PCE inflation in the USA was just released. It relates to January and not February and centers on prices paid by American households, which is a key determinant of central bank policy.

Personal income rose 1.0 percent at a monthly rate in January, according to the Bureau of Economic Analysis. The personal consumption expenditures (PCE) increased by 0.2% to $43.9 billion, in line with expectations. The PCE price index increased 0.3 percent. Excluding food and energy, the core PCE price index gained 0.4 percent. On an annual basis, it grew by 2.8%, which was also in line with expectations.

The rise was mainly caused by spending for services that was partly offset by a $77.0 billion decrease in spending for goods. Within services, the largest contributors to the increase were housing and utilities, financial services and insurance and health care. Within goods, the leading contributors to the decrease were motor vehicles and parts, gasoline and other energy goods.

All in all, it confirms that inflation is cooling as expected to the 2% target set by the Fed. It paves the way for rate cuts this year, although they are still not expected before June. Futures on Wall Street rose after the release of the figures, with the Nasdaq 100 up 0.6%.

February is playing catch-up this year, with the 29th of the month unlikely to change the stock market picture, barring a cataclysmic event: Western equity markets are heading for a fourth consecutive month of gains - their best run since the seven months of gains seen between February and August 2021.

Yesterday's session remained quiet, with little movement on the surface, with the possible exception of a few sell-offs in technology stocks after their solid run since the end of November (+12% for the Nasdaq 100, for example). The major financial benchmarks haven't moved much in recent days: the euro/dollar pair has dozed off, rate cut expectations have calmed, gold is snoozing and oil is experiencing only modest jolts, apart perhaps from the narrowing of the spread between North Sea Brent and US light crude WTI - specialists explain that this reflects increased demand for physical deliveries. Earnings reports were mixed. Reckitt (-13%) issued a bleak outlook, and so did Snowflake.

On another topic, I’m sure you’ve all heard about the Magnificent Seven: Microsoft, Apple, Nvidia, Amazon, Alphabet, Meta and Tesla. Now, Europe’ answer to these Magnificent Seven was just unveiled. French Bank Societe Generale made a list of the Seven Wonders, which are seven European companies that accounted for more than a third of the rise in the Stoxx Europe 600 since January 2020 (the index has gained around 33% over the period). As a result, their weighting in the broad index has risen from 6.8% to 13.7%. We have giant Danish lab Novo Nordisk and Deutch semiconductor manufacturer ASML, the two stars of Northern Europe. Two luxury stocks, the French LVMH and Hermès. Two German companies: software group SAP, which has restored its reputation, and electric equipment manufacturer Siemens. Last but not least, Schneider Electric, the French group that leads the Digital Transformation of Energy Management and Automation in Homes, Buildings, Data Centers, Infrastructures and Industries. Together, they account for over 30% of the Euro Stoxx 50.

In Asia Pacific today, the Nikkei is still treading water in Japan (-0.1%), while Australia is accelerating a little (+0.5%). South Korea lost 0.3%. the Hang Seng declined 0.1%. In Europe, the Stoxx EU 600 is up 0.2% and the FTSE 100 rose 0.5%.

Today's economic highlights:

Quite a few statistics today. February inflation in France and Germany. In the US, we have new jobless claims, PCE inflation and personal income and household consumption, as well as the MNI Chicago PMI and housing resales. The full agenda is here.

The dollar is worth EUR 0.9230 and GBP 0.7907. The ounce of gold is holding steady at USD 2,041. Oil is firm, with North Sea Brent at USD 82.24 a barrel and US light crude WTI at USD 78.58. The yield on 10-year US debt stands at 4.28%. Bitcoin is trading at USD 62,900.

In corporate news:

  • Apple plans to unveil plans to use generative artificial intelligence later this year, CEO Tim Cook said at the company's annual shareholders' meeting on Wednesday.
  • HP Inc missed Wall Street estimates for its first-quarter sales on Wednesday, hit by sluggish demand in the PC market. The stock lost 4.4% in pre-market trading.
  • Paramount Global missed Wall Street estimates for its quarterly sales on Wednesday, but posted an unexpected profit, boosted by streaming-related gains. The stock gained 2.3% before the opening.
  • CRH forecasts Ebitda growth of 6% to 10% in 2024 after the largest building materials producer in the US and Europe posted 15% growth for 2023 on Thursday, beating its own forecasts.
  • Meta - South Korean President Yoon Suk Yeol met Meta CEO Mark Zuckerberg on Thursday to discuss ways of increasing cooperation with the US company in artificial intelligence (AI) and digital ecosystems, Yoon Suk Yeol's office said.
  • Boeing must develop a comprehensive plan to resolve "systemic quality control issues" within 90 days, the head of the U.S. Federal Aviation Administration said Wednesday. The U.S. Justice Department is also looking into last month's incident, in which a panel ripped off mid-air, which could expose the company to criminal prosecution, Bloomberg News reported on Wednesday. The stock loses 1% before the opening.
  • Ford - A U.S. regulator announced on Thursday that it was opening an investigation into the recall of some 44,219 vehicles due to loss of brake and power steering effectiveness.
  • Chemours has appointed an interim CEO and CFO, the group said on Wednesday, after delaying the publication of its quarterly and annual results due to doubts about the accuracy of its financial reports.
  • Salesforce was down 2.4% before the opening. The company forecasts sales for fiscal 2025 below market expectations, as it expects low customer spending on its cloud computing and professional products.
  • Snowflake forecast first-quarter product sales below Wall Street estimates, citing lower customer spending in an uncertain economy, sending its shares down 22% before the open.
  • AMC Entertainment posted a larger-than-expected quarterly loss on Wednesday due to higher distribution costs for Taylor Swift and Beyonce concert films, as well as a decline in the number of Hollywood movies. The stock lost 11% before the opening.
  • Electronic Arts - The video game manufacturer announced on Wednesday a 5% reduction in its workforce.
  • Duolingo - The language-learning platform is up 21.1% before the opening after forecasting 2024 revenues in the $790-$802 million range, against a consensus of $699.3 million.

