Trump vs. Inflation, the markets reassess their accounts

As much as the first week of the advent of the “Trump 2” project went well, the second fell apart. Wall Street started by gaining 4.66% in week 1, before losing 2.08% in week 2. You’ll tell me, that’s still a comfortable increase. OK, you’re right, but that wasn’t the plan. The plan was for the stock indices to soar.”to the moon“, to use the semantics specific to the Musko-sphere (people who like Elon Musk, not people who have Ax Musk deodorant).

In Europe, the plan is to stop the stock market hemorrhage and prevent European leaders from saying anything and everything. It is clear that it is a failure on both counts. The broad Stoxx Europe 600 index won its fifth losing badge in a row, losing 0.7% over the week. And Olaf Scholz spoke on the phone with Vladimir Putin, in a solitary initiative worthy of Emmanuel Macron’s best outings. This did not really please his allies, nor even more so Volodymir Zelensky. Over the weekend, Russia took the opportunity to destroy Ukrainian energy infrastructure in one of the biggest attacks in recent weeks. The White House authorized kyiv on a case-by-case basis to respond on Russian territory with long-range missiles made in USA.

Despite last week’s stock market turmoil, Wall Street remains the fashionable place for investors. To put it crudely, investors believe that Donald Trump’s return to business will be good for the U.S. economy and bad for the rest of the world. We have to go back to 2013 to see managers so overexposed to American stocks. The slogan is “sell hubris, buy humiliation“, nicely summed up the great head of strategy at Bank of America, Michael Hartnett. In this case, hubris is the arrogance of the Democrats and their supporters who were crushed.

The bout of caution visible last week on Wall Street, however, reflects a certain number of investors’ doubts. First, the valuation gap between American stocks and stocks from the rest of the world is at a high of 75 years, that is to say the age of my Uncle Jacques. So it’s been a while. Next, the dollar is at a 55-year high against other currencies in effective exchange rates. This is the age of Bixente Lizarazu, who is therefore 20 years younger than my Tonton Jacques. It’s starting to get old too. Finally, and in my opinion this is the biggest risk at the moment, the policy that Donald Trump is preparing to deploy could have major inflationary impacts. Investors do not seem very well prepared for the dynamism of the rate cut scenario that they like. The American central bank also seems quite uncomfortable with the latest events, having only just launched its cycle of lowering key rates. Two-thirds of the market still think the Fed will cut rates next month, but the bets are much more uncertain starting in January 2025.

Here’s what you shouldn’t miss this morning to start the financial week:

• Xi Jinping is ready to work with the Trump administration if it respects four “red lines”: do not call into question the influence of the Communist Party on power, do not push the country towards democracy, do not hinder its economic growth and not encouraging Taiwanese independence. Even with a lot of good will, it is difficult to see how these specifications could be fulfilled.
• North Korea could send Putin 100,000 troops for war, according to Bloomberg.
• S&P revises Ireland’s credit outlook to “positive” due to the country’s strong fiscal performance and the recovery of “Apple taxes”.
• Economic agenda: market attention will mainly focus on the PMI indicators of major economies, which are scheduled for publication on Friday. Also keep an eye on Thursday on key figures for employment, the real estate sector and the Philly Fed index in the United States.
• Corporate agenda: Nvidia will be in the spotlight Wednesday evening with the announcement of its quarterly results. Walmart, Target, Sonova and Imperial Brands will also be there.

In Asia Pacific, the stock markets are starting the week a bit in all directions. South Korea dominates the debates with a gain of more than 2%. Australia and Hong Kong gain a few points. On the other hand, India, Japan, Taiwan and mainland China are declining. European leading indicators are slightly bullish, in the wake of futures Americans.

Today’s economic highlights

The NAHB Home Price Index will be released at 4 p.m. The whole agenda here.

