In addition, new data from the Labor Department today showed the number of Americans filing new claims for unemployment benefits dropped last week, which shows a further tightening of labor market conditions, which is likely to keep inflation high. Initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 166,000 for the week ended April 2, versus a Reuters forecast of 200,000 applications.

Will the Fed be able to ensure a soft landing for the US economy? This is the question that investors have been asking themselves for some time now. But it is becoming more important as important deadlines approach and the central bank's resolve is confirmed.

After taking a bit of a back seat, the narrative surrounding the U.S. central bank's monetary policy is coming back to the forefront. Investors are trying to determine how motivated the Fed is to put out the inflationary fire. Despite the good health of the US economy, the business community fears the consequences of the end of easy money.

In this context, yesterday's release of the Fed minutes reinforced fears about the Fed's resolve. The market is always bipolar and knows that the Fed must do something to regain control of the situation, but goes into a tantrum any time such measures are about to materialize. ING economist James Knightley believes the minutes from the latest policy committee show an increased willingness to regain control of inflation through a series of aggressive rate hikes and rapid balance sheet reduction. "We expect the federal funds rate to reach 3% early next year, but as recession risks increase, rate cuts will again be considered before the end of 2023," the specialist predicts.

In fact, the evolution of stock prices could largely depend on the ability of investors to look ahead to the medium term. In the optimistic scenario, they believe that the Fed will meet its objectives despite a more complicated period for financing, and that it will have the ability to reverse the situation when the time comes to restart the machine. This is essentially the plan described by Knightley just above, and it is the one suggested by the occasional incursions of the yield curves into the inversion zones between shorter and longer maturities.

But there is of course also a pessimistic version. In this scenario, external shocks, such as the consequences of the war in Ukraine, limit the effects of the Fed's voluntarist policy, and the Fed also faces internal pressures from the effects of its policy, particularly in the credit market. It is not managing to catch up and growth remains below the rise in prices. Stock markets are getting into a tailspin with the reduction in available liquidity, which is weighing on demand.

Nobody knows which scenario will prevail, especially since financial realities are often in-between. But uncertainty makes for nervousness and it often takes time for investors to take the full measure of the upheavals underway. Yesterday, stocks had to endure a second session of doubt. Indexes with a majority of highly valued or cyclical stocks suffered greatly. The Nasdaq 100 fell for a second time by more than 2%. Utilities, Health Care and Consumer Staples were in the green...

In other news, tensions surrounding the Ukrainian conflict continued, in particular the implementation of extra sanctions targeting Russian interests. Warren Buffett invested heavily in HP Inc. and there are rumors of competing bids for the Italian infrastructure giant Atlantia.

 

Economic highlights of the day:

German industrial production, EU retail sales and US weekly employment data are today's main indicators.

The dollar is trading at EUR 0.9173. Gold is up to USD 1932. Oil is rather close to its recent lows, with North Sea Brent at USD 101.3 and US light crude WTI at USD 96.80. The yield on 10-year US debt is down slightly to 2.58% on 10-year. Bitcoin falls to USD 43,400 a coin.

 

On markets:

* Berkshire Hathaway, Warren Buffett's company, took a stake of about $4.2 billion in Wednesday's trading in HP, a stock advisory shows. HP shares are up 11.7 percent before the Wall Street opening.

* Electric car maker shares rise in pre-market trading after a meeting between Joe Biden's administration and industry leaders, at which the U.S. government talked about a consensus on interoperability of electric vehicle charging stations.

* Tesla will recall 127,785 Model 3 vehicles in China because of potentially faulty semiconductors that could cause accidents, the industry regulator announced Thursday.

* The Boeing Company - A company-built 737 MAX operated by Shanghai Airlines landed in Shanghai on Thursday, flight-tracking websites show, raising hopes that the aircraft will resume commercial operations in China. Boeing shares are up 1 percent in pre-market trading.

