Romain Fournier

Chief Editor
Having worked in the British, French and Swiss financial press, Romain is able to report on local and international issues, as comfortable in French as in the language of Shakespeare, Romain Fournier leads the editorial team at Marketscreener. Fine connoisseur of the English-speaking markets, Romain delivers an editorial every day on US and UK markets.

Today on Wall Street: Bad timing

12/20/2021 | 10:29am EDT
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The hawkish turn taken by central banks comes amid a global surge of the Omicron variant, spoiling the traditional end-of-year rally. The mood is heavy at the start of the week.

It took until the end of the year for the stock markets to falter, even though December is historically a good month for equity markets. What went wrong? Since the "flash crash" at the end of winter 2020, equity markets have been boosted by the recovery in corporate earnings and the "whatever it takes" policies implemented around the world. These policies have been deployed thanks to the blank checks signed by the major central banks to governments. They have borne fruit: economic growth was strong and most companies have not gone under. But these policies also encouraged price hikes and distorted the labor market and household consumption.

Buoyed by their success and encouraged by the political class, central banks were slow to reduce their support for the economy. They finally decided to do so this fall, taking care to prepare investors well in advance. They eventually put their plans into action last week, at least as far as the Fed, the ECB, the Bank of England and the Bank of Japan are concerned. The problem is that central banks' timetable collided with a new wave of the pandemic. In the basic scenario, the coronavirus should not have regained strength, at least not as fast as we’ve seen in the past few weeks. In fact, the pandemic had dropped significantly in the ranking of threats to the economy in recent months. The gradual extinction of the coronavirus should have allowed central banks to change their monetary course without too much damage.

But the Omicron variant and its meteoric rise have changed the game. And the Fed, the ECB and others find themselves in a monetary tightening phase at a time when markets are thinking that a little help might still be necessary.

This is not the only thing dampening the mood this morning. Democratic Senator Joe Manchin said yesterday that he will not vote for the $1,750 billion "Build Back Better" investment plan proposed by the Biden administration to improve social benefits and accelerate the energy transition. Given the Democrats' narrow majority in the upper chamber, this defection could bury the project. Manchin believes the spending is excessive in light of the country's debt load and inflationary impact. This led Goldman Sachs to reduce its growth forecasts for the US in 2022, which illustrates in a very concrete way the weight of public spending in the investment bank's expectations.

 

Economic highlights of the day:

The dollar is down to EUR 0.8850. The ounce of gold is trading at USD 1795. Oil is suffering at USD 70.02 per barrel for Brent and USD 66.89 for WTI. The yield on 10-year US debt is down to 1.37%. Bitcoin is close to USD 46,000 per unit.

 

On markets:

* Shares of electric vehicle manufacturers such as Tesla, Nio and Nikola are giving up more than 2% in pre-market trading after U.S. Democratic Senator Joe Manchin on Sunday refused to support President Joe Biden's $1.75 trillion investment plan.

* Carnival - The cruise line reported lower-than-expected quarterly revenue on Monday as customers postponed their cruise plans due to the health situation.

* Moderna - The U.S. drugmaker gained 6% in pre-market trading after announcing that the booster dose of its COVID-19 vaccine appeared to offer protection against the Omicron variant of the coronavirus in laboratory tests.

* Novavax - The European Medicines Agency on Monday recommended granting marketing approval to the U.S. biotech's COVID-19 vaccine, the fifth vaccine approved for adults in Europe. Novavax shares jumped 10.5% in pre-market trading.

* Pfizer, BioNTech - France's High Authority for Health (HAS) approved on Monday the extension of COVID-19 vaccination with the two companies' vaccines to all children aged between five and eleven years.

* Biogen - The laboratory announced on Monday a reduction of about 50% in the price of its Alzheimer's disease drug in response to complaints from hospitals and U.S. lawmakers that the treatment was too expensive. The stock is up 2.5% in pre-market trading.