Analyst recommendations:

  • American Express Company: Morningstar downgrades to sell from hold with a target price of USD 190.
  • American Tower Corporation: Morningstar upgrades to buy from hold with a target price of USD 215.
  • Analog Devices, Inc.: Baptista Research downgrades to hold from outperform with a price target reduced from USD 222.80 to USD 212.90.
  • Celanese Corporation: Baptista Research downgrades to hold from underperform with a price target raised from USD 145 to USD 163.
  • Cf Industries Holdings, Inc.: Piper Sandler & Co downgrades to underweight from neutral with a price target reduced from USD 87 to USD 82.
  • Formula One Group: Morningstar drops coverage and downgrades to sell from dropped coverage with a target price of USD 60.
  • Lowe's Companies, Inc.: Morningstar downgrades to sell from hold with a target price of USD 207.
  • Newmont Corporation: Jefferies upgrades to buy from hold with a price target raised from USD 34 to USD 38.
  • Nvidia Corporation: Baptista Research downgrades to hold from outperform with a price target raised from USD 550 to USD 841.50.
  • Okta, Inc.: WestPark Capital upgrades to buy from hold with a target price of USD 140.
  • Palo Alto Networks, Inc.: Baptista Research downgrades to hold from underperform with a price target raised from USD 280 to USD 331.70.
  • Snowflake Inc.: Morgan Stanley downgrades to equalwt from overwt with a price target reduced from USD 230 to USD 175.
  • The Mosaic Company: Baptista Research upgrades to buy from hold with a price target reduced from USD 39.90 to USD 39.60. Piper Sandler & Co downgrades to underweight from neutral with a price target reduced from USD 42 to USD 32.
  • Vulcan Materials Company: Baptista Research downgrades to underperform from hold with a price target raised from USD 235 to USD 267.30.
  • Salesforce.com, Inc.: ROTH MKM maintains its buy recommendation and raises the target price from USD 265 to USD 335. Raymond James maintains its strong buy recommendation and raises the target price from USD 300 to USD 380. Canaccord Genuity maintains its buy recommendation and raises the target price from USD 290 to USD 350. Truist Securities maintains its buy recommendation and raises the target price from USD 275 to USD 360. D.A. Davidson maintains a neutral recommendation with a price target raised from USD 230 to USD 300.
  • The Cooper Companies, Inc.: Stifel maintains its buy recommendation and reduces the target price from USD 420 to USD 105.
  • Walmart Inc.: Baptista Research maintains its hold recommendation with a price target reduced from USD 163.40 to USD 64.40.
  • Anglo American Plc: NOAH Capital Markets upgrades to buy from dropped coverage with a price target raised from ZAR 416 to ZAR 1249.35.
  • Aston Martin Lagonda Global Holdings Plc: Oddo BHF downgrades to neutral from outperform with a price target reduced from GBP 4 to GBP 1.80.
  • Diageo Plc: Morningstar downgrades to hold from buy with a target price of USD 157.
  • Direct Line Insurance Group Plc: Barclays upgrades to equalweight from underweight with a price target raised from GBP 1.88 to GBP 2.19.
  • Hays Plc: Redburn Atlantic drops coverage on the stock.
  • Land Securities Group Plc: AlphaValue/Baader Europe downgrades to reduce from sell with a price target reduced from GBX 587 to GBX 580.
  • Learning Technologies Group Plc: Goldman Sachs drops coverage to neutral with a target price reduced from GBX 232.40 to GBX 97.
  • Man Group: Panmure Gordon & Co. Limited upgrades to buy from hold with a target price of GBX 320.
  • Pagegroup: Redburn Atlantic drops coverage on the stock.
  • St. James's Place Plc: Redburn Atlantic downgrades to neutral from buy with a price target reduced from GBX 750 to GBX 560. Citi upgrades to buy from neutral with a price target reduced from GBP 6.53 to GBP 6.15.
  • Barrick Gold Corporation: Jefferies upgrades to buy from hold with a price target raised from USD 15 to USD 21.
  • First Quantum Minerals Ltd.: Barclays upgrades to equalweight from underweight with a price target raised from CAD 11 to CAD 13.
  • Nutrien Ltd.: Piper Sandler & Co downgrades to underweight from neutral with a price target reduced from USD 68 to USD 54.