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.

Inflation continues to run hot ahead of Fed decision

12/14/2021 | 09:41am EDT
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Volatility is still high. Yesterday, indexes went backwards, sometimes quite sharply, with the Nasdaq losing 1.5%. Investors are awaiting important monetary deadlines, due between tomorrow and the end of the "stock market month" on Friday, when the last clearing of the year will take place. A day called the "four witches ".

Investors are getting nervous about the economic consequences of the Omicron variant, the Chinese real estate market or the flurry of central bank decisions this week. They are wondering how much of a response the Fed will make to inflation and labor market issues that are running amok. Businesses in the US are having big problems hiring jobless claims are the lowest they've been in half a century, small and medium-sized businesses can't fill their toughest jobs, job openings far outstrip demand, and the Kansas City Fed's index of labor market conditions is on fire.

Today, new data shows that U.S. producer prices rose more than expected in November, another sign that inflation is here to stay. The producer price index climbed 0.8% last month after gaining 0.6% in October, the Labor Department said. In the 12 months through November, the PPI soared 9.6%.

CME's FedWatch tool shows that the market sees a one-in-three chance for a rate hike announcement at the March 16 meeting, and a 57% probability at the May 22 meeting. The Fed will provide additional evidence on Wednesday. Doves are hoping that the pandemic backlash will force the Fed to soften its rhetoric, while hawks are hoping that the central bank will finally pull the trigger after letting inflation slip and the labor market boil.

On Thursday, the European Centra Bank will take over, but its speech will necessarily have less impact. However, European equity markets will remain sensitive to the transitional arrangements that will be put in place by Christine Lagarde's team to replace other transitional arrangements, which were already replacing previous transitional arrangements. In the contest of the most beautiful flight to safety, the ECB is playing in the big league. Or perhaps it is "still living on another planet", as one economist teasingly suggests.

 

Economic highlights of the day:

British employment figures, European industrial production, and US producer prices are on the agenda today.

The dollar is flat at EUR 0.8848. The ounce of gold is down to USD 1767. Oil is down to $70.39 for WTI and $73.38 for Brent. The yield on 10-year US debt eases to 1.42%. Bitcoin is just below USD 47,000.

 

On markets:

* Apple, which approached the symbolic mark of 3,000 billion dollars in market capitalization on Monday, could reach this level on Tuesday. The share is up about 1% on the Frankfurt Stock Exchange.

* The U.K. Competition and Markets Authority said Tuesday that Apple and Alphabet subsidiary Google have a stranglehold on how consumers use their phones, effectively removing a real choice in the "eco-system.

* Tesla CEO Elon Musk has sold nearly $13 billion worth of his shares in the car company since November, including $906 million on Monday, stock market advisories show. Separately, Elon Musk said Tuesday that Tesla would now allow "dogecoin," a cryptocurrency, as a payment method in a test. Tesla shares are down 2% in pre-market trading.

* KKR - The U.S. investment fund, which has made a €10.8 billion takeover bid for Telecom Italia that its target's board has yet to decide on, said Monday it has not set a deadline for viewing the Italian operator's books.

* MGM Resorts - The U.S. casino operator announced Monday the sale of its Mirage hotel and casino assets in Las Vegas to Hard Rock International Group for $1.08 billion.

* Pfizer, BioNTech - The Swiss health authority recommended Tuesday that children ages 5 to 11 be vaccinated against COVID-19 with two doses of the vaccine developed by the two companies, which can begin next month.

* The Serum Institute of India, one of the world's largest vaccine manufacturers, plans to start production of Novavax's COVID-19 vaccine for children in India in six months. The stock is up 2% in pre-market trading.

* Moderna will produce up to 100 million doses of its COVID-19 vaccine per year starting in 2024 in Australia, where the U.S. company has set up one of its largest factories outside the U.S. and Europe, Australian Prime Minister Scott Morrison announced.

* Atara Bio jumped 5.4% in pre-market trading after the company presented a study on Monday showing positive data on its experimental treatment for complications associated with the Epstein-Barr virus (EBV).

* Generation Bio - The gene therapy company's stock plunged 29% in premarket trading Tuesday after the company presented an update on its study of mice and monkeys for hemophilia A, an inherited disorder that causes blood to not clot normally.

 

Analyst recommendations:

  • Adobe: J.P. Morgan downgrades to neutral from overweight. PT up 3.3% to $680
  • Akamai: J.P. Morgan downgrades to underweight from neutral. PT up 4% to $120
  • Arena Pharma: Jefferies cut its recommendation to hold from buy. PT up 11% to $100
  • BAE: J.P. Morgan downgrades from neutral to underweight, targeting GBp 555.
  • Big Lots: Goldman Sachs downgrades to sell from neutral. PT down 2.2% to $43
  • Britvic: Barclays resumes tracking at Overweight with a target of GBP 980.
  • Cadence Design: J.P. Morgan downgrades to neutral from overweight. PT up 0.5% to $185
  • Callaway Golf: Goldman Sachs initiated coverage with a recommendation of neutral. PT set to $29
  • Capri Holdings: Goldman Sachs upgrades to buy from neutral. PT rises 38% to $86
  • eBay: UBS upgrades  to Buy from Neutral, sets $80 PT
  • Ford: Daiwa Securities cut its recommendation to underperform from neutral. PT down 7% to $19
  • General Motors: Daiwa Securities downgrades to neutral from outperform. PT up 9.9% to $65
  • ITM Power: Santander starts tracking as Buy with a GBp 830 target.
  • Meta Platforms: UBS raises PT to $425 from $416, sets Buy rating.
  • Model N: J.P. Morgan upgrades to overweight from neutral. PT up 31% to $38
  • PTC: J.P. Morgan downgrades to neutral from overweight. PT up 13% to $138
  • Qinetiq: J.P. Morgan downgrades from neutral to underweight, targeting GBP 265. 
  • Ralph Lauren: Goldman Sachs cut its recommendation on Ralph Lauren Corp. Class A to sell from buy. PT down 8.4% to $110
  • The Home Depot: Evercore ISI adjusts PT to $430 from $415, maintains Outperform rating
  • The Sherwin-Williams Company: Evercore ISI adjusts PT to $365 from $350, maintains Outperform rating
  • Walmart: Evercore ISI adjusts PT to $150 from $145, maintains In-Line rating

