Today on Wall Street: Investors brace for an uncertain year end

October inflation figures published yesterday in the United States were unambiguous, as they clearly blew up the counters. The result was a correction in all three U.S. indexes, most notably on the Nasdaq on the grounds that growth stocks need liquidity more than others. But liquidity could be in short supply if the U.S. central bank was to accelerate its rate hike process. This is nothing new, because it has been the same story every month since spring. But as the clock is ticking, the Fed's task looks increasingly difficult.

With the end of earnings season, equity markets will lose traction and macroeconomic disorders could once again cloud the picture. However, we should not overstate the case, as there are also exogenous drivers. For example, the rumors that have been circulating since last night about an orderly - i.e. not too messy - dismantling of the developer China Evergrande Group by Beijing. The country’s official press also reported that the country's banks increased lending to developers in October, a sign of an upturn in the local credit market, probably orchestrated by the central government.

When inflation figures were released yesterday, the classic mechanisms were set in motion: the dollar strengthened and gold took a nice vertical slope upwards. In a more recent trend, bitcoin followed almost exactly the same path, a sign that some may use it as an alternative tool to protect themselves from inflation. The only difference is that gold's rise has held up in the evening, unlike that of the cryptocurrency. But can we really lend identical characteristics to these two products in finite quantities, one physical and the other digital? This quarrel of the old and the new gives me the opportunity to introduce a superb paper by the excellent Morgan Housel, who distills his market science on the blog of his organization, the Collaborative Fund.

The paper is 8000 characters long and is about the relationships we have between generations and the influence this can have, in this case in economics and investment. Housel highlights the risk of relying on the expert opinions of a world that no longer exists, in a universe as evolving as ours. An idea that refers to the inability to accept novelty and therefore innovation. "Don't buy stocks when the P/E ratio is above 20" was a good lesson to learn from the 1970s, when interest rates were 7%, the Fed had not yet learned what it was capable of, and most companies were cyclical manufacturers as opposed to digital services. Is it relevant today? Philosophically, yes. In practical terms, probably not," he writes, urging us to adapt.

We are generally more conservative than the generation that follows us. In investment, things evolve, lines move. Morgan Housel concludes by quoting Vishal Khandelwal: "Some of us are so set in our ways that we can never get rid of the idea that anything new must be bad... “As soon as you get into the 'expert' mindset, a lot of things become impossible. So down with experts, at least those who are stuck in the past.

 

Economic highlights of the day:

There will be no major macroeconomic indicators today.

The dollar is up to EUR 0.8725 after US inflation rose. The ounce of gold has rallied in the meantime to USD 1863, while bitcoin is stabilizing at USD 64,880. Oil is trading at USD 82.20 for Brent and USD 80.60 for WTI. The yield on the 10-year T-Bond has risen to 1.55% and the Bund to -0.25%.

 

On markets:

* Tesla gained 3.6% in pre-market trading after Elon Musk sold about $5 billion worth of shares, days after launching a consultation on Twitter about a sale of some of his stock.

 

* Walt Disney reported Wednesday quarterly results that fell short of expectations as the entertainment giant posted the smallest increase in subscribers to its Disney+ online video platform in the period since it launched in 2019 to compete with Netflix. It's giving up 5% in pre-market trading.

 

* Beyond Meat is anticipating fourth-quarter sales below consensus expectations as the U.S. veggie steak specialist suffers a slowdown in demand from grocery stores and restaurants. In after-market trading Wednesday, its stock was down 19%.

 

* Didi is gaining more than 5% in pre-market trading. The Chinese ride-hailing giant is preparing to restart its apps in China by the end of the year in anticipation that Beijing's investigation into the group's cybersecurity will be over by then, three people directly involved in the matter said.

 

* Lordstown Motors gained 10 percent in after-hours trading Wednesday after announcing that Taiwan's Foxconn Group had completed a stake announced in September by acquiring $50 million worth of shares in the electric vehicle maker.

 

* Affirm, which specializes in payments, announced on Wednesday that it had strengthened its partnership with Amazon and reported better-than-expected quarterly revenue, boosted by growth in the number of customers and merchants on its "buy now, pay later" platform. The stock was up more than 27% in after-hours trading.

 

* Tapestry, the owner of bag maker Coach, raised its annual revenue and earnings forecasts on Thursday on the back of a strong recovery in demand for luxury goods despite supply chain disruptions. The group also announced a $1 billion share buyback program. The stock was up 10% in pre-market trading.

 

* Moderna has agreed to sell its COVID-19 vaccine to the African Union for $7 a dose, half the price the U.S. paid earlier this year, the head of the African Centers for Disease Control said Thursday.

 

Analyst recommendations :

• APA Corporation: MKM Partners adjusts price target on apa to $36 from $33, keeps buy rating
• Beyond Meat: Bernstein cut its recommendation to market perform. PT up 5.8% to $100
• Cairn Energy: Peel Hunt downgrades to hold from buy. PT down 4.8% to 180 pence
• GlaxoSmithKline: Goldman Sachs is keeping its Buy rating. The target price has been raised from GBp 1870 to GBp 2000.
• HSBC: Keefe, Bruyette & Woods downgrades to underperform from outperform. PT down 7.3% to 400 pence
• IPG Photonics: Bernstein cut the recommendation to market perform. PT down 4% to $160
• NCC: Canaccord Genuity upgrades to buy from hold. PT up 26% to 310 pence
• Restaurant Brands International: KeyBanc downgrades to sector weight from overweight
• Shaftesbury: J.P. Morgan upgraded from Underweight to Neutral with a target of GBp 630.
• Pfizer: Independent Research raised the recommendation to buy from hold. PT up 10% to $54
• Take-Two Interactive Software: MKM Partners adjusts price target on  to $200 from $186, keeps neutral rating
• The Home Depot: Gordon Haskett adjusts price target for  to $357 from $425, maintains buy rating
• UnitedHealth: Mizuho adjusts price target on  to $500 from $455, maintains buy rating
• ViacomCBS: Rosenblatt Securities adjusts price target to $42 from $45, maintains neutral rating
• Walt Disney: Atlantic Equities cut the recommendation to neutral from overweight. PT down 1.4% to $172