Jay Powell dampens the mood a bit

Trump Trade crossed paths with the Fed boss a little earlier than expected. Jerome Powell suggested that the pace of the long-awaited rate cuts could be less sharp than the market hopes, because the US economy is doing well. The little red flag of inflation has resurfaced, making investors a little tense.

European stock markets have the opportunity to end three consecutive weeks of decline. To do this, we will need to materialize today the rebound outlined the day before. An awakening which resulted in a gain of 19% for the three card of the European rating, the British Burberry. This unexpected enthusiasm followed a session of self-flagellation, during which the new management listed the strategic errors made in the past, while swearing that it had the magic formula to restore the image of the brand known for its trench coats. -coats and scarves in checkered cashmere. In France, it was Alstom which put on the show after financial performances which confirm that something positive is happening after the difficult quarters. In the end, all European indices progressed yesterday, with a French CAC40 and a German DAX which recovered a little less than 1.4% and an Italian FTSE MIB up almost 2%.

The United States, for their part, continued to suffer from its recent gains, a bit like my office neighbor Laurent, who risks being a little dented this morning. Not because of his recent gains, but rather because he broke volatility records last night at Chartreuse Verte during a little party organized after the work day. I’m also waiting to see the degree of regret from my neighbors on the left, Tommy and Adrien, who the aforementioned Chartreuse led to challenge themselves on a bike tour of Lake Annecy. Coming back to less alcoholic and more financial considerations, Wall Street was dragged down by its industrial and health stocks, while bets linked to the election of Donald Trump needed a break. The automobile sector was particularly affected by rumors of Donald Trump’s desire to atomize federal aid of 7,500 USD for the purchase of an electric vehicle. Lucid lost -4.6% and Rivian -14%. Even his colleague Elon Musk’s company, Tesla, marked the blow by falling -6% (after having gained 42% in one month, it is true). The small values compartment too, with a Russell 2000 which fell markedly for the third time in a row yesterday. In addition to digesting recent gains, the American stock market took the hit after lukewarm comments from Fed boss Jerome Powell on the trajectory of key rates. He both underlined the strength of the American economy, currently unmatched, and the lack of urgency for the Fed to reduce its rates quickly. Investors saw this as a more conservative posture than expected, which was immediately reflected in the forecasts of rate developments during the decision that the central bank must take on December 18. The probability of a status quo increased from 17.5% yesterday to 41.1% this morning. The majority hypothesis remains a quarter-point rate cut, but it is weakened. I would like to remind you that the equity markets view the decline in key rates favorably because it is synonymous with cheaper and therefore more abundant money. The bond market hardly reacted since it had somewhat anticipated the situation at the start of the week.

Professionals generally believe that the Trump Trade’s slowdown is only temporary and that FOMO, the fear of missing the upward train, will quickly make a comeback. However, they are uncomfortable with the valuation levels reached by American stocks. They are expensive, but discussions on valuation are becoming increasingly rare, summarizes the Société Générale strategy team. The S&P500 pays on average 22.5 times the expected results in a year, well beyond the average over 5 years (19.6 according to FactSet) or over 15 years (16.4). This is the year of records for the broad American index, which displays an outperformance of 20% over its European counterpart the Stoxx Europe 600 in 2024, unheard of since 1995, according to Bloomberg. This shift causes another. Our friends at AlphaValue estimate that the 550 European stocks in its coverage universe pay on average 13.7 times next year’s expected results. American stocks therefore currently display a premium of 64% over European stocks. A little less if we put aside the European sectors whose PERs are in deep depression (oil, banking and automobiles). But the gap is historic and reflects, in part, the idea that the old continent will be mistreated during the Republican mandate in the White House.

Today’s macro news is dominated by some positive signals from the Chinese economy, with retail sales growing at the most dynamic pace in the last eight months, beyond expectations. Investors are keeping an eye on the series of statistics expected in the United States in the afternoon, just to confirm or refute their doubts about the evolution of rates. As things stand, any data that is more dynamic than expected risks reinforcing speculation on a Fed status quo in December.

In Asia Pacific, green dominates with moderate gains, which go up to 0.7% in Australia. India is still struggling, while China is suffering. The MSCI China, which is coming out of five sessions of decline, hesitates between rising and falling during the session. European leading indicators are well anchored in the red for this November clearing session, since it is already the 3rd^e Friday of the month.

Today’s economic highlights

In the United States, attention will focus on the Empire Manufacturing Index and retail sales (2:30 p.m.), then on capacity utilization and industrial production (3:15 p.m.), and finally on business inventories (4:00 p.m. ). The whole agenda here.

