Inflation for September increased 0.4%, while 0.3% was expected, while core inflation advanced 0.3%, matching the consensus. Personal income rose 0.3% (0.4% expected), while consumption expenditure climbed 0.7%, above forecasts of 0.5%.
Despite the resilience of the US economy, the results of listed companies are showing signs of weakness. Let me remind you that, not so long ago, there was constant talk of recession, while corporate margins continued to rise. Investors are disconcerted, as evidenced by the brutal, sometimes surreal reactions to guidance for the end of the year or for 2024.
Investors are on edge. When Siemens Energy and Standard Chartered are losing 34% and 12% respectively, something is wrong on stock markets. The previous day, Worldline was down 59%. Even the invincible stocks aren't necessarily doing well any more: Alphabet lost 9.5% on Wednesday, while Meta lost 9% in two days.
I haven't yet got my hands on FactSet's latest weekly analysis on corporate results, but I do have the impression that downward revisions to targets are piling up at a much higher rate than usual.
Investors can feel that things are cracking up all over the place. But as US macroeconomic statistics continue to defy all logic, they find it hard to see the Fed coming to their rescue by pretending to lift a finger, at least in the short term. Things would really have to get considerably worse on the capital markets front for the central bank to introduce into its speech a phrase like "the Fed is attentive to financial market volatility" or something to that effect. The kind of phrasing that would bring the first rate cut closer.
Yesterday's session saw the main indices continue their slide. After losing 2.5% the previous day, it was the Nasdaq 100 that took another beating, falling 1.9% at the bell. The technology index has now lost over 11% from its July peaks. The publication of much stronger-than-expected "macro" statistics in the US (GDP, durable goods orders, old real estate) is fueling the scenario that key rates will remain high for longer.
In Europe, it is difficult to identify sectoral trends after another set of results. Within the same segment, there are sometimes big differences in performance between the various players. A case in point is the banking sector, where Swedish banks and French bank BNP Paribas slipped after frankly disappointing results, while Spanish Banco Santander roared back into the green after big profits. A few months ago, readers asked us whether interest rate hikes are positive or negative for banks. The most realistic answer is that they are good (money held earns a better return) until they become bad (business is penalized and default rates rise). The question now is whether the second milestone has been reached. For AlphaValue, the answer is yes. The research firm points to the results of Swedish banks, for whom the peak of the period of windfall profits from rapidly rising interest rates has passed. AlphaValue believes that this "constitutes a powerful early warning for the European banking sector as a whole", even if each institution has a different structure which may bring forward or postpone the timing of this peak. A shake-up in the sector would not be insignificant: it accounts for 9% of European capitalization and 16% of the continent's total dividends.
The deluge of corporate earnings releases continues. Good figures from Amazon and Intel are helping to restore the tarnished reputation of technology stocks. The rebound in Nasdaq futures has inspired Asian and Pacific markets. Japan and Hong Kong recovered by just over 1%. Things were more complicated in South Korea and Australia, where rebounds were fairly modest. Mainland China and India are in between.
Economic highlights of the day:
US PCE inflation, as well as US household income and spending are on the agenda, followed by the University of Michigan confidence index. The full agenda is here.
The dollar is trading at EUR 0.9456 and GBP 0.8237. The ounce of gold is solid at USD 1982. Oil recovers but remains under pressure, with North Sea Brent at USD 88.13 a barrel and US light crude WTI at USD 84.28. The yield on 10-year US debt fell back to 4.85%. Bitcoin is trading at around USD 34,100.
In corporate news:
- Amazon.com gained 4% in pre-market trading following the publication of its results. The group said on Thursday it expected a jump in sales and earnings in the fourth quarter, with a successful campaign for special promotion days, faster deliveries and an improved outlook for its cloud computing division.
- Intel said it expected sales for the October December period to exceed wall street estimates, expressing optimism about a rebound in orders for its semiconductors after several quarters of slowing pc sales led to a build-up of inventories.
- Ford Motor fell by 2.5% in pre-market trading, as the company withdrew its annual sales forecast pending the signing of an agreement with the main us auto workers' union (uaw). The automaker also warned of pressure on demand for electric vehicles.
- Exxon Mobil posted third-quarter earnings of $9.1 billion on Friday, down some 54% on the record profit posted a year ago, but up quarter-on-quarter thanks to the recovery in oil prices. Third-quarter earnings were $2.25 per share, compared with $4.68 in the same quarter last year.
- Chevron posted lower third-quarter earnings on Friday, despite rising oil prices, sending its shares down 2% before the opening. The oil group posted net income of $6.5 billion, or $3.48 per share, compared with $11.2 billion, or $5.78 per share, in the same period last year.
