The reason for this is quite simple: Technology, Industry and Consumer Cyclicals have taken off again, leaving Health Care and Finance in the dust.

Investors seem to be past the point when they saw everything in black, and are now looking at the glass as half full. They've fully integrated the Fed's aggressive rate hike cycle and the ongoing macroeconomic slowdown. They have also seen that companies, for the most part, are still able to pass on rising costs to the consumer. And that valuations are less crazy than they were six months ago. All of this remains very fragile, and the impact of the macroeconomic forces at work, such as inflation or energy and climate disorders, is extremely difficult to quantify.

In the "shock cycle" theory, by Morgan Housel, we're at the stage when the market has stopped denying positive news, which is already a considerable advance compared to the weeks that preceded. The very warm reception given last week to the results of Apple or Amazon are proof of this, although they were far from the usual standards of both companies. Investors even found reasons to hope in the bad US GDP reading for the second quarter, believing that the Fed could end its hawkish policy sooner than expected, to get the economy moving again.

This week, Speaker of the US House of Representatives Nancy Pelosi has started a tour of Asia. Rumor has it that she will pass through Taiwan, which is already causing new tensions with China. Xi Jinping warned Joe Biden not to play with fire… On Thursday, the Bank of England will unveil its decision on rates and on Friday, we'll see US job data for July.

This morning, all three Wall Street indexes opened slightly down. Earnings season is still intense, with many companies due to published their results before mid-August, when activity will ease. This week includes PayPal, Costco, CVS Health, Eli Lilly, Amgen and ConocoPhillips.

 

Economic highlights of the day:

July manufacturing PMI's are on the agenda for the major economies, including the Eurozone at 10:00 and the US at 10:00am. There will also be the ISM Manufacturing PMI and the Construction Spending PMI (10:00am). All the macro agenda here. China reported an official manufacturing PMI back in contraction zone in July, at 49 points, below expectations (50.3). The Caixin PMI, which contains more private companies, deteriorated to 50.4 points but remains in the expansion zone.

The dollar is down to EUR 0.9758. The ounce of gold is stabilizing at USD 1770. Oil retreated from the previous week, with North Sea Brent at USD 99.39 per barrel and U.S. WTI light crude at USD 93.19. The yield on 10-year US debt stabilized at 2.66%. Bitcoin is trading around USD 23,400.

 

On markets:

*The Boeing Company was trading up about 3% in pre-opening trade, with two sources telling Reuters that the U.S. regulator approved the aircraft maker's plan on Friday to resume deliveries of 787 Dreamliners. Separately, Boeing said on Monday it would set up a research and development center for sustainable fuel and electric aircraft in Japan.

*Alibaba said Monday it would work to keep its listing on the New York Stock Exchange alongside Hong Kong's, after the Chinese e-commerce giant was placed on a watch list by U.S. authorities. The stock was up 2.2% in pre-market trading.

*The U.S. Commerce Department said Friday that it would limit the amount of government subsidies for semiconductor manufacturing and would not let companies use the funds to "inflate their bottom line."

*Twitter - Elon Musk countered in court Friday against Twitter, stepping up his legal fight against the platform over its aborted $44 billion buyout.

*Baker Hughes said Monday it has signed an agreement to sell its oilfield services business in Russia to local management.

*Global Payments - The payment solutions provider will buy EVO Payments for nearly $4 billion, including debt. EVO Payments shares were up 17.5% in pre-market trading, while Global Payments was up 4%.

*Loews - The conglomerate lost 4.5% in premarket trading after reporting second-quarter profit of $180 million, compared with $754 million in the year-ago period.

 

Analyst recommendations:

  • Anglo American: J.P. Morgan upgrades to overweight from neutral. PT up 31% to 3.850 pence.
  • Babcock International Group: Numis Securities raised the recommendation to hold from reduce. PT up 5.1% to 325 pence.
  • Baxter International: KeyBanc Capital Markets maintains overweight rating. PT up 32% to $77.
  • Booz Allen Hamilton Holding: Truist Securities raised the target to $100 from $80. Maintains hold rating.
  • BT Group: Numis Securities moves to hold from reduce. PT set to 155 pence.
  • The Carlyle Group: Evercore ISI raised the recommendation to outperform from inline. PT up 20% to $45.
  • Church & Dwight: Truist Securities cut the target to $100 from $120 Maintains buy rating.
  • EastGroup Properties: Morgan Stanley maintains equal-weight rating. PT down 15% to $195.
  • Eversource Energy: Wolfe Research raised the recommendation to outperform from peerperform. PT up 8.8% to $96.
  • Goldman Sachs: Oppenheimer & Co raised the target to $511 from $483. Maintains outperform rating.
  • Hartford Financial Services Group: MKM Partners maintains neutral rating. PT down to $70 from $80.
  • Old Dominion Freight Line: Deutsche Bank maintains hold rating and downgrades price target to $267 from $347.
  • O'Reilly Automotive: D.A. Davidson & Co maintains buy rating. PT up to $815 from $740.
  • Rightmove: Investec upgrades to hold from sell. PT set to 650 pence.
  • Synaptics Incorporated: Rosenblatt adjusts price target to $240 from $320. Keeps buy rating.
  • Teleflex: Raymond James downgrades price target to $266 from $325.
  • United Rentals: UBS cut the target to $365 from $400. Maintains buy rating.
  • Willis Towers Watson: Raymond James cut the target to $250 from $270. Maintains strong buy rating.