Today on Wall Street: Out with the old

The galloping inflation recorded in the United States in October does not seem to upset stock markets too much. Still, investors are closely monitoring these price increases, because they are likely to force the U.S. central bank to raise its key interest rates at an accelerated pace, which would mean the end of easy access to money. Investors know that the liquidity tap will be turned down, but they hope that the process will be gradual. The more inflation and its ramifications shake the building, the more likely it is that the Fed will tighten conditions faster than expected.

But for now, stock markets seem to have taken it in their stride. Wall Street corrected well on the news of the pace of price increases on Wednesday, but indexes barely moved away from their records. Yesterday, the S&P500 and the Nasdaq rebounded, but not the Dow Jones, which was weighed down by a 7% drop in Walt Disney stock. The entertainment giant was caught up in the normalization of the performance of its streaming service Disney+, which has reached a plateau after a successful launch and now has to fight with the same weapons as the competition, that is to say, spend more to acquire new customers.

Earnings season mostly had some pleasant surprises. The outlook for companies has not been hurt by shortages and cost increases, contrary to what some in the financial community feared. Morale remains high, as evidenced by the increase in financial transactions and the continuation of exuberant IPOs. The latest one is electric vehicle specialist Rivian, whose price has risen from $78 to $123 in two sessions and which is already worth a little more than $105 billion. To give you an idea, this is more or less the current capitalization of Daimler. The Californian company has so far sold just under 150 electric pickups since its creation, mainly in test with its employees. That's how many vehicles Mercedes sells in half an hour worldwide.

This suggests that traditional carmakers are considered old news and new entrants the big winners of tomorrow. Elon Musk, the boss of Tesla, sounded a bit condescending when he said he hoped that Rivian will one day it be able to be profitable. While reminding us that out of hundreds of startups, "Tesla is the only U.S. automaker in the last 100 years to have achieved high production volumes and positive cash flow."

On the political front, the climate conference is set to deliver its verdict this Friday. COP26 is heading straight for a fiasco when it is supposed to be the last chance to reach the climate goals decided in Paris. "Unless there is a miracle today", as Liberum Bank wrote in a paper this morning, the result should be far from the stakes.

 

Economic highlights of the day:

The University of Michigan consumer confidence index and the JOLTS survey on job openings in the United States are the main indicators of the day

The dollar/euro pair is trading at EUR 0.8736. The ounce of gold is down a few cents to USD 1855. Oil is also down to USD 80.0 for WTI and USD 81.50 for North Sea Brent. Bond yields are roughly flat, with a US 10-year paying 1.55% and a Bund at -0.24%. Bitcoin is back up around USD 63,980.

 

On markets:

* Johnson & Johnson announced Friday its intention to split into two independent entities, one combining its pharmaceutical and medical device businesses, the other consumer products. The stock gained 4.3% in pre-opening trading.

* Lordstown Motors announced on Thursday that it would postpone the launch of its Endurance electric pickup by three months due to shortages of components and raw materials. The stock is down a little more than 10% in pre-market trading. BTIG lowered its recommendation from "buy" to "neutral".

* Tesla - The electric carmaker's chief executive, Elon Musk, sold an additional 639,737 shares for a total of just over $687 million, stock exchange notices made public Friday show, continuing to reduce his stake. It had already sold about $5 billion worth.

* Swiss luxury goods group Richemont said it is in discussions with Farfetch to acquire a stake in its online retail subsidiary Yoox-Net-a-Porter (YNAP).

* Biogen gained 2.1% in pre-market trading after the publication of positive results from trials of its Alzheimer's disease treatment Aduhelm, which has already been approved by the US authorities.

* NXP Semiconductors said Thursday it is targeting $15 billion in revenue by 2024, driven in part by growth in electric vehicle revenue.

* JD.Com - The Hong Kong-listed online shopping group's stock gained 5.17 percent Friday, its best performance in a month, after announcing record sales for "Singles' Day," one of the year's biggest promotional deals. Alibaba, on the other hand, lost 0.4% in pre-market trading after announcing a slowdown in its sales growth on the same day.

* Luminar Technologies reported Thursday a quarterly revenue below market expectations and the stock was losing 2% in after-hours trading.