- Juniper networks beat consensus for third-quarter sales on Thursday, benefiting from increased demand for cloud computing. The company's preliminary revenues fell 1% to $1.40 billion, but beat expectations of $1.39 billion for the quarter ended September 30. The stock gained 5% after the close.
- Dexcom - the medical device manufacturer raised its annual sales forecast on Thursday and beat quarterly estimates thanks to strong demand for its devices. The share price rose by more than 14% after the close. Quarterly sales rose 27% to $975 million, against a consensus of $939.24 million.
- Resmed - the medical equipment manufacturer lost 7% after the close, as the group reported quarterly sales up 16% to $1.10 billion, largely in line with consensus.
- Capital one financial climbed 4.7% after the close after reporting third-quarter adjusted earnings per share of $4.45, beating analysts' estimates of $3.25, thanks to higher interest rates on its loans.
- Chipotle Mexican grill surprised the consensus on Thursday thanks to strong demand for its products, despite weakness in the foodservice sector. The chain's comparable sales climbed 5% in the third quarter, exceeding the 4.46% increase expected on average by analysts.
- Quarterly results for AbbVie and Colgate-Palmolive will be published before the opening.
- JPMorgan chase - ceo Jamie Dimon will sell part of his stake in the bank in 2024, the first such share sale he has made since taking the helm. Dimon intends to sell one million of the 8.6 million shares he owns.
- Rithm capital - the asset manager will acquire sculptor capital management for $12.70 per class a share, in a transaction valuing the company at approximately $719.8 million, the two companies said friday.
- Eli Lilly said Thursday that the US Health regulator had approved its drug to treat adults with a type of chronic inflammatory bowel disease, which is a multi-billion dollar market.
- Youtube, a division of alphabet, is considering joining meta in applying for e-commerce licenses in Indonesia after the country banned online purchases on social media platforms, people familiar with the discussions said.
- General motor - gm's cruise autonomous driving division said it is suspending autonomous driving trials across its fleets, the company said Thursday.
- The impact on Taiwan of the latest us restrictions on the export of its high-end artificial intelligence chips to China should be limited and manageable in the short term, a senior executive at chipmaker tsmc said on Friday.
- Agnico eagle min: Veritas Investment Research maintains its buy recommendation with a price target raised from CAD 90.70 to CAD 91.20.
- Amazon.com: Morningstar upgrades to buy from hold with a price target raised from USD 150 to USD 155.
- Bio-rad: RBC Capital maintains its outperform rating and reduces the target price from USD 513 to USD 482.
- Bristol-myer: BMO Capital Markets downgrades to market perform from outperform with a price target reduced from USD 70 to USD 60.
- Capital one fina: Morgan Stanley maintains its underweight recommendation with a price target raised from USD 86 to USD 87.
- Comcast: Scotiabank downgrades to sector perform from sector outperform with a price target reduced from USD 50 to USD 49.
- Datadog: Wells Fargo downgrades to equalweight from overweight with a price target reduced from USD 120 to USD 95.
- Enphase energy: Piper Sandler & Co downgrades to neutral from overweight with a price target reduced from USD 150 to USD 75.
- Eqt corp: JP Morgan maintains its overweight recommendation with a target price raised from USD 44 to USD 46.
- Idex corp: Citi maintains its buy recommendation with a price target reduced from USD 255 to USD 238.
- Intel corp: Morningstar upgrades to buy from hold with a price target raised from USD 35 to USD 40.
- Kellanova: Jefferies maintains its hold recommendation with a price target reduced from USD 62 to USD 53.
- Masco corp: Loop Capital Markets maintains its hold recommendation with a price target reduced from USD 61 to USD 56.
- Mastercard: Citi maintains its buy recommendation with a price target reduced from USD 455 to USD 450.
- Merck & co: BMO Capital Markets upgrades to outperform from market perform and raises the target price from USD 113 to USD 132.
- Northrop grumman: Morningstar upgrades to hold from sell with a price target raised from USD 434 to USD 440.
- Roblox: Truist Securities upgrades to buy from hold with a price target raised from USD 35 to USD 37.
- Southwest air: Morningstar downgrades to sell from buy with a price target reduced from USD 36 to USD 19.
- Sun communities: Compass Point Research & Trading maintains its neutral recommendation with a price target reduced from USD 125 to USD 116.
- Target corp: Wells Fargo maintains its equalweight recommendation with a price target reduced from USD 135 to USD 120.
- Verisign: Citi maintains its buy recommendation with a price target raised from USD 243 to USD 245.
- Vulcan materials: Loop Capital Markets maintains its buy recommendation with a price target reduced from USD 260 to USD 250.