The main changes in recommendations

• Ahold Delhaize: HSBC improves its recommendation from hold to buy with a price target raised from 29 EUR to 37 EUR.
• Alcon: BNP Paribas Exane maintains its outperformance recommendation and reduces the price target from 96 to 90 CHF.
• ArgenX: Morgan Stanley maintains its overweight recommendation with a price target raised from 580 to 675 USD.
• Axa: Barclays maintains its overweight recommendation and raises the price target from 39 to 42 EUR.
• Dassault Systèmes: Stifel maintains its purchase recommendation with a price target reduced from 42 to 40 EUR.
• Ence Energía Y Celulosa: Jefferies goes from hold to buy with a price target raised from 3.50 to 3.65 EUR.
• Geberit: Jefferies remains underperforming with a price target raised from 355 to 393 CHF.
• Hays Plc: HSBC moves from hold to buy with a price target reduced from 104 to 100 GVX.
• Jenoptik: Landesbank Baden-Württemberg downgrades from hold to buy with a price target reduced from 26 EUR to 25 EUR.
• KBC Group: Barclays maintains its market weighting recommendation with a price target raised from 67 to 68 EUR.
• Kering: Deutsche Bank maintains its buy recommendation with a price target reduced from 340 to 320 EUR.
• National Bank Of Greece: Morgan Stanley downgrades from overweight to market weighting with a price target reduced from 10.25 EUR to 9.05 EUR.
• Nilfisk Holding: SEB Bank moves from hold to buy with a price target raised from 125 DKK to 130 DKK.
• Piraeus Financial Holdings: Morgan Stanley downgrades from overweight to market weighting with a price target reduced from 5.39 to 4.96 EUR.
• Porsche Automobil Holding: HSBC downgrades from hold to lighten with a price target reduced from 36 EUR to 26 EUR.
• Rheinmetall: HSBC maintains its purchase recommendation with a price target raised from 660 to 700 EUR.
• Scor Se: HSBC maintains its recommendation to hold with a price target raised from 23 to 26 EUR.
• Shell Plc: Landesbank Baden-Württemberg improves its recommendation from hold to buy with a price target raised from 2800 GBX to 2900 GBX.
• Soitec: HSBC maintains its purchase recommendation with a price target reduced from 181 to 89 EUR.
• Stadler Rail: Bank Vontobel AG downgrades from buy to hold with a price target reduced from 38 CHF to 24 CHF. JP Morgan maintains its recommendation to underweight with a price target reduced from 25.40 to 20.60 CHF.
• Sthree: HSBC improves its advice from hold to buy with a reduced price target of 429 to 420 GBX.
• Swiss Life Holding: Bank Vontobel AG maintains its recommendation to hold with a price target raised from 732 to 760 CHF.
• Swiss Re: Goldman Sachs maintains its neutral recommendation with a price target raised from 127 to 134 CHF.
• Thales: Bernstein maintains its market performance recommendation with a price target raised from 170 to 173 EUR.
• Vestas Wind Systems: Sparebank 1 Markets goes from sell to neutral with a price target reduced from 130 DKK to 105 DKK.
• Zehnder Group: Stifel maintains its buy recommendation and reduces the price target from 67 to 60 CHF.
• Viridian: Arctic Securities starts monitoring for purchase with a price target of 66 EUR.
• Worldline: Stifel maintains its recommendation to hold with a target price reduced from 8 to 6 EUR.
• Zurich Insurance: Barclays maintains its overweight recommendation and raises the price target from 540 to 565 CHF.

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)

• Bouygues Telecom completes the acquisition of La Poste Mobile and its 2.4 million customers.
• Orange is appealing a decision by the PNF to seize 312 million euros.
• Ipsen presents its latest data on Iqirvo.
• La Française des Jeux announces the success of its inaugural bond issue of €1.5 billion intended to refinance the acquisition of Kindred.
• Getlink postpones the return to service of its ElecLink cable until December 2.
• Exosens enters into exclusive negotiations with a view to acquiring Noxant, a specialist in high-performance cooled infrared cameras.
• Casino estimates that early departures and voluntary departures will “reduce the number of forced departures from 2900 to 2400”.
• Ikonisys signs a distribution agreement in Central America.
• The main publications of the day : Lexibook, Aures… The rest here.

In the big world

Important (and not so important) announcements

D’Europe

• Meyer Burger, abandoned by its biggest customer, is close to bankruptcy.
• Intrum files for bankruptcy in the United States to restructure a debt of 4.5 billion dollars.
• Prysmian is considering a dual listing on Wall Street.
• Enel increases its dividend and targets a profit of 6.7 to 6.9 billion euros in 2025. The group will invest $45 billion by 2027.
• Fitch Ratings affirmed Leonardo’s BBB- long-term credit rating and raised its outlook to “positive”.
• ThyssenKrupp wants to list its TKMS shipyard on the stock market.
• Avolta obtains a concession at Shenzhen International Airport.
• The owners of Cineworld are considering listing their cinema chain on the US stock market, according to Sky.
• Peach Property sells part of its real estate portfolio.
• The main publications of the day : Salmar, Big Yellow, Solaria Energia, ThyssenKrupp Nucera…

From North America

• Nvidia’s new AI chips are facing server overheating issues, according to The Information.
• T-Mobile US victim of massive network hack by China, according to WSJ
• Palantir at the top after the announcement of a planned transfer to the Nasdaq to claim the Nasdaq 100.
• Warner Bros. Discovery and the NBA settle their broadcast rights dispute, according to the WSJ.
• Donald Trump could name Marc Rowan of Apollo Global Management in charge of the US Treasury.
• Medical services provider CareMax files for Chapter 11 bankruptcy protection in the United States.
• Eyenovia Ends Eye Drug Study, Cuts 50% of Its Workforce.
• Major shareholder Trump Media is selling almost its entire stake.
• The main publications of the day : Aecom…

From Asia Pacific and beyond

• Samsung shares jump 6.4% after announcing a $7 billion share buyback plan.
• The main publications of the day : Xiaomi…

The rest of the global publications calendar here.

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