It was the highlight of the week: The monthly US employment report, an important data point for the conduct of monetary policy. This statistic has long been published on the first Friday of the following month, with a few exceptions. For this month of December 2023, the US Labor Office had warned that the announcement would take place on the second Friday of the month. I guess the statisticians knew they'd be a bit short on December 1. But all that doesn't really matter, and financiers are looking as usual for evidence in the data that the labor market is suffering but not deteriorating too quickly. This would fit in perfectly with the dream combo of a Fed rate cut and a controlled economic slowdown, or "soft landing". In other words, a context favorable to rising equities.

However, things didn’t turn out this way. U.S. job growth picked up in November, with non-farm payroll rising by 199,000 instead of the 185,000 expected in the consensus, while the unemployment rate stood at 3.7%, instead of a 3.9% forecast. Average hourly earnings were up 0.35% from October, versus 0.4% expected. Average hourly earnings progressed 3.96% from last November, while 4% was expected.

Wall Street futures dropped after the report, which fueled fears of higher rates for longer. However, this increase is not totally a surprise, as thousands of auto workers and actors returned after strikes. And employment gains are less than the monthly average of 238,800 jobs this year. The Fed is still expected to keep rates unchanged next Wednesday. It has raised its policy rate by 525 basis points to the current 5.25%-5.50% range, since March 2022. As I write these lines, futures were recouping some of the losses.

In anticipation of these employment figures, Wall Street rose yesterday. The Nasdaq 100 recovered 1.5%, fueled once again by artificial intelligence. The release of Google’s own version of ChatGPT sent Alphabet soaring by 5.4%, while Advanced Micro Devices gained 10% in the wake of the presentation of processors designed to titillate Nvidia and its 80% market share in AI. Nvidia gained 2.4%, a sign that the return of investors’ appetite for this sector was stronger than the emergence of competition from AMD. The AI effect, a powerful driving force behind the rise in US technology stocks between November 2022 and the summer of 2023, had dried up a little recently, but seems to have started up again yesterday.

In other news, Hunter Biden has been indicted in a tax case, which shouldn't do his dad at the White House any favors. India's central bank kept rates unchanged, as expected. The country is experiencing marked economic growth, while the ruling party strengthened its positions in the last elections: there is therefore little reason to move the lines at present. In Japan, the yen continued to rise, while bets are mounting that the Bank of Japan will adopt a less flexible monetary approach, with negative interest rates still in place. In Europe, EU finance ministers spent half a sleepless night looking for a compromise on taxation, which has not yet been reached.

Today's economic highlights:

Non-farm payrolls, the unemployment rate and consumer sentiment from the University of Michigan are on the agenda.

The dollar is stable at EUR 0.9281 and GBP 0.7953. The ounce of gold stabilizes at USD 2027. Oil enjoyed a small technical rebound, with North Sea Brent at USD 75.70 a barrel and US light crude WTI at USD 70.89. The yield on 10-year US debt stood at 4.16%. Bitcoin retreats to around USD 43,700.

In corporate news:

  • Broadcom was down 1.1% in pre-market trading, as the semiconductor manufacturer reported lower-than-expected quarterly sales amid intensifying competition in network chips.
  • Nvidia is in advanced discussions with Malaysian conglomerate YTL for a partnership in data centers, according to three sources close to the matter, as the American chip giant seeks to expand its activities in Southeast Asia. The group will also discuss a possible semiconductor cooperation agreement with Vietnamese technology companies and authorities at a meeting in Hanoi on Monday, according to a letter of invitation to participants seen by Reuters.
  • Honeywell is to buy CARRIER's security business for $5 billion, the Wall Street Journal reported on Friday. Carrier advanced by 5% before the opening.
  • Microsoft denied on Friday that it had taken control of OpenAI after the UK competition authority said it was reviewing the nature of their partnership. "The only thing that has changed is that Microsoft now has a non-voting observer seat on the OpenAI board, which is very different from an acquisition," Microsoft said in a statement.
  • Merck said Friday that an experimental therapy developed with its partner Eisai to treat a type of cancer of the lining of the uterus failed to meet its primary end-stage study objective.
  • Apple and its suppliers aim to produce more than 50 million iPhones in India each year, within two to three years, the Wall Street Journal reported on Thursday, citing people involved in the matter.
  • Boeing- Hong Kong's Cathay Pacific Airways announced on Friday that it had placed a firm order for six Airbus A350s at a list price of $2.71 billion (€2.51 billion), to replace its aging Boeing 747s.
  • Lululemon Athletica lost 3.3% in after-hours trading after the group lowered its sales and earnings forecasts for the current quarter against a backdrop of reduced consumer spending. 
  • Spotify lost 1.9% in after-hours trading following the announcement that its CFO, Paul Vogel, would be stepping down at the end of March 2024.
  • Levi Strauss & Co announced on Thursday evening that its CEO, Chip Bergh, will leave the company in April after more than ten years at the helm of the jeans manufacturer. He will be replaced by Michelle Gass, the group's current president, on January 29.
  • Smith & Wesson Brands dropped 4.83% in after-hours trading following the publication of a lower-than-expected quarterly profit.

