But let’s start with the traditional weekly retrospective. In the United States, the S&P500 index ended the week down, while the Nasdaq 100 gained 0.6%. As I've written about 17,000 times in the last few weeks, growth technology stocks are popular again because investors are betting on betting on a Fed rate hike pause, followed by cuts as early as this year. But they remain careful, directing their funds towards the big players with strong fundamental profiles. Alphabet's 11% and Amazon's 4% weekly gains illustrate this. And something else too: Artificial Intelligence.

Manish Kabra of French bank Societe Generale published a note about this on Friday. He points out that the hype around artificial intelligence is so strong that it is enough to create a buying current that supports Nasdaq. "Without the popular AI stocks, the S&P 500 would be down 2% this year. Not +8%," says the bank's US strategy boss. Ai’s rising popularity can is also reflected in the big inflows into AI-flavored ETFs. Manish Kabra recommends that if you want to play AI, focus on the best defensive/growth players in ETFs related to the theme. These include Accenture, Microsoft, ServiceNow, ANSYS, Intuit, Adobe and Synopsys.

In Europe, last week was the fourth in a row of less than 0.5% change for the STOXX Europe 600. It could have been the third consecutive week of slight contraction, but Friday's session allowed the European broad index to close with a minimalist positive balance of 0.04% on the weekly sequence.

A few words on the dominant political, economic and financial news of the beginning of the week. In Turkey, incumbent President Erdogan has beaten the polls by coming out on top in the presidential election. The second round (yet to be confirmed) looks set to be a tight one on May 28.

In China, the central bank did not change its rate policy this morning. Mixed economic data in the country has investors fearing a weaker rebound than expected.

Meanwhile, the saga over the debt ceiling will resume on Tuesday with a new round of talks. A stalemate would obviously have major consequences for the country's economic dynamics.

On the economic agenda this week, the main dates to remember are the Empire State Manufacturing index (today) and the retail sales statistics (Tuesday). For China, the production and consumption figures for April (Tuesday), with a spectacular increase over one year, due to a favorable comparison base. Central bankers are also on the agenda: Christine Lagarde (ECB) will speak on Tuesday and Friday and Jerome Powell (Fed) on Friday.

On the earnings calendar, we have The Home Depot, Cisco, Walmart, Applied Materials or Deere, among others.

So far, investors seem quite optimistic about a favorable outlook for the debt ceiling talks, since Wall Street futures were slightly higher pre-bell Monday.

 

Economic highlights of the day:

The European industrial production for March and the American Empire Manufacturing index for May are today’s main indicators. The full agenda is here.

The dollar is down slightly to EUR 0.9194 and GBP 0.7995. Gold is firm at USD 2013. North Sea Brent is worth USD 74.65 a barrel and US WTI light crude USD 70.56. The yield on US 10-year debt rises to 3.46%. Bitcoin is trading around USD 27,380.

 

In corporate news:

  • Tesla - The head of the carmaker, Elon Musk, will attend the "Choose France" summit in Versailles on Monday after a planned meeting with Emmanuel Macron at the Elysée Palace.
  • General Motors announced on Friday that it was recalling nearly one million vehicles in the United States because of a risk of explosion of the gas generators in the driver's airbags.
  • Analog Devices announced on Monday that it plans to invest €630 million in a new research and development (R&D) and manufacturing facility in Ireland, which would allow the chipmaker to expand its capacity in Europe.
  • Western Digital and Kioxia Holdings, the world's No. 2 and No. 4 flash memory companies, respectively, are accelerating merger talks, two sources with direct knowledge of the matter said.
  • Oneok announced on Sunday that it would buy oil pipeline operator Magellan Midstream Partners in a deal valued at about $18.8 billion, including debt.
  • Apollo Global Management said on Monday it was not considering a formal bid for John Wood Group after submitting a proposal last month at 240 pence per share, valuing the British group at about 1.66 billion pounds.
  • US healthcare group Envision Healthcare, backed by KKR, filed for bankruptcy protection on Monday.
  • Luminar Technologies - Chief executive Austin Russell will take a majority stake in Forbes Global Media Holdings in a deal that values the company at nearly $800 million, Russell and Integrated Whale Media Investments (IWM), Forbes' parent company, announced Friday.

 

Analyst recommendations:

  • Albemarle: Baird upgrades to outperform from neutral. PT up 47% to $288.
  • Charles Schwab: Raymond James upgrades to outperform from market perform. PT up 29% to $63.
  • Dupont de Nemours: Deutsche Bank upgrades to buy from hold. PT up 25% to $80.
  • Essex property: Wolfe Research downgrades to underperform from peerperform. PT down 5.3% to $204.
  • Flutter: Citigroup upgrades from neutral to buy targeting GBp 19,000.
  • Mid-America: Wolfe Research downgrades to underperform from peerperform. PT down 11% to $137.
  • Park National: Piper Sandler downgrades to underweight from neutral. PT down 1.4% to $103.
  • Washington Trust: Piper Sandler upgrades to neutral from underweight. PT up 15% to $26.
  • Watches of Switzerland: RBC starts tracking at Outperform, targeting GBp 1100.