 


© MarketScreener.com 2021
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Stocks mentioned in the article
ChangeLast1st jan.
ADOBE INC. 1.19% 399.09 Delayed Quote.-29.62%
AKAMAI TECHNOLOGIES, INC. -0.98% 97.51 Delayed Quote.-16.69%
ALPHABET INC. -1.34% 2178.16 Delayed Quote.-24.81%
APPLE INC. 0.17% 137.59 Delayed Quote.-22.52%
ATARA BIOTHERAPEUTICS, INC. 0.00% 5.16 Delayed Quote.-67.26%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) -0.21% 0.6666 Delayed Quote.4.29%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.60% 0.71072 Delayed Quote.-3.14%
BARCLAYS PLC 0.77% 153.88 Delayed Quote.-18.33%
BIG LOTS, INC. -6.04% 27.54 Delayed Quote.-38.87%
BIONTECH SE -2.90% 163 Delayed Quote.-36.77%
BITCOIN (BTC/EUR) 2.83% 28640.1 End-of-day quote.-31.86%
BITCOIN (BTC/USD) 3.13% 30331.7 End-of-day quote.-36.46%
BRITISH POUND / EURO (GBP/EUR) -0.20% 1.18043 Delayed Quote.-0.63%
BRITISH POUND / US DOLLAR (GBP/USD) 0.68% 1.25869 Delayed Quote.-7.70%
BRITVIC PLC 1.56% 826.165 Delayed Quote.-11.58%
CADENCE DESIGN SYSTEMS, INC. 1.93% 146.6 Delayed Quote.-21.33%
CALLAWAY GOLF COMPANY 0.30% 20.16 Delayed Quote.-26.53%
CANADIAN DOLLAR / EURO (CAD/EUR) -0.69% 0.733165 Delayed Quote.5.94%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.19% 0.78142 Delayed Quote.-1.59%
CAPRI HOLDINGS LIMITED -2.27% 41.68 Delayed Quote.-35.79%
DAIWA SECURITIES GROUP INC. 1.19% 623.3 Delayed Quote.-5.04%
EBAY INC. -0.69% 44.31 Delayed Quote.-33.37%
EURO / US DOLLAR (EUR/USD) 0.88% 1.06626 Delayed Quote.-7.23%
EVERCORE INC. -0.49% 109.56 Delayed Quote.-19.35%
FORD MOTOR COMPANY -2.72% 12.5 Delayed Quote.-39.82%
GENERAL MOTORS COMPANY -1.99% 35.4 Delayed Quote.-39.62%
GENERATION BIO CO. 5.25% 5.41 Delayed Quote.-23.59%
INDIAN RUPEE / EURO (INR/EUR) -0.26% 0.012112 Delayed Quote.3.10%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.42% 0.012898 Delayed Quote.-4.36%
ITM POWER PLC 1.83% 308.7 Delayed Quote.-22.69%
KKR & CO. INC. 2.58% 51.76 Delayed Quote.-30.52%
LONDON BRENT OIL 1.01% 113.68 Delayed Quote.42.93%
META PLATFORMS, INC. 1.18% 193.54 Delayed Quote.-42.46%
MGM RESORTS INTERNATIONAL 2.14% 34.37 Delayed Quote.-23.42%
MODEL N, INC. 0.14% 21.69 Delayed Quote.-27.77%
MODERNA, INC. -4.97% 136.25 Delayed Quote.-46.35%
NASDAQ COMP. -0.30% 11354.62 Real-time Quote.-27.42%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.87% 0.64749 Delayed Quote.-6.31%
NOVAVAX, INC. -8.57% 53.42 Delayed Quote.-62.66%
PFIZER, INC. 3.59% 52.47 Delayed Quote.-11.14%
PPI INC. 0.00% 3550 End-of-day quote.-14.04%
PTC INC. 3.57% 113.42 Delayed Quote.-6.38%
RALPH LAUREN CORPORATION 1.25% 93.24 Delayed Quote.-21.55%
S&P 500 0.01% 3901.36 Real-time Quote.-18.14%
S&P GSCI CRUDE OIL INDEX 0.93% 609.7225 Real-time Quote.46.63%
TESLA, INC. -6.42% 663.9 Delayed Quote.-37.18%
THE HOME DEPOT, INC. -0.20% 287.19 Delayed Quote.-30.80%
THE SHERWIN-WILLIAMS COMPANY -0.55% 257.95 Delayed Quote.-26.75%
UBS GROUP AG 1.51% 17.485 Delayed Quote.4.90%
US DOLLAR / EURO (USD/EUR) -0.88% 0.937849 Delayed Quote.7.79%
WALMART INC. 0.11% 119.2 Delayed Quote.-17.62%
WTI 0.98% 111.245 Delayed Quote.44.84%
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