Investors are smiling, and seem to be back to the strong optimism that they had before the 2022 debacle. The fussier among you will object that the peaks of 2021 have not yet been reached, but it is clear that they are fast approaching. Wall Street is less than 5% away from the record highs of the S&P500 and Nasdaq 100.

Powell kept a hawkish stance, but a less hawkish phrase in his speech focused the attention of the market. While he warned that the time is not necessarily ripe to cut rates, but he also indicated that monetary policy is now "well settled in restrictive territory". Investors have concluded that U.S. rates could fall faster than Powell suggests, which is in line with their aspirations. The options market shows that the probability of a first rate cut as early as the March meeting is 60%. The figure rises to 86% for the May meeting. In short, investors are comforted by their blue-sky scenario: slowing inflation means rate cuts in the near future, soft economic landing and re-acceleration.

Despite this rather negative configuration for the dollar, the greenback has strengthened against the euro of late. This is because a new parameter has entered the equation. Until now, the market believed that the ECB would reverse its restrictive monetary policy later than the Fed. But given the rapid decline in inflation in Europe, corroborated by a series of positive statistics last week, the Frankfurt-based bank could also begin to loosen its grip as early as the first half of 2024. Like the Fed, it is saying the opposite for the time being, but the signals are sufficiently favorable for investors to place a few coins on this scenario. The euro therefore adjusted downwards to reflect the acceleration of this monetary easing timetable.

In other news, gold just hit an all-time high of around US$2,135 an ounce. The precious metal is benefiting from the prospect of falling interest rates. Bitcoin broke back through the USD 40,000 mark over the weekend, as speculation mounts over the launch of ETFs backed by the cryptocurrency, products currently under review by US regulatory authorities.

In Hong Kong, the courts decided to prolong China Evergrande's agony. Against all expectations, the liquidation hearing was postponed, much to the dismay of the creditors who had requested it. The developer is sitting on some $327 billion in debt.

This week, the macroeconomic agenda will be dominated by the November nonfarm payrolls numbers for the United States, on Friday. Chinese indicators (services PMI on Tuesday, credit figures on Wednesday and inflation on Friday) will also be closely scrutinized. The calendar of corporate releases is very sparse: chip giant Broadcom and sportswear specialist Lululemon will dominate the news.

Stock futures were trading in the red on Monday, with bond prices also weakening amid some tempering of recent enthusiasm over the potential for Federal Reserve interest rate cuts.

Economic highlights of the day:

October US durable goods orders are today’s main indicator.

The dollar is slightly up to EUR 0.9197 and GBP 0.7891. The ounce of gold is worth USD 2067. Oil takes a hit, with North Sea Brent at USD 78.7 a barrel and US light crude WTI at USD 73.90. The yield on 10-year US debt stands at 4.25%. Bitcoin is trading at around USD 41,800.

In corporate news:

  • Hawaiian Holdings soared by over 180% to $13.65 in pre-market trading, as Alaska Airlines announced that it was acquiring the group for $1.9 billion, including $900 million in debt, representing $18 per share. Alaska Airlines was down 9.0% before the opening, while Spirit Airlines was up 5.3% and Jetblues Airways up 1.1%.
  • Uber Technologies is up 5% ahead of the opening, as the group will be included in the S&P 500 index from December 18. JABIL and BUILDERS FIRSTSOURCE will also join the index on the same date, gaining 3.5% and 2% respectively.
  • Carmot Therapeutics - Roche is to buy the obesity drug specialist for $2.7 billion, to gain exposure to the growing market for weight-loss drugs.
  • Tesla - Sales of electric vehicles manufactured in China by the carmaker fell by 17.8% year-on-year in November, to 82,432 cars, according to data from the China Individual Car Association (CPCA) released on Monday. This is the biggest drop since December 2022.
  • Spotify - The music streaming service announced on Monday that it would cut around 1,500 jobs to reduce costs, or 17% of its workforce, after already laying off 600 people in January and another 200 in June.
  • Boeing - The US Air Force has eliminated the group from the competition to develop the successor to the E-4B Nightwatch, Boeing confirmed on Friday, the future nuclear warplane.
  • HF Sinclair - The refiner expects lower capital expenditure for 2024, with maintenance costs expected to fall next year.
  • Aspen Insurance plans to go public next year in New York rather than London, partly due to management concerns over valuation and stricter listing requirements in Britain, the Financial Times reported on Sunday. The group hopes to raise $4 billion.
  • Virgin Galactic Holdings - The space company falls 12.4% as billionaire Richard Branson "ruled out injecting more money into his loss-making space travel company", according to the Financial Times.
  • Eli Lilly said on Friday that the US Food and Drug Administration (FDA) had given a second approval to its drug Jaypirca, which is used to treat a form of blood cancer.

