So far, so good – 02/12/2024

Silence, we’re going up. The company’s results continue to lead the markets, sometimes creating wide gaps, as in the match between leather bags and beauty creams, which swung to Hermès’ advantage over L’Oréal last week. This week there will be another duel between the carp and the rabbit: Capgemini / Coca-Cola for example, or Airbus / Deere. Meanwhile, almost nothing is happening in Asia this morning due to the long weekend in most markets.

Last week the CAC40 gained 0.7%, the S&P 500 about 1.4% and the Nikkei 225 just 2%. So the bullish trend continues, even though the blue-sky scenario for investors earlier in the year (ie the Fed’s first rate cut in March and then five or six more by the end of the year) is now ancient history. The US economy is too dynamic to cut rates so quickly, the central bank made clear. The market expects only four declines in 2024, but this pace is still questionable. The release of consumer prices (Tuesday) and producer prices (Friday) for the month of January in the United States will help improve the forecast. Investors like it when the economy is doing well, but they like it even more when money is flowing. Overall, we are still on a relatively positive bias. What is the worst thing the market is currently afraid of (other than factor X)? Inflation is so strong that it will question the decline in silver prices.

The results releases shake investors out of their obsession with the Fed, artificial intelligence and Chinese growth. On this front, things are going pretty well: profit growth in 4^E The quarter was twice as fast as expected in the United States and 81% of companies exceeded expectations. The average over the past four years is 76%. Yes, companies always outperform expectations because they manage expectations very carefully and transmit carefully conservative targets to analysts. Marketing-financial optimization works very well (it is insidious, but it is also a sign of good control over one’s activity). Two-thirds of S&P500 companies have already gone public, including a large number of heavyweights. There are still some headliners left and not least, such as Nvidia, Walmart, Berkshire Hathaway, Broadcom and Salesforce. If middling stocks and downgrades took some revenge in late 2023, nature quickly returned to Wall Street. In 2024, the “Magnificent Seven” account for 60% of the growth in the S&P500. And again, I should say the magnificent six because Tesla is in the lead (-22%). But hey, the broad Wall Street index crossed the 5,000-point mark for the first time at the close on Friday.

The start of the week will be marked by the closure of most major Asian stock markets for the Lunar New Year: China, Hong Kong, South Korea, Singapore, Taiwan, Malaysia and Vietnam are affected. For good measure, the day is a public holiday in Japan, celebrating its founding. Only India and Australia are left to provide entertainment. Mumbai and Sydney lost around 0.4% earlier in the week.

Things to remember over the weekend:

• Expected results releases in Europe this week (selection): Capgemini, Airbus, Aciloluxotica, Michelin, Stellantis, Safran, Schneider, Orange, Pernod Ricard, Legrand, Heineken, Schindler, Ahold Delhaize, Genmab…
• Donald Trump is causing an uproar among United States allies by saying he is willing to encourage Russian authorities to do whatever they want with NATO members who do not contribute enough to the alliance’s budget.
• Elon Musk is scheduled to testify in the SEC’s investigation into Twitter.
• France is preparing to end land rights in Mayotte in an effort to curb the migrant crisis there, a meaningful decision that is causing debate.
• Former Finnish Prime Minister Alexander Stubb won the presidential election in his country. It symbolizes continuity, especially at the geopolitical level.
• For fans of American football and Taylor Swift, the Kansas City Chiefs won the Superbowl in a suspenseful finish against the San Francisco 49ers.

European leading indices are bullish.

Today’s economic affairs

No figures today, but speeches from Fed bankers (including Michelle Bowman at 3:20pm during the European session). The entire agenda is here.

The Euro is trading at 1.0793 USD. An ounce of gold fell to 2023 USD. Oil was steady with North Sea Brent at USD 81.66 per barrel and American WTI light crude at USD 76.54. The 10-year yield on US debt rises to 4.18%. Bitcoin is trading at $48,180.