* Oracle's acquisition of Cerner, a company that specializes in digitizing medical data, could be announced this Monday, a CNBC reporter writes on Twitter. The Wall Street Journal reported last week that the deal could be worth $30 billion.

* Elon Musk said on Twitter on Saturday that he would have to pay more than $11 billion in taxes this year.

* Apple - The U.S. group has asked the Indian competition authority to reject a complaint of abuse of dominance regarding the commission it charges app developers, in light, Apple says, of its very small market share in India, shows a document seen by Reuters.

* YouTube, the video service of Alphabet subsidiary Google, on Sunday restored access to Walt Disney's channels on its platform after an undisclosed distribution deal between the two groups.

* AMC Entertainment and Cinemark theaters, which suffered during the COVID-19 crisis, benefited over the weekend in the U.S. and Canada from the success of "Spider-Man: No Way Home," the third-biggest movie release in Hollywood history, its distributor Sony announced Sunday.

 

Analyst recommendations:

  • Anthem: Mizuho Securities raised the recommendation to buy from neutral. PT up 15% to $510
  • AT&T: Barclays upgrades to Overweight from Equalweight; PT is $30
  • Block: Wedbush Lowers Block's Price Target to $190 From $250 Amid 'Choppy Consumer Spending;' Neutral Rating Kept
  • The Boston Beer Company: Jefferies raised the recommendation on Boston Beer Co. Class A to hold from underperform. PT up 0.6% to $535
  • Cerner: Morgan Stanley raised the recommendation to equal-weight from underweight. PT down 5.3% to $85.
  • CrowdStrike Holdings: Daiwa has an average rating of outperform and price targets ranging from $200 to $350
  • Diversified Energy Company: Jefferies starts tracking as Buy, targeting GBp 160.
  • Federal Realty: J.P. Morgan raised the recommendation on Federal Realty Investment Trust to overweight from neutral. PT up 9.6% to $142.
  • Fedex: Credit Suisse retains his positive opinion on the stock with a Buy rating. Previously set at USD 330, the target price has been slightly modified to USD 336
  • Fiserv: Wedbush cuts PT to $130 from $138, Outperform rating kept
  • Global payments: Wedbush cuts PT to $150 from $240, Outperform rating kept
  • Healthpeak: J.P. Morgan raised the recommendation to overweight from neutral. PT up 15% to $40
  • Public storage: J.P. Morgan upgrades to overweight from neutral. PT up 6.4% to $385
  • Realogy: J.P. Morgan upgrades to overweight from neutral. PT up 32% to $21
  • Regency Centers: J.P. Morgan downgrades to neutral from overweight. PT up 9% to $78
  • Teradata: Needham & Co upgrades to buy from hold. PT rises 50% to $64
  • Vesuvius: Jefferies remains Buy with a price target raised from GBp 725 to GBp 730.
  • Visa: Wedbush cuts PT to $240 from $270, Outperform rating kept.
  • Welltower: J.P. Morgan downgrades to neutral from overweight. PT up 8.2% to $90