Analyst recommendations:

  • Adobe Inc.: Mizuho Securities maintains its buy recommendation and raises the target price from USD 630 to USD 680.
  • Apple Inc.: Morgan Stanley maintains its overweight rating and raises the target price from USD 210 to USD 220.
  • Atlassian Corporation: Piper Sandler & Co maintains a neutral recommendation with a price target raised from USD 180 to USD 201.
  • Autodesk, Inc.: Berenberg maintains its buy recommendation and raises the target price from USD 228.50 to USD 255.
  • Barclays Plc: Redburn Atlantic maintains its neutral recommendation with a price target raised from GBX 135 to GBX 160.
  • Broadcom Inc.: Morningstar moves to hold from sell with a price target raised from USD 840 to USD 970.
  • Chewy, Inc.: Evercore ISI maintains its in-line recommendation and reduces the target price from USD 35 to USD 19.
  • Coca-Cola Europacific Partners Plc: Morningstar initiates a sell recommendation with a target price of EUR 54.
  • Coca-Cola Hellenic: Morningstar initiates a sell recommendation with a target price of GBP 26.
  • Crowdstrike Holdings, Inc.: Piper Sandler & Co maintains its overweight recommendation and raises the target price from USD 245 to USD 280.
  • Datadog, Inc.: Piper Sandler & Co maintains its overweight recommendation and raises the target price from USD 125 to USD 134.
  • Dollar General Corporation: Citigroup remains neutral recommendation with a price target raised from USD 115 to USD 138.
  • Domino's Pizza Inc.: Barclays maintains its underweight recommendation and raises the target price from USD 330 to USD 340.
  • Equinix, Inc.: Morgan Stanley maintains its market weight recommendation and reduces the target price from USD 785 to USD 767.
  • First Solar, Inc.: Morgan Stanley upgrades to overweight from equalwt with a price target raised from USD 214 to USD 237.
  • Imperial Brands Plc: RBC Capital downgrades to sector perform from outperform with a price target reduced from GBX 2200 to GBX 1800.
  • Imperial Oil Limited: JP Morgan upgrades to neutral from underweight with a target price raised from CAD 95 to CAD 97.
  • Lloyds Banking Group Plc: Redburn Atlantic upgrades to neutral from sell with a price target raised from GBX 40 to GBX 50.
  • Lululemon Athletica Inc.: Bernstein maintains its market perform recommendation and raises the target price from USD 366 to USD 400.
  • Mcdonald's Corporation: DZ Bank AG Research maintains its buy recommendation and raises the target price from USD 300 to USD 330.
  • Moderna, Inc.: Redburn Atlantic maintains a neutral recommendation with a price target reduced from USD 159 to USD 94.
  • Mondelez International, Inc.: D.A. Davidson initiates a Buy recommendation with a target price of USD 83.
  • Palo Alto Networks, Inc.: Piper Sandler & Co maintains its overweight recommendation and raises the target price from USD 285 to USD 343.
  • Pnc Financial Services Group, Inc.: Piper Sandler & Co maintains a neutral recommendation with a price target raised from USD 125 to USD 143.
  • Relx Plc: Kepler Cheuvreux downgrades to hold from buy with a price target raised from GBX 2915 to GBX 3100.
  • Servicenow, Inc.: Piper Sandler & Co maintains its overweight recommendation and raises the target price from USD 620 to USD 747.
  • Spotify Technology S.A.: Baird maintains its outperform rating and raises the target price from USD 185 to USD 225.
  • The Clorox Company: Wells Fargo maintains its underweight recommendation and raises the target price from USD 120 to USD 135.
  • The Cooper Companies, Inc.: Jefferies maintains its hold recommendation and reduces the target price from USD 425 to USD 375.
  • The Hershey Company: D.A. Davidson initiates a neutral recommendation with a target price of USD 205.
  • The Home Depot, Inc.: Truist Securities maintains its buy recommendation and raises the target price from USD 340 to USD 356.
  • Zscaler, Inc.: Piper Sandler & Co maintains its overweight recommendation and raises the target price from USD 220 to USD 236.