This drop comes after a few good session that saw a renewed appetite for equities from investors, despite a rather anxious context. Even the Fed's warning that it is prepared to raise interest rates more aggressively didn't faze markets, until today it seems. The most prominent sectors were those that had suffered the most since the start of the year: consumer discretionary, technology and financials. The more defensive segments were on a break.
For my part, I was fairly certain that the accumulation of bad news would plunge us into a prolonged period of doldrums. I have not completely given up on this scenario, but financial markets are playing a different tune.
Besides, one should always be wary of certainties and of things that are difficult to quantify. For example, I don't really know if investing in an electric vehicle is good for the planet and for my portfolio, even if I have a hunch, but I have been thinking about buying one for several weeks. Recent events have convinced me to do so. Of course, there are no more electric vehicles for sale. First, because many people had the same impulse as me and some of them did not procrastinate as much. Secondly, because the war in Ukraine, which is not even a month old, has cut off access to some key components, including wiring harnesses. In an industry like the automotive industry, which has spent years developing the art of "just-in-time", this is a disaster.
I can't remember which newspaper ran a headline last week that read something like "What an opportunity for the electric vehicle industry. Unfortunately, nothing is ready". Oh yes, Elon Musk is ready. He even grew a 5th giant factory in Europe, a "Gigafactory", in 22 months. 22 months between the first stone and the delivery of the first electric vehicle to a customer yesterday.
Personally, I didn't think it was possible that a guy like Musk would be able to shake up such an orderly and conservative sector as the automotive industry in such a short time. But he did it and everyone is looking to copy him. As a result, Tesla is worth more than all the other traditional car manufacturers combined on the stock market. Some say it's too much, others say it's deserved. I must admit that over time, I have gone from a skeptical and vaguely retrograde position to a form of admiration. To be perfectly accurate, Elon Musk did not found Tesla, which was founded by Martin Eberhard and Marc Tarpenning, but he was the one who orchestrated its rise to power.
All this to say that I have abandoned my initial certainty and that one must always be able to question one's positions. I therefore promise to try to find something positive and constructive in the current economic-political-strategic trends. I will start by reminding you that being invested for the long term and being well diversified is the best guarantee against the ups and downs of the financial markets.
This morning, the news is buzzing about new sanctions against Russia and European energy autonomy projects ahead of Joe Biden's arrival in Brussels tomorrow. The presence of Russia in the G20, a place coveted by Poland, will be discussed. Before that, the Ukrainian president Volodymir Zelensky will address the French parliament later today. I also note some papers on the dreaded diesel fuel shortage on the old continent and others on the fall of bonds which favors the repatriation of cash to stocks: again the "TINA": there is no alternative to stocks.
Economic highlights of the day:
On the agenda today, US new home sales figures and weekly oil inventories from the DOE.
The dollar is up 0.4% against the euro to 0.9105. The ounce of gold is up 0.5% to USD 1929. Oil remains firm, with North Sea Brent at USD 120.9 and US WTI light crude at USD 114.1. The yield on US debt rises to 2.4% over 10 years, while German debt offers a coupon of 0.50% over the same period. The French OAT is approaching 1% (0.96%). Bitcoin is trading around USD 42,000.
* The Boeing Company - One of the two black boxes of the China Eastern Airlines 737-800 plane that crashed in the mountains of southern China on Monday has been found, a representative of the Civil Aviation Administration of China (CAAC) said Wednesday.
* Apple - Several services of the American group, including Apple Music and the online store App store, affected Tuesday by an outage for the second consecutive day, are back in operation, shows a web page of the company.
* Tesla - The U.S. automaker's stock, which gained nearly 8 percent Tuesday as it opened its European plant near Berlin, gave up 1.5 percent in premarket trading Wednesday.
* Adobe - The share of the Photoshop editor is down 2.9% in pre-trade after the announcement of profit forecasts and sales for the current quarter below expectations. Several analysts have also lowered their price target on the stock.
* Intel, Micron - Executives from both companies are expected to make a plea to the U.S. Senate Commerce Committee on Wednesday for increased federal support for semiconductor production.
* Western Digital - Kioxia Holdings announced Wednesday that it plans to build a new flash memory chip production facility with Western Digital in northern Japan. According to a source, the investment could be worth about 1 trillion yen.
* Gamestop - Billionaire Ryan Cohen's company acquired 100,000 shares of GameStop stock, according to a stock exchange notice published Tuesday. The video game distributor's stock climbed 11.7 percent Wednesday before the Wall Street opening.
* General Mills - The food company on Wednesday raised its full-year profit and revenue forecasts, helped by higher selling prices and strong demand for pet food products. General Mills shares are up 3% in pre-market trading.
* Exxon Mobil - The oil company announced Tuesday that it has hired Dan Ammann, former president of General Motors, to lead its energy transition business effective May 1.
* Okta - The authentication specialist, which was the victim of a security breach exploited by the hacker group Lapsus$ that could affect up to 366 customers, is down 3.2% in pre-market trading.
Adobe: Deutsche Bank downgrades Adobe to $575 from $660. Maintains buy rating.
American Woodmark: Loop Capital Markets downgrades to hold from buy. PT up 5% to $59.
Anaplan: UBS downgrades anaplan to neutral from buy, adjusts price target to $66 from $65
Beazley: HSBC downgrades from buy to neutral targeting GBp 480.
Carnival: Stifel downgrades to $30 from $33. Maintains buy rating.
Diageo: Kepler Cheuvreux raised the recommendation on Diageo Plc to buy from hold. PT up 12% to 4,200 pence.
Nike: DA Davidson lowers price target to $170 from $179, reiterates buy rating.
Poshmark: Wedbush downgrades to $16 from $23. Maintains outperform rating.
Reckitt: Jefferies downgrades from hold to underperform targeting GBp 5000.
T-Mobile: KeyBanc Capital Markets upgrades to overweight from sector weight. PT up 23% to $155.
The Scotts Miracle-Gro: Truist Securities adjusts price target to $185 from $225, reiterates buy rating
Watches of Switzerland: Societe Generale starts tracking as a buy, targeting GBp 1430.
Wynn resorts: UBS adjusts price target to $73 from $81, maintains neutral rating