On equity markets, the bumpy ride of 2020 has been replaced by a linear rise in indexes since the beginning of the year. A quick glance at a price chart shows the remarkable regularity of the rise.
Investors continue to favor leveraged assets, i.e. the riskiest ones. The reasoning is simple: markets are going up, so you might as well go for the most volatile pockets, which will tend to go up more in the current context. On the other hand, as you probably already know, these assets will be hit harder if markets correct. But the mood is not really for such a scenario. Last week, several compartments recorded very positive net flows. Emerging market debt, equity markets and high yield debt in particular. The latter category is closely watched as it is a good barometer of investor sentiment. When they are confident about the economic outlook, they turn to this debt issued by companies with medium to poor financial strength, which offers high returns. As for stocks, they are in their ninth consecutive week of positive flows, according to Bank of America Merrill Lynch research. In short, investors are firing on all cylinders.
If we had to focus on only one event this week, it would be Wednesday, June 16, when the U.S. central bank will announce its last monetary policy decision before the summer, along with its latest economic projections. Everything will of course revolve around inflation and the risk of economic overheating. The Fed must continue its balancing act to make it look as if it is still convinced that prices will not go out of control in the long term, while ensuring that its support measures will always be perfectly calibrated. In reality, the central bank is navigating a bit like most monetary institutions. But it is not in such an uncomfortable situation given the dynamics of the global economy.
At the G7, there was talk of fiscal and health compromises, renewed tensions over Brexit, and Chinese threats. Overall, the meeting leaves a taste of unfinished business after the enthusiastic statements that preceded the summit. But that's always a bit the case at the G7.
Economic highlights of the day
Industrial production in Europe in April is the only relatively followed indicator of the day.
The dollar is down to €0.8247. Gold is suffering at USD 1858 per ounce. Oil is up at USD 73.4 per barrel for Brent and USD 71.60 per barrel for WTI. US debt yields are rising slightly to 1.46% over 10 years. Bitcoin is up to USD 40,500.
* Tesla gains 1% in pre-market trading as its leader Elon Musk said in a tweet Sunday that the automaker could use bitcoin as a payment method again if the cryptocurrency's "miners" used more renewable energy.
* Novavax climbs 7.8% in pre-market trading. The pharmaceutical company presented data from its late-stage clinical trial in the U.S. on Monday, showing that its vaccine is more than 90% effective against different variants of COVID-19.
* Humanigen gained 1.9% in pre-market trading. The pharmaceutical company has started the approval process in the U.K. for its lenzilumab treatment for patients with COVID-19.
* Lordstown Motors announced Monday the resignation of its chief executive, Steve Burns, and chief financial officer, Julio Rodriguez, days after the electric truck maker warned it may not have enough cash to continue operations next year. The stock is losing 8% in pre-market trading.
- Alliant Energy : UBS adjusts price target to $59 from $56, maintains neutral rating
- Ally Financial : Janney adjusts fair value estimate to $61 from $54, maintains buy rating
- Alphabet : Tigress Financial initiates stock's price target at $3,185, reiterates strong buy rating
- Big Yellow: Kempen upgrades from sell to neutral with a target of GBp 1300.
- Biogen : UBS lifts stock to buy from neutral, pt to $463 from $311
- Ferrari: Goldman Sachs upgrades its Buy rating to Sell with a target of USD 207.
- GlaxoSmithKline: Deutsche Bank retains its Sell rating. The target price continues to be set at GBp 1300.
- Halliburton : Goldman Sachs adjusts pt to $26 from $25, maintains neutral rating
- HSBC : Investec upgrades to hold rating from sell
- Ocugen : Cantor Fitzgerald adjusts pt to $4 from $11, maintains neutral rating
- Pentair : Goldman Sachs adjusts price target to $77 from $71, maintains buy rating
- North American Construction : National Bank adjusts pt to c$24 from c$23, maintains outperform rating
- The Honest Company: Loop Capital adjusts price target to $20 from $15, maintains hold rating