* Blackstone - Sources said the U.S. private equity group and the Benetton family are considering a possible counteroffer for Italian highway and airport operator Atlantia, which has been approached by Global Infrastructure Partners (GIP) and Brookfield Infrastructure.

* Meta Platforms is considering integrating virtual tokens and cryptocurrencies into its applications to pay content creators and develop financial services as part of its metaverse project, the Financial Times reported Wednesday. Meta shares are up 1% in pre-market trading.

* Alphabet - Roskomnadzor, Russia's communications regulator, announced on Thursday retaliatory measures against Alphabet subsidiary Google, accused of spreading "false images" about the Ukrainian conflict, including a ban on all advertising for the platform.

In addition, the conviction in France of Google to 150 million euros fine for abuse of dominant position in the advertising market was confirmed on appeal, a spokesman for the group said Thursday.

* Levi Strauss & Co. reported better-than-expected quarterly results Wednesday night on the back of higher prices and solid demand. The stock jumped 5.5% in pre-market trading.

* Regeneron - The U.S. drugmaker and Sanofi announced Thursday that the European Commission has extended the marketing authorization for their treatment Dupixent in a form of severe asthma in children aged six to 11.

* Caesars Entertainment- British online gaming group 888 will pay about 585 million pounds, nearly 30 percent less than the 834.9 million previously expected, for the international assets of William Hill, owned by Caesars Entertainment, the companies announced Thursday, citing economic and regulatory changes.

* JD.Com - The Chinese online shopping site, facing slowing growth, on Thursday promoted its chairman Lei Xu to CEO to succeed founder and CEO Richard Liu, who will focus on the company's rural operations and supervision of young managers. The stock is down 1.6% in pre-market trading.

 

Analyst recommendations:

  • Abbvie: Morgan Stanley raises AbbVie's PT to $192 from $142, keeps Overweight rating
  • AbioMed: Wolfe Research initiated coverage with a recommendation of peerperform. PT up 5.2% to $330.
  • Aerojet: J.P. Morgan upgrades to overweight from neutral. PT up 22% to $49.
  • Autonation: J.P. Morgan upgrades to overweight from neutral. PT up 33% to $130.
  • Blackstone: Exane BNP Paribas downgrades to neutral from outperform. PT up 14% to $135.
  • Brewin Dolphin: LBBW moves from Outperform to Market Perform targeting GBp 515.
  • Bristol-Myers Squibb: Morgan Stanley downgrades  to Underweight from Equalweight, adjusts Price Target to $64 from $66
  • Cullen/Frost Bankers: Wolfe Research upgrades to outperform from underperform. PT up 23% to $171.
  • Dana: Barclays downgrades to equal-weight from overweight. PT up 12% to $18.
  • Edwards Life: Wolfe Research initiated coverage with a recommendation of outperform. PT up 11% to $134.
  • Ford: Barclays downgrades to equal-weight from overweight. PT up 10% to $17.
  • Hays: Jefferies remains Buy with a price target reduced from GBp 205 to GBp 160.
  • Inspire Medical: Wolfe Research initiated coverage with a recommendation of peerperform. PT up 5.4% to $270.
  • Intuitive Surgical: Wolfe Research initiated coverage with a recommendation of peerperform. PT up 9.1% to $315.
  • Lazard: Wolfe Research downgrades to underperform from peerperform. PT up 14% to $39.
  • PageGroup: Jefferies downgrades from buy to hold targeting GBp 570.
  • Masimo: Wolfe Research initiated coverage with a recommendation of peerperform. PT up 9.4% to $160.
  • ResMed: Wolfe Research initiated coverage with a recommendation of outperform. PT up 13% to $280.
  • Royalty Pharma: Morgan Stanley upgrades to Overweight from Equalweight, adjusts Price Target to $48 from $46
  • RPM International: Fermium Research downgrades to hold from buy. PT up 5.6% to $92.
  • Sonic Automotive: J.P. Morgan downgrades to neutral from overweight. PT up 36% to $57.
  • Sthree: Jefferies maintains a Hold rating with a price target reduced from GBp 500 to GBp 430.