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A smooth landing without a hitch?

  • Post category:Economy News
  • Reading time:9 mins read

The equity markets closed yesterday on fairly disparate paths, which do not call into question the new dominant sentiment: the American central bank lowered its inflation alert level by one notch. The message was passed by the president of the institution himself, Jerome Powell, on Wednesday evening. A feeling reinforced by macroeconomic statistics which came to support the scenario. US PCE inflation, which the Fed is said to be watching a lot, has slowed a bit more than expected. The PMI activity indicators are in the contraction zone. In the minds of investors, less inflation and slower economic activity are signs that the central bank will be able to moderate the pace of its monetary tightening cycle. The boss of the New York Fed, John Williams, tried yesterday to curb the ambient optimism, but he did not scare many people. A bit like when Emmanuel Macron criticizes Elon Musk for having reduced moderation on Twitter. Musk must be very scared.

At the same time, the job market is showing few signs of weakening in the United States and household consumption seems to be holding up. If we combine this with the aforementioned reduction in the inflationary slope, we come across the scenario that has been stamped for months as being the least unfavorable: a punitive Fed but a soft economic landing. That’s on paper of course, but it stands up. Markets will look today for the self-fulfilling prophecy of this analysis in the November labor market figures in the United States, which will be announced at 2:30 p.m. One can imagine, and I speak under the cover of myself only (in other words that it is better to be wary), that figures below expectations, but not too much, would go perfectly in the direction of what investors expect. The plan that goes off without a hitch dear to the famous contemporary philosopher Hannibal Smith.

In this kind of situation and to avoid falling into the trap of flashes in the pan, you have to look at the other cogwheels of the big financial mechanic. The thing is, they seem to be telling the same story. The 10-year American debt is remunerated at 3.54% this morning, whereas it was at 4.2% a month ago. Financiers are therefore expecting the peak in rates to be lower than they had feared, which is a positive signal for the equity markets. Same topo on the dollar, which has clearly faltered. The dollar index, which compares the American currency to a basket of the most used currencies in the world, is at its lowest since June. Again, this is a strong sign of what the market expects for US monetary policy.

Yesterday, therefore, the European indices generally ended up, with the exception of the London FTSE, while the United States remained undecided until the end. Despite surging 4.6% the day before, the Nasdaq 100 still climbed 0.1%, confirming a return to the market’s libido for risky assets. The S&P500 lost 0.1%. The Dow Jones faltered more heavily (-0.56%), but it suffered a mishap from Salesforce, which plunged 8% after announcing the departure in January of its co-leader. The 2% drop in the largest capitalization of the index, UnitedHealth, is not unrelated either to this performance gap with the S&P500. While things are stirring in the United States, we must nevertheless note the stoicism of European equities, which continue their methodical rise to the point that, as I said earlier this week, the French CAC40, the Spanish IBEX or the FTSE 100 British are up year on year.

We must therefore remember today the publication of US employment figures at the start of the afternoon. Also note that OPEC + will give indications on Sunday on its production policy in 2023, probably after the EU will have decided on a price cap for Russian oil. In the geopolitical section, Joe Biden said he was ready to discuss with Vladimir Putin the end of the war in Ukraine, which was perceived by specialists as Washington’s greatest openness to dialogue since the start of the conflict. In China, good connoisseurs of the habits and customs of the CCP believe that the leaders could formalize a more pragmatic vision vis-à-vis the Covid in early December. Understanding refusing to acknowledge that the zero-covid policy has not had the expected results, but officially changing course. Financiers are obviously on the lookout because this would make China attractive again for investment.

The week ended in the red in Asia Pacific, particularly in Japan where the slide in the dollar, or rather the rise in the yen, catapulted the Nikkei 225 down 1.6%. Same symptoms in South Korea, but with the won this time, and a KOSPI at -1.8%. India and Australia yielded a little less than 1%, while the Chinese places are rather down 0.5%. European leading indicators are slightly bearish, like their US counterparts. The CAC40 lost 0.5% to 6722 points shortly after opening.

Economic highlights of the day

November US jobs numbers will take the field at 2:30 p.m. The whole macro diary here.

The euro rises again to 1.0524 USD. The ounce of gold continues to benefit from the weakening of the greenback to approach 1800 USD. Oil is fairly stable, with North Sea Brent at $87.06 a barrel and US WTI light crude at $81.28. The yield on US 10-year debt fell to 3.54%. Bitcoin is trading around 16,950 USD.

