Economists believe this might be due to a shortage of workers, and investors have not reacted to the data yet: this does not change the perception that the economic recovery is accelerating.
Corporate results continue to pile up, with targets largely revised upwards. Meanwhile, several sectors are suffering from a sudden and marked disaffection of investors. Macroeconomic statistics remain buoyant and while the situation in India is a concern, this has not derailed the prevailing optimism, which is still fueled by the recovery linked to the economic reopening of several countries.
Investment styles reversed last November, with cyclical and discounted stocks starting to outperform growth stocks. This is of course true, but a second movement has come on top of that: investors have started to burn their 2020 idols, including companies that have benefited from physical distancing and those perceived to be the beneficiaries of the energy transition. Indiscriminately, by the way, as some fine companies are being washed away with the bathwater.
Will the energy transition stop? No. Will the digitalization of the economy stop? No. The opportunities are still there, but not at any price, that's the message that is currently being sent out. A little bit of restraint doesn't hurt, but we shouldn't think that investors have become reasonable. It's just that they sometimes perceive some excesses. Unfortunately, this is not an exact science, otherwise crises would always be avoided. As for the rest, companies continue to raise their 2021 targets by leaps and bounds.
Markets still have their pockets of exuberance, not least because there is too much money flowing, even if it is not always directed where central banks would like it to go. In its semi-annual report on financial stability, the Fed yesterday warned of the need to bring more transparency to "shadow banking", which goes under the regulatory radar and allows deals like Archegos to be made. The central bank is targeting certain hedge funds and all entities that practice excessive leverage. In other words, it has its work cut out for it. An industry that it feeds, in a way, with its colleagues, by flooding the markets with liquidity to prevent the economies from going off course. There are other areas of irrationality, especially in the cryptocurrency space, even if one believes in the concept.
The final session of the week is looking good Auspices in the stock market, where recent spikes should be erased in favor of new highs at the open. The US and Chinese macroeconomic indicators are robust and counterbalance the Indian debacle in the face of the coronavirus. And to think that the country was cited as an example a few weeks ago as being close to the end of the crisis. If there is a certainty to have concerning this so confusing coronavirus, it is that humility is a prerequisite to any political and sanitary approach. The situation in India will necessarily have global implications, whether for the economy (Bloomberg reports today on how the backbones of financial institutions and IT contractors are affected), for health (the country is a major producer of pharmaceutical ingredients and finished products) and for pandemic management. On this last point, read this very good report by economists Robert Carnell and Warren Patterson on what brought this situation in India.
Economic highlights of the day
Industrial production in Germany and France, before US employment figures for April and US wholesale inventories for March are being published. Earlier today, China reported stronger-than-expected exports in April, while the Caixin services PMI for April came in particularly strong.
The dollar is down to 0.8241. Gold took the upward slope, reaching a multi-week high of USD 1?837.9 per ounce. Oil is down to USD 63.95 a barrel WTI and USD 67.44 a barrel Brent. Bitcoin is up to USD 57,600.
* Pfizer and BioNTech announced Friday that they have initiated an application to the U.S. Food and Drug Administration for full licensure of their COVID-19 vaccine, which is currently approved only for emergency use.
* Cigna raised its annual profit and revenue targets after a better-than-expected first quarter, relying on its Evernorth healthcare services business to drive growth amid COVID-19 uncertainty. In pre-market trading, the stock gained 0.8%.
* American International Group reported a better-than-expected first-quarter profit despite the impact of winter storms and coronavirus-related claims.
* Citigroup is considering providing cryptocurrency-related services in the face of customer interest, the Financial Times reported Friday.
* Beyond Meat - The plant-based protein steak specialist reported a wider-than-expected quarterly loss Thursday due to higher transportation costs, new product launches and restaurant closures. Its stock is losing 6.8% in pre-market trading.
* Square is gaining 3.4% in pre-market trading after reporting quarterly profit on Thursday that was well above market expectations, as strong demand for bitcoin fueled a surge in cryptocurrency transactions on its Cash App payment service.
* AMC Entertainment gained 3.2% in pre-market trading after saying Thursday that its business should improve in the coming months as movie theaters reopen.
* Peloton Interactive said Thursday that its quarterly revenue more than doubled in the first quarter, but estimated that a recall of its treadmills, which have been blamed for several household accidents and the death of a child, would result in about $165 million less revenue in the current quarter. The stock gained 6.6% in pre-market trading.
* WoodWard is considering a potential takeover of British engineering group Meggitt, which is up more than 7% on the London Stock Exchange, according to the Dealreporter website.
* Nike gained nearly 1% in premarket trading, following its competitor Adidas, which gained nearly 8% in Frankfurt after adjusting its sales forecast for 2021 upwards.
- Adidas: JP Morgan maintains his neutral opinion on the stock. The target price continues to be set at EUR 280.
- Alpha and Omega Semiconductor : B. Riley lifts PT to $52 From $48, maintains Buy rating
- Anheuser-Busch Inbev: Jefferies remains Buy with a price target raised from EUR 70 to EUR 75.
- ArcelorMittal: Jefferies remains Buy with a price target raised from EUR 34 to EUR 38. AlphaValue remains Buy with a target price raised from EUR 27 to EUR 30.40.
- Daimler: Goldman Sachs remains Buy with a price target raised from EUR 100 to EUR 100.
- Deutsche Bank: Morgan Stanley upgraded from Underweight to Overweight with a EUR 12.20 target.
- Etsy: Truist Adjusts Price Target for Etsy to $215 From $224, Maintains Buy Rating
- Ericsson: Morgan Stanley upgrades the stock to Overweight from Overweight with a target of SEK 135.
- Fox : Rosenblatt ups PT to $39 From $35, remains with Neutral rating
- Hammerson: Societe Generale upgrades its Buy rating to Hold with a target of GBP 38.
- Henkel: RBC remains Buy with target price raised from EUR 111 to EUR 114.
- Hugo Boss: Baader Helvea upgraded from accumulate to buy with EUR 50 target.
- Infineon: Societe Generale upgraded from Hold to Buy with EUR 41.50 target.
- Nokia: Morgan Stanley upgraded from Overweight to Overweight targeting EUR 5.
- Papa John's International : Stephens Adjusts Price Target for Papa John's International to $115 From $110, Maintains Overweight Rating
- Sika: Citigroup remains Buy with a price target raised from CHF 290 to 321.
- Societe Generale: Jefferies remains Buy with a price target raised from EUR 30 to EUR 32.
- SpringWorks Therapeutics : Wedbush improves PT to $104 From $100, maintains Outperform rating
- Stellantis: Kepler Cheuvreux remains Buy with target price raised from EUR 20 to EUR 22.
- Sun Life Financial : Credit Suisse remains Outperform, $71 PT on Sun Life Financial
- TT Electronics: Barclays starts tracking as Overweight with a target of GBP 280.
- Ubisoft: Credit Suisse lowered its target price from EUR 85 to EUR 77.
- Watts Water Technologies : Goldman Sachs lifts PT to $123 From $107, stays Neutral