US stock market indexes managed to bounce back yesterday after Tuesday big shock, when stronger-than-expected US inflation in August plunged investors into deep disarray and sent the Nasdaq down more than 5%. This statistic, which is worse than what economists were expecting, shows that the US central bank still has work to do to regain control of prices. Investors translated this as "more rate hikes and less money in circulation for longer."

The CME's FedWatch index, which predicts rate movement at the next Fed meeting scheduled for next week, shows a 70% probability in favor of a 75-basis point increase and 30% in favor of 100 basis points. Prior to Tuesday's release, the odds of a 100-basis point rate hike were at zero. The mood has become heavier again and investors are wondering what the future holds.

There are quite few new macro statistics published today in the US. It shows that the job market is still going very strong, with initial jobless claims for the week of Sept. 10 falling to 213,000, which is well below expectations of 228,000.

In addition, US retail sales rose by 0.3% in August compared with a 0.1% decrease expected in a Bloomberg consensus, after the previous month's 0.4% decline. This is mainly due to a rise in motor vehicle sales.

Also today, Vladimir Putin and Xi Jinping will meet in Samarkand in Uzbekistan. A strong statement for the Chinese leader, as this is the first time he leaves China since the start of the coronavirus pandemic.

 

Economic highlights of the day:

Today on the agenda, a flurry of indicators: Philly Fed, retail sales and Empire Manufacturing, as well as industrial production and business inventories at 16:00. The whole macro agenda here. 

The dollar is trading at EUR 0.9995. The ounce of gold is down to USD 1685. Oil is down, with North Sea Brent at USD 95.5 per barrel and US WTI light crude at USD 87.0. The yield on 10-year US debt is firm at 3.42%. Bitcoin has stabilized at around USD 20,000.

 

Corporate news:

* Adobe is close to a deal to buy Figma, a specialist in collaborative tools for design and engineering, and the talks are for a valuation of more than $15 billion, Bloomberg News reported Thursday. Adobe shares were down 2.8 percent in pre-market trading in reaction to the news.

* Tesla is considering a review of its business strategy in China, its second-largest market, including closing dealerships in major shopping malls in cities like Beijing in favor of cheaper locations in the suburbs, two sources close to the matter told Reuters. Needham also raised its recommendation to "hold" from "underperform" on the carmaker's stock. The stock is up 0.6% in pre-market trading.

* Union Pacific, BNSF - Major U.S. railroads and unions representing 115,000 railroad employees have reached a tentative agreement on wage increases and improved working conditions, President Joe Biden announced Thursday. In pre-market trading, Union Pacific gained 4.1%, CSX 2.4%.

* Block, PayPal Holdings, Affirm Holdings - The Consumer Financial Protection Bureau (CFPB), the U.S. federal consumer protection agency, said Thursday it is considering imposing rules on deferred payment companies, saying their products and services could harm consumers.

* Walt Disney, Comcast - Comcast CEO Brian Roberts hinted Wednesday that his company would demand a premium for selling its minority stake in Hulu, which Walt Disney wants to buy before January 2024.

* AIG - AIG's life and health insurance division, Corebridge FinAancial, which begins trading Thursday, raised $1.68 billion Wednesday in its initial public offering (IPO).

* KKR announced Thursday the success of its friendly takeover bid for all of Albioma's shares, which allows the American investment fund to hold 92.19% of the capital of the French renewable energy group.

 

Analyst recommendations:

  • AstraZeneca: Credit Suisse downgrades from Outperform to Neutral targeting GBp 11,000.
  • BT Group: HSBC upgrades from hold to buy targeting GBp 185.
  • Devon: J.P. Morgan downgrades to neutral from overweight. PT up 15% to $83.
  • Electronic Arts : Atlantic Equities downgrades to neutral from overweight. PT up 2.4% to $130.
  • EOG Resources: JPMorgan raises to overweight from neutral, price target to $156 from $152.
  • GSK: Credit Suisse upgrades from Underperform to Neutral with a target of GBp 1430.
  • Hyatt: Berenberg raised the recommendation to buy from hold. PT up 13% to $105.
  • Kohl's: Jefferies downgrades to hold from buy. PT up 1.1% to $29.
  • Masimo: Wolfe Research upgrades to outperform from peerperform. PT up 9.5% to $165.
  • Netflix: Evercore ISI upgrades to outperform from inline. PT up 34% to $300.
  • Nordstrom: Jefferies upgrades to buy from hold. PT up 33% to $24.
  • Okta: Jefferies starts at Buy With $90 Price Target.
  • Phillips 66: Wolfe Research downgrades to peer perform from outperform.
  • Quanta Services: Goldman Sachs downgrades to neutral from buy. PT up 5.4% to $150.
  • Tate & Lyle: Citigroup upgrades from neutral to buy targeting GBp 850.
  • Zscaler: Jefferies starts at Hold With $200 Price Target.