Analyst recommendations:

  • 3m Company: Barclays upgrades to equalweight from underweight with a price target raised from USD 98 to USD 107.
  • Adobe Inc.: Barclays maintains its equalweight recommendation and raises the target price from USD 640 to USD 680.
  • At&T Inc.: BNP Paribas Exane initiates an underperform recommendation with a target price of USD 13.
  • Autozone, Inc.: JP Morgan maintains its overweight recommendation and raises the target price from USD 2975 to USD 3000.
  • Ball Corporation: Baptista Research maintains its hold recommendation and raises the target price from USD 54.50 to USD 58.40.
  • Blue Owl Capital Inc.: Evercore ISI maintains its outperform rating and raises the target price from USD 14 to USD 15.
  • Broadcom Inc.: Oppenheimer maintains its outperform rating and raises the target price from USD 990 to USD 1100.
  • Capital One Financial Corporation: Wells Fargo maintains its overweight rating and raises the target price from USD 115 to USD 125.
  • Citizens Financial Group, Inc.: Morgan Stanley downgrades to equal weight from overweight with a target price of USD 31.
  • Coca-Cola Europacific Partners Plc: Goldman Sachs upgrades to buy from neutral with a price target raised from USD 61 to USD 70.
  • Comcast Corporation: BNP Paribas Exane upgrades to outperform from neutral with a price target raised from USD 44 to USD 49.
  • Costco Wholesale Corporation: JP Morgan maintains its overweight rating and raises the target price from USD 605 to USD 652.
  • Crown Castle Inc.: Deutsche Bank maintains its hold recommendation and raises the target price from USD 91 to USD 105.
  • Deere & Company: JP Morgan maintains a neutral recommendation with a price target raised from USD 380 to USD 385.
  • Discover Financial Services: Wolfe Research maintains its outperform rating and raises the target price from USD 95 to USD 115.
  • Edwards Lifesciences Corporation: Morgan Stanley maintains its overweight rating with a reduced target price from USD 102 to USD 80.
  • Epam Systems, Inc.: Baptista Research maintains its hold recommendation with a price target raised from USD 264 to USD 280.
  • Estee Lauder: Deutsche Bank maintains its buy recommendation and raises the target price from USD 137 to USD 146.
  • Extra Space Storage Inc.: BMO Capital Markets maintains its market perform recommendation and raises the target price from USD 137 to USD 150.
  • Fair Isaac Corporation: Goldman Sachs maintains its buy recommendation and raises the target price from USD 1156 to USD 1289.
  • Ferguson Plc: AlphaValue/Baader Europe downgrades to reduce from add with a price target raised from GBP 141.03 to GBP 143.47.
  • First Quantum Minerals Ltd.: BMO Capital Markets maintains its outperform rating and reduces the target price from CAD 28.50 to CAD 20.
  • Fox Corporation: Baptista Research upgrades to buy from outperform with a price target raised from USD 33.40 to USD 38.60.
  • Gartner, Inc.: Baptista Research downgrades to underperform from hold with a price target raised from USD 369.80 to USD 415.
  • General Motors Company: Mizuho Securities upgrades to buy from neutral with a price target raised from USD 38 to USD 42.
  • Gfl Environmental Inc.: Raymond James maintains its outperform rating and raises the target price from USD 35 to USD 36.
  • Grab Holdings Limited: Morgan Stanley maintains its overweight rating and reduces the target price from USD 5.40 to USD 4.80.
  • Huntington Bancshares Incorporated: Morgan Stanley maintains its overweight rating and raises the target price from USD 12 to USD 13.
  • Icon Public Limited Company: Baird maintains its outperform rating and raises the target price from USD 289 to USD 304.
  • Insulet Corporation: Baptista Research upgrades to outperform from buy with a price target reduced from USD 235 to USD 219.
  • Iqvia Holdings Inc.: Baird maintains a neutral recommendation with a price target raised from USD 202 to USD 221.
  • Liberty Broadband Corporation: BNP Paribas Exane initiates an underperform recommendation with a target price of USD 66.
  • Lululemon Athletica Inc.: Wells Fargo downgrades to equalweight from overweight with a target price of USD 445.
  • Mastercard, Inc.: William O'Neil & Co Incorporated upgrades to buy from dropped coverage.
  • Prologis, Inc.: BMO Capital Markets maintains its outperform rating and raises the target price from USD 124 to USD 130.
  • Public Storage: BMO Capital Markets maintains its outperform rating and raises the target price from USD 287 to USD 300.
  • Salesforce.com, Inc.: Phillip Securities maintains its accumulate recommendation and raises the target price from USD 242 to USD 270.
  • Shopify Inc.: Morgan Stanley maintains its market weight recommendation and raises the target price from USD 62 to USD 74.
  • Skyworks Solutions, Inc.: Baptista Research upgrades to buy from hold with a price target raised from USD 108.90 to USD 121.30.
  • Spotify Technology S.A.: DZ Bank AG Research maintains its sell recommendation with a price target raised from USD 130 to USD 150.
  • Teleflex Incorporated: Baptista Research downgrades to hold from buy with a price target reduced from USD 255.40 to USD 251.50.
  • The Trade Desk, Inc.: Cannonball Research maintains its buy recommendation and raises the target price from USD 80 to USD 88.
  • Uber Technologies, Inc.: Redburn Atlantic maintains its buy recommendation and raises the target price from USD 45 to USD 68.
  • United Rentals, Inc.: KeyBanc Capital Markets downgrades to sector weight from overweight.
  • Veeva Systems Inc.: Jefferies maintains its buy recommendation and reduces the target price from USD 265 to USD 225.
  • Verizon Communications: BNP Paribas Exane initiates an outperform recommendation with a target price of USD 47.