Major changes in recommendations

• Addian: BNP Paribas Exxon maintains its neutral recommendation with a price target of 1300 to 1420 EUR.
• Ams-Osram: Jefferies Buy with a price target of 2.70 to 3.10 CHF.
• Amundi: RBC Capital maintains an Outperform recommendation with a price target of 69 to 70 EUR.
• Aperam: JP Morgan maintains its recommendation of underweight with a price target of 25 to 26.60 EUR.
• Atos: AlphaValue/Baader Europe maintains its sell recommendation with a reduced price target from 1.14 to 0.30 EUR.
• Banque Cantonale Vaudoise: Bank Vontobel AG maintains its recommendation to hold with a target price of 92 to 95 CHF.
• Crédit Agricole: AlphaValue/Bader Europe maintains its buy recommendation and lowers the price target to 16.20 EUR from 16.50 EUR.
• Deliveroo: Deutsche Bank initiates buy watch with price target of GBX 180.
• Dätwyler Holding: Bank Vontobel AG maintains its hold recommendation with a reduced price target of 196 to 190 CHF.
• Eiffage: Stifel maintains its recommendation to hold the price target, lowering it from 103.50 to 101 EUR.
• Andomines Finland: Inderes cut to sell with a price target raised from EUR 4.70 to EUR 5.20.
• Finnair: Interest moves from easing to accumulation with a price target cut from EUR 0.05 to EUR 0.049.
• Hermès International: AlphaValue/Baader Europe maintains its sell recommendation with a price target of 1411 to 1434 EUR. Goldman Sachs maintains its neutral recommendation with a price target of 2060 to 2245 EUR. William O’Neill & Co Incorporated upgrades its recommendation to Buy from drop coverage.
• HSBC: Keefe Bruyette & Woods moves from market perform to underperform with a price target cut to GBX 700 from GBX 750.
• Höegh Autoliners: Clarksons Securities AS downgrades its recommendation from Buy to Neutral with a price target of NOK 125.
• Kaufman & Broad: BNP Paribas Exxon maintains its Outperform recommendation with a price target of 30 to 33 EUR.
• Kbc Group: Morgan Stanley maintains its overweight recommendation and raises the price target from 74 to 76 EUR.
• Camira: Inderes moves from bearish to accumulate with a price target of 15 to 19 EUR.
• Kongsberg Groupon: Sperbank 1 Markets moves to neutral from buy with a price target of NOK 580 to NOK 630.
• L’Oreal: JP Morgan maintains its neutral recommendation with a reduced price target of 420 to 410 EUR. Jefferies remains underperforming with a price target ranging from 340 to 355 EUR. Stifel maintains its buy recommendation with a reduced price target of 490 to 470 EUR.
• Lloyds Banking Group: Keefe Bruyette & Woods upgrades its recommendation to Market Perform from Underperform with a price target of GBX 50.
• Lonza Group: HSBC maintains its buy recommendation and lowers price target from 560 to 540 CHF.
• Plexi: JP Morgan initiates Overweight with a price target of 33.50 EUR.
• Sanofi: JP Morgan maintains its neutral recommendation with a price target of 92 to 94 EUR.
• Shell: Baptista Research moves from Hold to Outperform with a price target ranging from USD 72.10 to USD 73.30.
• Societe Generale: Citigroup maintains its buy recommendation with a price target of 36 to 33 EUR.
• Standard Chartered: Keefe Bruyette & Woods revises its recommendation from Underperform to Market Perform with a price target of GBX 790.
• Swisscom: Goldman Sachs maintains its sell recommendation with a reduced price target of 470 to 460 CHF.
• Thule Group: Carnegie Group Buy with a price target of SEK 300.
• Total Energy: Gerdes Energy Research LLC maintains its Buy recommendation and raises the price target from $80 to $83.
• Ubisoft Entertainment: Wells Fargo maintains its market weight recommendation and lowers the price target from EUR 30 to EUR 27.
• UBS Group: Bank Vontobel AG maintains its buy recommendation and raises the price target to CHF 28 from 26.50. Morgan Stanley maintains its market weighting recommendation with a price target of 28 to 29 CHF.
• Unibail-Rodamco-Westfield: Goldman Sachs maintains its buy recommendation with a price target of 85 to 101 EUR.

in France

Important (and not so important) announcements

• The L Catterton fund, of which LVMH owns 40%, will buy 34% of Todd for 43 EUR per share.
• Battery maker ACC secures €4.4 billion in financing for three European factories. Stallantis will hold 45% of ACC’s capital, Mercedes 30% and TotalEnergies (via Ceft) 25%.
• S&P downgrades Atos to “CCC” and is at risk of default. Bluebell Fund asked the company to review its governance, according to Les Echos.
• Towards a takeover bid at 15 EUR on Believe.
• The takeover bid for Orapi was reopened from February 12 to March 8 at EUR 6.50.
• Gaussin is in talks to sell its 51% stake in GAMA (formerly Navy) to its co-shareholder Macnica.
• Key releases of the day: Cafom, Buy-Rent…

In the big world

Important (and not so important) announcements

• Mondy has confirmed it is considering a potential takeover of DS Smith, but discussions are at a preliminary stage.
• Novo Nordisk’s majority shareholder plans to invest up to $7 billion a year by 2030, according to the FT.
• The Moratti family will sell Saras shares to Vitol representing approximately 35% of the company’s capital at EUR 1.75 per share.
• Nvidia is building a new division focused on cloud computing and designing custom chips for other companies.
• ASML will launch production of its new “High NA EUV” machine at a cost of $350 million, its latest innovation to maintain its market share in the sector.
• According to the FT, BP Plc will benefit from a $700 million windfall due to tax changes in the United Kingdom.
• Jeff Bezos sells nearly $2 billion in Amazon stock.
• Diamondback Energy is nearing a merger with Endeavor, according to the WSJ.
• Apple dropped a lawsuit against Rivos for trade secret infringement.
• According to Bloomberg, Terna will buy electricity distribution assets worth €1.5 billion from Enel and Asea.
• Tesla is temporarily slashing Model Y prices in the United States.
• Key releases of the day: Arista, Waste Management, Michelin, Galp Energia, Edison… The whole agenda is here.

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