possible and then think again. That said, Brainard is in her role: she is one of the personalities sitting at the central bank who is considered the most flexible (the so-called "doves", as opposed to the more orthodox "hawks") with regard to monetary policy. She is therefore expected to act as a counterweight in times of monetary tightening.

Today, the European Central Bank is scheduled to deliver its monetary verdict at 8:15 am ET. There will be a small overlap since Christine Lagarde will probably still be speaking at the same time as her Fed counterpart, Jerome Powell, takes the microphone for a conference in the US at 9:10 am ET. Will he be in tune with Lael Brainard or will he be more hawkish? As for the ECB, it should proceed with a vigorous tightening to try to regain control of inflation. The forecast is for a three-quarter point increase in the main refinancing rate, from 0.50 to 1.25%, which would be an unprecedented move. To be precise, the forecasts are between 0.50 and 0.75 points higher, with a slight bias towards 0.75.

 

Economic highlights of the day:

Weekly jobless claims (8:30 am) and Jerome Powell's speech are today's main indicators. All the macro agenda here. This morning, Japan announced that its Q2 GDP is finally a bit more dynamic than expected.

The dollar is on par with the euro. The ounce of gold is up to USD 1719. Oil is trying to stabilize, with North Sea Brent at USD 87.50 a barrel and US WTI light crude at USD 81.52. The yield on 10-year US debt has fallen back to 3.23%. Bitcoin is trading around USD 19,200.

 

Corporate news:

*Apple unveils a new iPhone and an extreme sports watch. The terminals will allow emergency messages via an agreement with satellite operator GlobalStar.

*Cineworld files for bankruptcy protection in the U.S. with $1.9 billion in liabilities.

*Mitsui and Shell explore the feasibility of carbon capture in Asia-Pacific.

*Stora Enso buys Dutch packaging company.

*Thoma Bravo will not bid for Darktrace.

*Skanska wins $422 million contract for Portland International Airport expansion project in the U.S.

*Tod's sales are up 17% in the first half of 2022.

*Ypsomed partners with Berlin-based therapy app developer Sidekick.

 

Analyst recommendations:

  • Allegiant Travel: Raymond James upgrades to outperform from market perform. PT up 55% to $150.
  • Asos: Jefferies downgrades from buy to hold targeting GBp 775.
  • Aveva: HSBC downgrades from buy to hold targeting GBp 3090.
  • GSK: Jefferies downgrades from buy to hold targeting GBp1475.
  • Intel: Stifel initiates coverage with Hold rating, $32 Price Target
  • ITV: Morgan Stanley downgrades from Overweight to Underweight, targeting GBp 55.
  • Nvidia: Stifel initiates coverage with Hold Rating, $165 Price Target
  • Ocado: Barclays upgrades from Underweight to Overweight in line with GBp 775 target.
  • Pioneer Natural: Peters & Co Ltd downgrades to sector perform from sector outperform. PT jumps 8.7% to $255.
  • Roku: Pivotal Research Group upgrades to hold from sell. PT down 8.5% to $60.
  • Spirit Aero: Morgan Stanley downgrades to underweight from overweight. PT up 18% to $35.
  • Williams Companies: Goldman Sachs downgrades to sell from neutral. PT down 9.9% to $30.