Statistically speaking, November is a very favorable month for investors. But not in 2021, as it ends down for a number of indices, down sharply even for the STOXX Europe 600, which is down 2.6% on its level at the end of October. Even the US broad index S&P500 posted a negative balance of 0.8% over the period. However, the middle of the month allowed us to explore virgin index territory, including historic highs, but this was without counting on the revenge of the pandemic, for a comeback as unexpected as it was brutal.
Back to square one then, with its procession of questions about the virulence of the episode, its economic consequences, the health response to be provided... As it has been the case for each wave since the beginning, the media machine and its relays on networks have gone into overdrive and one can read everything and its opposite almost everywhere, whatever the level of qualification of the source. In this kind of situation, investors have taken the habit of reasoning pragmatically and turning to central banks to flatten the problem by printing money.
It's a good thing that Jerome Powell, the head of the US central bank, who now knows that his first mandate will be doubled by a second one, had a speech to give yesterday. But instead of the traditional "don't worry ladies and gentlemen, we'll take care of everything", he announced that inflation is probably more persistent than expected and that in response, the Federal Reserve may have to reduce its support plan for the economy faster than expected. This twofold announcement is very significant. First, the Fed recognizes that it has been a bit wrong about the sustainability of price increases. Secondly, it confirms its critics who believe that it was too slow to react.
This change of tone happens to fall at the very moment that markets are cashing in on the arrival of the variant Omicron. Yesterday, the three leading Wall Street indexes took a hit, losing between 1.6 and 2%. Until now, the Fed had always been careful to separate tapering and interest rates rises. It will probably continue to do so by insisting that the emergency stop of money printing will help calm inflationary pressures. The first rate hike is postponed to a later date.
So, will the markets continue to sink into depression? Apparently not, according to today's leading indicators, which suggest a sharp rebound. The creator of BioNtech said he is confident that current vaccines mitigate the effect of the new variant. In addition, the Israeli Minister of Health, who believes that the first feedbacks show that a 3rd dose protects quite effectively against the disease.
Economic highlights of the day:
The final manufacturing PMIs of the major economies are released throughout the day. China's, compiled by Markit and Caixin, remains in contraction territory by the smallest of margins. In the United States, we have the ADP report on employment, the ISM manufacturing, construction spending and oil inventories.
The dollar has risen to EUR 0.8820. The ounce of gold is trading at USD 1787. Oil regained some height at USD 71.34 per barrel of Brent and USD 68.19 per barrel of WTI. The yield on the 10-year T-Bond is up to 1.48% (+3 points) while the Bund is stable at -0.35%. Bitcoin is holding at USD 58578.
* Merck - A panel of experts advising the U.S. Food and Drug Administration on Tuesday recommended emergency approval of the company's COVID-19 antiviral treatment, potentially paving the way for the first oral treatment for the disease to be approved in the United States. Merck shares jump 5.3% in pre-market trading.
* Pfizer, BioNTech - The vaccination campaign against COVID-19 in children aged 5 to 11, with the vaccine developed by Pfizer and BioNTech, will begin in the European Union on December 13, a week ahead of schedule, German Health Minister Jens Spahn said Wednesday.
* Salesforce on Tuesday forecast a lower-than-expected profit for the current quarter due to increased competition from players like Microsoft, sending its stock down 6% in premarket trading.
* Mondelez - Dirk Van de Put, the food company's CEO, told Reuters that the sugar-free version of its Oreo cookies, launched in China last August, had received a "somewhat disappointing" response despite the current trend for so-called "healthy" products.
* Amazon - New York Attorney General Letitia James asked a state judge on Tuesday to appoint an expert to oversee employee safety at an Amazon logistics center in New York, citing an easing by the retailer of measures against COVID-19 that were already deemed "inadequate.
* Alphabet subsidiary Google announced Wednesday that it would ban all political advertising on its platform in the Philippines between Feb. 8 and May 9, 2022, as part of the presidential election to name a successor to Rodrigo Duterte.
* Qualcomm unveiled on Tuesday a new high-end chip called Snapdragon 8 Gen 1 that will equip Android-based smartphones and will, according to the company, display better graphics and take sharper photos than competing chips.
* Nio - The Chinese manufacturer of electric vehicles gained 4% in pre-market trading on the strength of its vehicle deliveries, which rose 105.6% year-on-year in November to 10,878 units.
- American Water: Wells Fargo Securities cut the recommendation to underweight from equal-weight. PT up 0.8% to $170
- Autozone: Wedbush raised the target to $1,900 from $1,820. Maintains outperform rating.
- Brixmor Property Group: BMO Capital Markets raised the recommendation to market perform from underperform. PT up 9.9% to $25
- CVS: Seaport Global Securities initiated coverage with a recommendation of buy. PT up 24% to $110
- Diageo: Societe Generale upgrades from hold to buy targeting GBp 4500.
- D.R. Horton: Goldman Sachs cut the recommendation to neutral from buy. PT up 22% to $119
- DTE Energy: Wells Fargo Securities raised the recommendation to overweight from equal-weight. PT up 14% to $123
- Federal Realty: BMO Capital Markets raised the recommendation to outperform from market perform. PT up 18% to $145
- Ferrari: Societe Generale changes its Buy rating to Hold with a target of USD 290.
- Future Plc: Berenberg remains in charge with a price target raised from GBp 4890 to GBp 5225.
- GB Group: Jefferies resumes its Buy rating with a target of GBp 1050.
- ImmunoGen: Jefferies raised the recommendation to buy from hold. PT jumps 94% to $12
- Lennar: Goldman Sachs raised the recommendation on Lennar Corp. Class A to buy from neutral. PT up 33% to $140
- Marvell Technology: Susquehanna adjusts PT to $82 from $75, keeps Positive rating
- NetApp: Deutsche Bank raised the target to $92 from $86. Maintains hold rating.
- Regency Centers: BMO Capital Markets raised the recommendation to outperform from market perform. PT up 18% to $82
- United Fire: Piper Sandler raised the recommendation to overweight from neutral. PT up 20% to $25