Dow +0.44%, S&P 500 +0.51%, Nasdaq -0.16%, Russell 2000 +0.12%, SOX -0.21%, Eurostoxx +0.11%, SMI -0.08% .
Wall Street ends the week pretty well, despite the fact that bond rates seem to no longer want to stop and are heading up. Friday’s news flow remains fairly subdued, we continue to follow the Ukrainian dossier, with rather reassuring information, Interfax reports that the Russian army will now focus on taking control of the Donbass, will it roll elsewhere? For his part, Joe Biden would suggest that President Zelensky negotiate with Vladimir Putin and cede part of Ukraine. In terms of economic statistics, we note the University of Michigan Consumer Confidence index hitting its lowest level since 2011 in March, while inflation expectations soared to a 41-year high. Not enough to reassure the equity investor, but be that as it may, nothing seems to really destabilize the indices these days, not even bond rates in orbit, I come back to that. The S&P500 (SPX) is ending its day near its session high and is now staring at its 100-day moving average. Trading volumes are literally dismal, 28% below the average of the last ten days, which was no longer crazy.
Volatility is on one knee, with the VIX down 4% to just above 20 on the bell. In terms of sectors, today’s SPX podium consists of Energy, Utilities and Finance. It’s interesting to see how energy and financial numbers rise together… 9 out of 11 SPX sectors ended their day in the green. Such a good performance of stock indices is impressive and even worrisome. The CFTC (Commodity Futures Trading Commission) reports that short selling of U.S. stock index futures reached its highest level since 2011 last week. Read: If the index continues to rise, there may be massive coverage of short positions, watch carefully. In any case, we are not really looking for shelter in this market, gold is pulling back to 1935 dollars an ounce, the yen continues to decline, the dollar / yen pair is moving at 123.50 this morning, after the Bank of Japan announced a still very expansionary monetary – credit policy. The dollar is in demand, trading at 1.0955 against the euro, but this is mainly due to rate hike expectations that continue to rise. As such, this week we will be keeping a close eye on the PCE (Personal Consumer Expenditure) index on Thursday and the US Monthly Employment Report on Friday.
Over the week, the US clearly beat Europe, SPX has fallen only 4.7% since January 1, and Eurostoxx50 has lost 10%. Factors influencing this market remain the war in Ukraine, disruptions in the supply chain, monetary policy and upcoming revisions of the company’s results. We may also consider including Will Smith in this cocktail or not…
The pressure from the bond market is not letting up an inch, and yields continue to rise. US 10-year bonds are trading at 2.50% this morning and are about to break out of a down channel that began 40 years ago. The yield curve flattens even more and the 2/10 year spread falls to 9 basis points (21 points on Friday). Children aged 5 to 10 now have -14 points. Currently yielding 2.40% on 2-year bonds, they have just achieved their strongest gain since 1984. The market message couldn’t be clearer: stagflation is feared like the plague, and the swap market is now valued at 200 basis points this year; Only 8 increments.
This growing dichotomy between views on stocks and bonds raises many questions: Why isn’t the stock market crashing? When will this rally end? Who buys shares? What happened to the saying “don’t fight the Fed”? So why are retail investors now reverting to this rather inappropriate YOLO (You Live Only Once) mindset?
Oil slightly lower, with a barrel of WTI light crude trading at $108.97 this morning after reports that the Aramco plant fire was under control following the attack.
It’s frankly good in Geneva, Watches and Wonders opens its doors the day after tomorrow at Palexpo. Watches and Wonders Geneva is the new name of the Salon International de la Haute Horlogerie (SIHH). In 2020, the first edition went entirely online, expanding its audience and versatility. The Watches and Wonders concept has been around since 2004 with local branches such as Beijing, Hong Kong and Miami. So he lives in Calvin City again, which is good.
Only one statistic is expected today, US wholesale inventories for February.
Adecco: JP Morgan went from neutral to worse, targeting 42 francs. Nestlé: Jefferies is still not up to the task: the target has been reduced from 110 to 100 francs. Unilever: Jefferies remains long, target lowered from 4700 to 4130 GBp. The FCC is adding Kaspersky, China Mobile and China Telecom to its list of threats. Temasek is campaigning to replace Bayer CEO Werner Baumann, according to Bloomberg. Daimler Truck’s CEO points to the “perpetually” high cost of electric vehicles without government subsidies. CVC may acquire a stake in a subsidiary of Telecom Italia. CSL confirms its intention to squeeze and delist Vifor. Zurich Insurance removed its Z logo from social media, the letter has become a sign in Russia of support for Moscow’s invasion of Ukraine.
Tonight and this morning in Asia, the indexes are trading in a scatter. Hong Kong was up 1.20%, Tokyo lost 0.73% after the bell, Shanghai was in balance, as was Seoul. SPX futures fell 12 points and Europe opened up 0.8%.