The main changes in recommendations

Accelleron Industries: Oddo BHF starts outperformance monitoring with a price target of 59 CHF.
Alcon: JP Morgan maintains its recommendation to overweight with a price target reduced from 84.30 to 79.60 CHF.
Alstom: JP Morgan maintains its overweight recommendation with a price target raised from 21.80 to 24.80 EUR.
ArcelorMittal: Citigroup maintains its buy recommendation with a price target raised from 38 to 40 EUR.
ASML: Jefferies remains a buy with a price target raised from 760 to 840 EUR.
Aviva: HSBC improves its recommendation from hold to buy with a price target raised from 520 to 555 GBX.
Burberry: Mediobanca goes from underperformance to neutral with a price target raised from 700 GBX to 850 GBX.
Carlsberg: Barclays downgrades market weighting to underweight with a price target reduced from 829.49 DKK to 698 DKK.
CVC Capital Partners: Citi goes from buy to neutral with a price target raised from 22.20 to 22.60 EUR.
DSV A/S: BNP Paribas Exane moves from neutral to outperform with a price target raised from 1100 DKK to 1700 DKK.
Eiffage: JP Morgan maintains its recommendation to overweight with a price target raised from 123 to 125 EUR.
Eutelsat Communications: Morgan Stanley maintains its market weighting recommendation with a reduced price target of 4.80 to 4.40 EUR.
Givaudan: Barclays downgrades its market weighting to underweight with a price target reduced from 4,200 CHF to 3,750 CHF.
Hugo Boss: Baader Helvea goes from buying to accumulating with a price target reduced from 56 EUR to 45 EUR.
Interparfums: Mediobanca maintains its outperformance recommendation with a price target reduced from 65.50 to 61 EUR.
Kuehne Und Nagel: BNP Paribas Exane maintains its underperformance recommendation with a price target reduced from 180 to 178 CHF.
Nemetschek: Goldman Sachs maintains its neutral recommendation with a price target raised from 95 to 105 EUR.
Orsted: DNB Markets improves its recommendation from sell to hold with a price target of 390 DKK.
Scor Se: RBC Capital maintains its recommendation of outperformance with a price target raised from 25 to 27 EUR.
SMA Solar: TD Cowen maintains its hold recommendation and reduces the price target from 20 to 12 EUR.
Sonova: Bank Vontobel AG maintains its recommendation to hold with a price target raised from 310 to 350 CHF.
Spirax Group: HSBC improves its recommendation from hold to buy with a price target raised from 7700 to 800 GBX.
Swiss Re: Citigroup maintains its buy recommendation with a price target raised from 135 to 146.20 CHF.
Südzucker: Matelan Research starts monitoring at neutral with a price target of 14.50 EUR.
Thales: Deutsche Bank maintains its buy recommendation with a price target raised from 179 to 182 EUR. JP Morgan maintains its overweight recommendation and raises the price target from 175 to 195 EUR.
TotalEnergies: Jefferies remains to be retained with a reduced price target of 62 to 60 EUR.

In France

Important announcements (and less important… I should point out that the information is given immediately before the opening and does not prejudge the color of the shares during the session)

Sanofi reaches a key milestone in the marketing of Sarclisa in Europe for the treatment of newly diagnosed multiple myeloma not eligible for transplant. Furthermore, the laboratory announces that the FDA has agreed to examine a new supplemental biological product license application for its Dupixent in the treatment of chronic spontaneous urticaria.
Kering issued 750 million euros of 10-year bonds, with a coupon of 3.625%.
Stellantis has no plans to close factories or carry out mass layoffs in Italy, an executive at the automaker said Thursday during discussions organized by the Italian government.
Vinci has increased its stake in LISEA, the concession company for the Tours-Bordeaux high-speed line, to 42.05%.
Amundi buys Aixigo for 149 million euros.
Vallourec announces a drop in its operating profit in the third quarter.
DSM-Firmenich sells most of its Robertet shares to go from 21.8 to 2%. The Strategic Participation Fund and Peugeot Invest bought back €125 million of shares.
Neoen wins 164 MWp of solar projects in France.
Voltalia has signed, in partnership with TAQA Arabia, a memorandum of understanding with the Egyptian Ministry of Electricity to upgrade the Zafara wind farms.
Forsee Power and Infinitev establish partnership for transport battery maintenance and recycling in Australia.
Medesis in receivership after conversion of its safeguard procedure.
Vergnet puts an end to old disputes representing €8 million.
The main publications of the day : Altamir, Touax, Plastivaloire, EPC Groupe, Bastide, M2i, Prologue, Abivax, Cabasse, Veom, MRM, Nextensa… The rest here.

In the big world

Important (and not so important) announcements

D’Europe

Halozyme would be interested in Evotec with an offer at 11 EUR per share, according to Bloomberg.
Generali announces a profit down over nine months, but higher than expectations.
Sandoz can compete in Europe with a flagship product from Regeneron and Bayer.
Cargotec has agreed to sell its MacGregor cargo handling business to Triton funds for 480 million euros, including debt.
Aegon revises its capital production forecast upwards after a positive result in the third quarter.
Swiss Steel cuts 800 jobs.
Rheinmetall has secured a C$325 million contract from the Canadian government for 85 military trucks.
The main publications of the day : General, Aegon…

From North America

From Asia Pacific and beyond