Volatility came down (slightly) yesterday, with Wall Street indexes ending on moderate declines, despite the announcement by the United States of an embargo on the import of Russian oil and other sources of energy. Well, the fact is that indexes continued to slide anyway, with a curious sectoral muddle that shows that investors are not all in agreement on what to do. There are the cautious, who continue to cement their defensive positions. The opportunists, who are overexposed to energy. Or the inveterate optimists, who see a good opportunity to buy back cheaply. This confusion has allowed sectors such as auto and energy to move in the same direction.

Energy, in fact, is at the heart of the paradox: the EU has increased its sanctions against Russia, but it cannot, as things stand, do without gas from the East. The United States does not have this problem. For a few days, it had become almost obvious that the White House would draw this new weapon of pressure, with or without the Europeans. This explains the moderate reaction of financial markets, which had time to integrate this scenario. This did not prevent oil from rising again to USD 130 per barrel of Brent.

Honestly, it is hard to find any positive economic elements in the short term. The tidal wave of price increases does not bode well, and the latest companies to report results tend to announce targets with conditional guidance or none at all. The mood has changed a lot compared to the companies that reported before the Russian invasion of Ukraine. Apart from new developments in the conflict in Ukraine, it is the political and economic meetings that are likely to dictate the direction of the of financial markets. The ECB meeting scheduled for tomorrow, the EU summit in Versailles on Thursday and Friday, while awaiting the Fed's monetary policy announcements on March 16. Between now and then, a lot can happen. 

 

Today's economic highlights:

The JOLTS survey on U.S. job openings in January and the DOE weekly oil inventories are on the agenda today. This morning, Japan reported annualized growth of 4.6% in Q4 2021, while the market was hoping for 5.6%. Chinese inflation came in at 0.9% in February, in line with expectations.

The dollar rallied to EUR 0.9074. The ounce of gold beats its recent highs at USD 1993. Oil is taking in the U.S. embargo on Russian imports, with North Sea Brent is trading at USD 121.53 and U.S. WTI light crude at USD 117.61. US debt yields are flat at 1.78% on 10-year, but the Bund is back in positive territory at 0.11% (vs. -0.02% the day before). Bitcoin rebounded to USD 42426 after a real fake US Treasury statement on cryptocurrencies.

 

On markets:

* Apple - The giant of new technologies, which finished down by 1.2% Tuesday, gains 2.2% in pre-trade Wednesday in the wake of the presentation of, among other things, new Mac computers and a new entry-level iPhone compatible with 5G. Analysts believe that this last model could allow the American group to increase its market share in mobile telephony, especially in China and India.

* The British government said Tuesday it is preparing a bill to require Google, Facebook, Twitter and other platforms to take more steps to prevent abuse and other online fraud after calls from consumer groups and Ofcom, Britain's telecommunications regulator.

* Activision Blizzard - The U.S. Justice Department and the Securities and Exchange Commission (SEC) are investigating alleged insider trading by IAC chairman Barry Diller, Alexander von Furstenberg, his son-in-law, and David Geffen, a music producer, who bought shares of the video game publisher days before the announcement of its sale to Microsoft, the Wall Street Journal reported Tuesday.

* Starbucks said Tuesday it was closing its cafes and suspending all operations in Russia, while Coca-Cola and Pepsi announced a temporary halt to sales of their beverages in the country, decisions that came in the wake of the invasion of Ukraine.

* Yum Brands - The owner of KFC and Pizza Hut restaurants announced a suspension of its investments in Russia, a key market for the group, following the Russian invasion of Ukraine.

* Schlumberger - The stock is down 3.3% in premarket trading Wednesday after the group warned of a possible impact of the Russian-Ukrainian conflict on its current quarter's results, with Russia accounting for about 5% of Schlumberger's global revenue.

* Netflix - Spencer Neumann, Netflix's chief financial officer, said Tuesday that his company has no plans to launch an ad-supported streaming video offering but did not rule out such an offering in the future. Walt Disney announced last Friday its intention to offer a cheaper subscription to Disney+ in exchange for advertising.

* Bumble- The U.S. dating site reported Tuesday a better-than-expected quarterly profit and said it expects strong international growth this year. The stock jumped 22.8% in trading before the Wall Street opening.

 

Analyst recommendations:

  • Bumble: Piper Sandler adjusts  price target to $21 from $35, maintains neutral rating.
  • Dollar Tree: Piper Sandler raises to overweight from neutral, price target to $181 from $157
  • Domino's Pizza: Loop Capital Markets downgrades to hold from buy. PT up 5% to $413.
  • Emerson Electric: Oppenheimer upgrades to outperform from market perform. PT up 17% to $110.
  • Eversource: Wolfe Research downgrades to peerperform from outperform. PT edges down 0.1% to $85.
  • Idex: Cowen upgrades to outperform from market perform. PT up 20% to $220.
  • J.B. Hunt: Goldman Sachs upgrades to buy from neutral. PT up 19% to $231.
  • Lululemon Athletica: Jefferies reiterates hold rating following footwear launch, maintains $340 price target.
  • Marathon Petroleum: Scotiabank raises price target for marathon petroleum to $85 from $79, maintains sector outperform
  • NatWest: Investec upgrades to buy from hold. PT up 9.6% to 225 pence.
  • Nvidia: Punto Casa de Bolsa upgrades to buy from hold. PT up 29% to $277.
  • PPL: Wolfe Research upgrades to outperform from peerperform. PT up 14% to $30.
  • Rio Tinto: Citigroup downgrades from buy to neutral.
  • Rotork: RBC upgrades from Underperform to Outperform targeting GBp 345.
  • Vesuvius: RBC upgrades from sector perform to outperform targeting GBp 475.
  • Lockheed Martin: Wolfe Research upgrades to outperform from peerperform. PT up 4% to $467.