Trump makes Wall Street shine and depresses Europe

Donald Trump will take on the role of President of the United States early next year. Which does not prevent it from widely occupying the field, particularly on the international scene. In financial markets, its comeback allowed Wall Street to record one of its best recent weeks. With a gain of 4.66%, the broad S&P500 index claims its sharpest increase in a year, precisely since the jump of 5.85% recorded during the week of October 30, 2023. American stocks are evolving, naturally, on records.

In Europe, it’s rather grimacing: the STOXX Europe 600 lost 0.8% last week, its third consecutive negative weekly performance. Investors have understood that with the return of the Republican to the White House, the situation on the old continent will be less favorable than it currently is.

Moreover, in what the market calls Trump Tradesthat is to say the double list of assets which benefit or suffer from the return of the former president to the helm, Europe is clearly in the loser column. With renewable energies or the Mexican peso for example. In the other column, I believe we can say that bitcoin is the big winner in the short term. It signed a record above 81,000 USD after gaining 33% in one month thanks to Donald Trump’s recent and opportunistic conversion to cryptocurrencies. There has also been incredible excitement around private prison operators, and to a lesser extent around US regional banks.

Beyond these fairly direct transmission belts, the other manifestations of future Republican policy will wait a little. During his previous term, Donald Trump implemented several radical measures, but he did not go as far as he had planned. His presidency had, it is true, been disrupted by the pandemic, but it is also because threats sometimes make it possible to obtain interesting results without having to take action. Trump excels at this. This time, however, observers have the feeling that he could go further and stronger. At the economic level, economists try to imagine the world as it will be from next year. And I believe I can write that a fairly broad consensus is emerging on the fact that taxes will fall and that customs duties will rise, which will have an inflationary effect which calls into question the Fed’s aggressive rate reduction trajectory. . This scenario could quite quickly turn into a headache for investors. But for now, they have chosen to avoid it to take advantage of the traction effect of the presidential election on risky assets.

The other important news for November 11 comes from China. The authorities announced on Friday a program of 10,000 billion yuan, or around 1,300 billion euros, which aims to ease the debt pressure of local governments. On the flip side, the amount is in line with what the market was hoping for. On the other hand, hopes for additional fiscal stimulus measures have been dashed. At the same time, Chinese inflation slowed further in October and producer prices continued to plunge. Two data that do not go well with an economic recovery. Finally, foreign investments in the country continued to decline, a sign that financiers, beyond a short-term windfall linked to recent government announcements, are not seriously considering massive re-exposure to China.

Let’s continue with some news that will interest financial professionals at the end of the weekend:

• Trump World (again!): a lot of irons in the fire for the former future president. He is scheduled to meet Joe Biden at the White House on Wednesday. He spoke on the phone with Ukrainian President Volodymir Zelensky, in the presence of Elon Musk. He also reportedly asked Vladimir Putin not to “aggravate the war in Ukraine.” He joined Robert Lighthizer to become his head of commerce. He asked Republican senators to exempt him from their approval of his appointments. Finally, he would prepare the withdrawal of the United States from the Paris Agreement.

• In France, the main pilots’ union is calling for a strike on Thursday against a tax increase. A meeting is planned in Paris between Emmanuel Macron and British Prime Minister Keir Starmer. A meeting with Donald Tusk and Mark Rutte is also planned to talk about Ukraine and NATO.

• Bitcoin exceeds 80,000 then 81,000 USD for the first time.

• The United States has ordered TSMC to halt deliveries to China of chips used in artificial intelligence applications, according to Reuters.

• COP29 opens in Baku. Yes, I know, this sentence is weird.

In Asia Pacific, the start of the week is chaotic. Australia, Japan and Taiwan decline modestly. India rebounded by 0.7%. Hong Kong fell by 1.8%, while mainland China managed to gain 0.2%. European leading indicators point to a rebound.

Today’s economic highlights

In the United States, the University of Michigan Consumer Sentiment Index (4:00 p.m.) will generate interest. The whole agenda here.

The main changes in recommendations

• Adecco: Bank Vontobel AG maintains its buy recommendation and reduces the price target from 43 to 35 CHF.
• AMS-Osram: Jefferies remains a buy with a price target reduced from 20 to 16 CHF.
• Aperam: BNP Paribas Exane maintains its outperformance recommendation and raises the price target from 31 to 32.50 EUR.
• BNP Paribas: Morgan Stanley maintains its market weighting recommendation with a reduced price target from 82 to 77 EUR.
• Compagnie Financière Richemont: HSBC improves its recommendation from hold to buy with a price target raised from 143 CHF to 155 CHF. Stifel maintains its buy recommendation and reduces the price target from 150 to 144 CHF. TD Cowen maintains its recommendation to hold with a reduced price target of 155 to 130 CHF.
• Engie: Goldman Sachs maintains its buy recommendation with a price target reduced from 20.60 to 20.50 EUR.
• Euronext: Barclays maintains its market weighting recommendation with a price target raised from 100 to 105 EUR.
• Brussels Lambert Group: AlphaValue/Baader Europe maintains its buy recommendation and raises the price target from 97 to 98.20 EUR.
• Landis+Gyr Group: JP Morgan maintains its neutral recommendation with a price target raised from 76 to 78.50 CHF.
• MTU Aero Engines: Goldman Sachs goes from neutral to buy with a price target raised from 276 EUR to 400 EUR.
• Prosus: Citigroup maintains its purchase recommendation with a price target raised from 45 to 50 EUR.
• Renault: Jefferies remains a buy with a reduced price target of 58 to 55 EUR.
• Renishaw: HSBC starts monitoring to hold with a price target of 3350 GBX.
• Saint-Gobain: Jefferies remains a buy with a price target raised from 103.10 to 147 EUR.
• Swisscom: Goldman Sachs maintains its sell recommendation with a reduced price target of 460 to 450 CHF.
• Technip Energies: Morgan Stanley maintains its overweight recommendation and raises the price target from 26.80 to 29 EUR.
• UBS Group: Deutsche Bank maintains its recommendation to hold with a price target raised from 26 to 27 CHF.
• Vontobel: Citigroup maintains its sell recommendation with a price target reduced from 51 to 50 CHF.
• Worldline: Goldman Sachs maintains its neutral recommendation with a price target raised from 7 to 7.50 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)

• Stellar and Leap motor abandon their project to build the B10 SUV in Poland. In addition, Stellantis will lay off 400 people at its Detroit parts factory.
• Atos announces that its subsidiary Bull has issued a preferred share for the benefit of the French State as part of the protection rights granted to the French State on sovereign and sensitive activities.
• Unieuro, purchased at more than 90%, will be delisted, announces Fnac Darty.
• Cabasse raises €0.4 million via its dilutive convertible bond issuance program.
• The main publications of the day : Transgene… The rest here.

In the big world

Important (and not so important) announcements

D’Europe

From North America

From Asia Pacific and beyond

The rest of the global publications calendar here.

Lectures