The main changes in recommendations

  • 4imprint: Berenberg goes from hold to buy targeting 4800 GBp.
  • ABN Amro: Jefferies remains to be kept with a price target raised from 11 to 13.20 EUR.
  • Adevinta: JP Morgan moves from overweight to neutral by targeting NOK 77.
  • Ahold Delhaize: Morgan Stanley resumes overweight tracking, targeting EUR 35.71.
  • Air France-KLM: JP Morgan resumes neutral tracking, targeting EUR 1.30.
  • AXA: KBW goes from outperformance to market performance by targeting EUR 28.
  • bioMérieux: AlphaValue remains to be reduced with a price target raised from 103 to 110 EUR.
  • Colruyt: Morgan Stanley resumes tracking to underweight, targeting EUR 25.90.
  • Cyan: Kepler Cheuvreux remains long with a price target reduced from 4 to 3.50 EUR.
  • Galp Energia: JP Morgan goes from neutral to overweight.
  • Generali: KBW goes from market performance to outperformance by targeting EUR 21.
  • Hennes & Mauritz: Goldman Sachs goes from sell to neutral, targeting 135 SEK.
  • Ipsen: Jefferies resumes long monitoring, targeting EUR 126.
  • J Sainsbury: Morgan Stanley resumes tracking to underweight by targeting 220 GBp.
  • KBC: Jefferies remains long with a price target raised from 69 to 70 EUR.
  • Kerry: Citigroup goes from buying to neutral, targeting EUR 100.
  • Lufthansa: JP Morgan resumes overweight tracking by targeting EUR 9.80.
  • Sensirion: Research Partners remains long with a target reduced from 140 to 135 CHF.
  • Tecan: UBS remains on the buy side with a price target raised from 483 to 493 CHF.
  • TotalEnergies: JP Morgan remains overweight with a price target raised from EUR 66 to 68.

In France

Important (and less important) announcements

  • Sanofi specifies that an offer for Horizon Therapeutics, if it were to be made, would be made in cash.
  • Saint-Gobain completes the sale of its Crystals and Detectors business for €203 million.
  • Teleperformance wants to restore its image by signing a global agreement with the UNI Global Union federation.
  • Vinci sells a building to the property company Tour Eiffel and acquires a motorway concession in Brazil.
  • Edenred Capital invests in 5Mins AI, the learning platform inspired by TikTok.
  • Gaztransport & Technigaz wins an order for tanks for seven new LNG carriers.
  • Kalray launches a fundraiser and clarifies its ambitions. The proceeds reached €24.4 million, at €16.50 per share.
  • Cabasse raises funds and enters Euronext Growth.
  • Europlasma announces a first delivery of asbestos waste from Switzerland.
  • Metadvertise acquires Triple A / PM SA.
  • Other publications: Aramis, LDLC Group, Oeneo, Vantiva…

In the world

Important (and less important) announcements

  • China’s Contemporary Amperex Technology holds 35.3% of the electric vehicle battery market in 2022.
  • The president of Credit Suisse announces that the outflow of funds has ceased.
  • Muddy Waters outbids dLocal’s balance sheet discrepancies.
  • ABB is investing $150 million in a robot factory in Shanghai.
  • AMS-Osram completes the sale of Traxon Technologies.
  • Polypeptide will miss its targets due to operational issues.
  • KBC welcomes the decision to approve the sale of substantially all of its performing credit assets and liabilities to Bank of Ireland Group.
  • Wells Fargo is cutting several hundred jobs in its mortgage finance arm.
  • UnitedHealth, Coloplast and Nike detach their dividends.
  • VAT Group sets its 2027 objectives.
  • Main publications of the day: Fast Retailing, Terna Energy… The whole agenda here.


  • The Napoleons of Big Tech (Project Syndicate, in English).
  • RTE, Enedis, EDF and GRDF: bailiffs, legal proceedings, police custody, social dialogue turns sour (Le Monde).
  • Blackstone Limits Withdrawals From Big Real Estate Fund As Investors Rush To Exit (Financial Times).
  • Should we rejoice in our disappearance? (The Atlantic, in English).
  • Hundreds of hospitals, clinics and nursing homes are asking for compensation from the “lino cartel” (La Lettre A).
  • A stone’s throw from Westminster, a den of ultra-conservative lobbies (Le Monde).
  • In Alaska, the disappearance of whales remains a mystery (Undark in English).