© MarketScreener.com 2021
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Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. -1.34% 2178.16 Delayed Quote.-24.81%
AMC ENTERTAINMENT HOLDINGS, INC. -8.03% 12.03 Delayed Quote.-55.77%
ANTHEM, INC. 2.69% 492.85 Delayed Quote.6.32%
APPLE INC. 0.17% 137.59 Delayed Quote.-22.52%
AT&T INC. 0.94% 20.4 Delayed Quote.9.81%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) 0.23% 0.6697 Delayed Quote.4.29%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.67% 0.71069 Delayed Quote.-3.14%
BARCLAYS PLC 1.02% 154.32 Delayed Quote.-18.33%
BIOGEN INC. 3.40% 199.65 Delayed Quote.-16.78%
BIONTECH SE -2.90% 163 Delayed Quote.-36.77%
BITCOIN (BTC/EUR) 2.83% 28640.1 End-of-day quote.-31.86%
BITCOIN (BTC/USD) 3.13% 30331.7 End-of-day quote.-36.46%
BLOCK, INC. -4.25% 83.44 Delayed Quote.-48.34%
BRITISH POUND / EURO (GBP/EUR) 0.04% 1.18358 Delayed Quote.-0.63%
BRITISH POUND / US DOLLAR (GBP/USD) 0.48% 1.25597 Delayed Quote.-7.70%
CANADIAN DOLLAR / EURO (CAD/EUR) -0.22% 0.736681 Delayed Quote.5.94%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.25% 0.78173 Delayed Quote.-1.59%
CARNIVAL CORPORATION -3.31% 13.13 Delayed Quote.-34.74%
CERNER CORPORATION 0.01% 93.93 Delayed Quote.1.14%
CHAINLINK (LINK/USD) 4.01% 7.323 End-of-day quote.-64.71%
CINEMARK HOLDINGS, INC. -1.24% 15.92 Delayed Quote.-1.24%
CREDIT SUISSE GROUP AG 1.22% 6.668 Delayed Quote.-25.81%
CROWDSTRIKE HOLDINGS, INC. 4.28% 148.74 Delayed Quote.-27.36%
DIVERSIFIED ENERGY COMPANY PLC 3.46% 126.65985 Delayed Quote.17.05%
EURO / US DOLLAR (EUR/USD) 0.43% 1.061 Delayed Quote.-7.23%
FEDERAL REALTY INVESTMENT TRUST -1.63% 109.4 Delayed Quote.-19.75%
FEDEX CORPORATION 0.93% 200.9 Delayed Quote.-22.32%
FISERV, INC. 1.27% 95.59 Delayed Quote.-7.90%
GLOBAL PAYMENTS INC. 1.35% 122.1 Delayed Quote.-9.68%
HEALTHPEAK PROPERTIES, INC. 0.48% 29.42 Delayed Quote.-18.48%
INDIAN RUPEE / EURO (INR/EUR) 0.10% 0.012156 Delayed Quote.3.10%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.32% 0.012885 Delayed Quote.-4.36%
LONDON BRENT OIL 1.13% 113.83 Delayed Quote.42.93%
MODERNA, INC. -4.97% 136.25 Delayed Quote.-46.35%
MORGAN STANLEY -0.74% 79.37 Delayed Quote.-19.14%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.82% 0.64697 Delayed Quote.-6.31%
NIKOLA CORPORATION -3.11% 5.92 Delayed Quote.-40.02%
NIO INC. -1.32% 16.44 Delayed Quote.-48.11%
NOVAVAX, INC. -8.57% 53.42 Delayed Quote.-62.66%
ORACLE CORPORATION 2.37% 68.63 Delayed Quote.-21.30%
PFIZER, INC. 3.59% 52.47 Delayed Quote.-11.14%
PUBLIC STORAGE 1.01% 312.91 Delayed Quote.-16.46%
REALOGY HOLDINGS CORP. -1.99% 11.34 Delayed Quote.-32.54%
REGENCY CENTERS CORPORATION -1.48% 63.26 Delayed Quote.-16.05%
S&P 500 0.01% 3901.36 Real-time Quote.-18.14%
S&P GSCI CRUDE OIL INDEX 0.99% 610.0513 Real-time Quote.46.63%
SONY GROUP CORPORATION -0.65% 11450 Delayed Quote.-20.38%
TERADATA CORPORATION -0.81% 35.66 Delayed Quote.-16.03%
TESLA, INC. -6.42% 663.9 Delayed Quote.-37.18%
THE BOSTON BEER COMPANY, INC. 0.01% 329.21 Delayed Quote.-34.82%
US DOLLAR / EURO (USD/EUR) -0.43% 0.942347 Delayed Quote.7.79%
VESUVIUS PLC 1.28% 349 Delayed Quote.-23.46%
VISA, INC. 0.84% 199.03 Delayed Quote.-8.16%
WELLTOWER INC. 0.67% 88.11 Delayed Quote.2.73%
WTI 1.10% 111.318 Delayed Quote.44.84%
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