Shallow do not do spring

Financial markets have benefited from their rally this week, benefiting from lower-than-expected inflation in the US and aggressive intervention by the Federal Reserve in September, so it appears that risk appetite remains for the time being, despite the specter of a recession. The company’s better-than-expected publications generally maintained the buying trend during the summer period.

Weekly Variations*
tops/flops week

to rise:

trade office (+35%): The return of investor appetite for technology stocks has largely benefited the digital marketing company, which was reassured with quarterly results in line with expectations.

Shock Wave Medical (+26%): The quarterly results of the company that develops medical devices for cardiology are higher than expected. A favorable first half of the fiscal year enabled the department to increase its annual turnover range.

Aviva (+16%): The British insurer will return more money to its shareholders, after it posted a larger-than-expected increase in operating profit in the first half, thanks to a strong performance in commercial insurance. The share repurchase program, the size of which has not yet been determined, will be launched when the 2022 results are published.

Struer (+13%): The German foreign media group has done well financially in the first half and is bullish for the rest of the financial year. Enough to reduce the accumulated stock market losses since 1Verse January.

Western Petroleum (+11%): Berkshire Hathaway increased its positions in the Oil group, rising to 20.2% of the round. Therefore, Warren Buffett is stepping up his bet in the oil sector, which helped achieve an honorable performance for his holding company in the first half of 2022.

total energy (+8%): Brent crude’s 6% rebound this week has boosted oil companies. The French major benefits from this.

Nixie (+8%): Reuters reveals that lower inventory this year has prompted buyers to approach the Italian payments specialist. Silver Lake Fund will be one of them.

in decline:

Warner Bros. (-10%): The group continues to pay the consequences of the reduction in its goals last Friday. The warning caused a 17% drop in address in one session. So he has since lost ground, despite his rebound on Thursday.

Universe (-11%): Cold rain awaits investors with lower annual expectations this week. Analysts who were positive found the review to be not very serious. Those who were negative see their fears confirmed. nothing new.

GSK (-13%) / halon (-13%) / Sanofi (-12%): The three labs were shaken by the return of the Zantac rumor. This anti-ulcer drug was available over the counter in North America until it was put on the market in 2019 after possible contamination with a potentially carcinogenic compound. A trial with several plaintiffs began on August 22 in the United States, which has raised concerns. Even if analysts seem to underestimate the impact of litigation, lawsuits in the United States always carry an element of risk.

Hapag Lloyd (-15%): The CEO said yesterday during a conference call with analysts that global growth in the container fleet will outpace freight demand from next year and ease the current tension in the market. Kepler Cheuvreux lowered its recommendation to continue with a target of €311.

sharpening (-18%): Analytics Software Specialist quarterly results are modest, annual forecasts have been lowered, due to delays in signing several large contracts with the US government and the more general context of the slowdown in expenditures.

XP Inc. (-21%): The results of the US-listed Brazilian broker did not convince investors, in a more difficult context for the sector in recent weeks. JP Morgan Chase planted an extra band on Thursday by lowering its recommendation from overweight to neutral.

Raw materials

On the main lines: Another week of increases in the commodity markets, such as the CRB Commodity Index which rose 3.6% in just five days. The energy division continues to grow despite the rising dollar.

oil : a bearish week for oil. Black gold prices are around $95 per barrel for Brent crude ($97) but also for WTI ($92). This is a drop of about $30 since the June highs. This decrease, as the International Energy Agency (IEA) asserts, is mainly due to oversupply. With an average of 100.5 million barrels per day in July, we reached the highest levels since January 2020, just before the pandemic began. However, demand remains strong. The agency revised up its estimate for 2022 by 380,000 barrels per day, to 99.7 million barrels per day.

metal : The general sentiment in the precious metals sector remains in recovery. Thus, the return of risk interest, which can be observed in recent sessions, is benefiting gold buyers. Barbarian Relic is trading around $1,793. Industrial metals are also gaining some traction since the recent Fed rate hike. Lead is trading at $328, copper recovering slightly at $572 while aluminum stagnates at $156.

agricultural products : The price of corn has recovered sharply in Chicago, and wheat is walking in water. The price of structural timber in the soft commodities registry still rebounded somewhat at $593 per 1,000 feet panel.

matte striped
total economy

vibration: Finally good news. For the first time in months, US inflation numbers were less hot than expected. Investors cheered with delight at the announcement, particularly in favor of highly-leveraged stocks. But they did not shout for long, as if they needed confirmation to continue the recovery that began in July. Thursday’s announcement of lower producer prices could have been such confirmation, but that wasn’t really the case. However, price normalization is an important step to improve macroeconomic visibility.

modified : The yield curve remains inverted in the US, with the 10-year yield at 2.85%, versus 3.19% for the two years. Therefore, the market is sticking to its guns, believing that short-term economic conditions are deteriorating. It’s hard to blame him. But the publication of a weaker-than-expected inflation rate in July led to a downward revision of expectations for a key rate hike: the mainstream expects a 50-point Fed tightening in September. Until the inflation was published, expectations were in favor of an increase of 75 basis points. In Europe, the European Central Bank is working to avoid a rise in the spread between German debt (0.95%) and Italian debt (3.03%). The French OAT is 1.52% over 10 years.

coins : The euro has regained some color against the dollar. We find it at $1.03, a level that fell at the beginning of July. However, the single currency has remained down 9.5% since the beginning of the year and is also struggling against the franc at CHF0.9705. The dollar lost ground against the major currencies after the release of inflation figures on Wednesday, which thus points to a potentially shorter-than-expected monetary tightening cycle. The dollar index fell by about 105 points.

Cryptocurrency : In the wake of US stock indices, Bitcoin has continued its rally this week and is now hovering around $24,000 at the time of writing. For its part, ether is clearly outperforming the market leader, posting a 6-fold increase since the beginning of August. Thus, ETH is back to hovers around $1,900 after dropping below the psychological $1,000 limit in June. A crazy development explained above all by the renewed appetite of investors for risky assets in recent weeks.

Evaluation : Key statistics for the next week are due on Wednesday with retail sales for July in the US. On the same day, the US central bank will publish the detailed minutes of its last meeting. Other notable events include Chinese retail sales (Sunday night – Monday) and UK July inflation (Wednesday).

price chart
Shallow do not do spring

This week was marked by good news about inflation, which came in at 8.5% year-on-year in the US. That’s down from the 40-year-old’s record broken in June of 9.1%. Perhaps this beginning of the inflection will be confirmed in the coming months, and will then allow us to confirm that we have finally reached a historic peak. But let’s not get carried away too quickly. Shallow do not do spring. It is too early to frame the economic recovery scenario as a central scenario, especially since so many other factors play a role in defining a recession. Caution should be exercised after this remarkable recovery in the major stock markets. I wish you a happy weekend to all investors.

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* The weekly changes in the indices and stocks displayed on the dashboard are for the period from Monday when the respective markets open until Friday when this newsletter is sent out.
The weekly variations of raw materials, precious metals and currencies displayed on the dashboard are for a period of 7 consecutive days from Friday to Friday until this newsletter is sent. These assets continue to trade on the weekends. 2022

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