The markets are looking at France

During the holiday season, if anyone asks you how Wall Street received the re-election of Donald Trump, you will just have to cite the numbers from November. Over the month, the Dow Jones gained 7.5%, the Nasdaq 6.2% and the S&P 500 5.7%. However, the prize goes to the Russell 2000, which follows small American stocks, with +10.8%. American strategists had, very early on, identified this size of company as the main beneficiary of Trump's return to business. Europe is struggling to keep up, in part because the United States' gains have been made against those of the rest of the world: what is called “Trump Trade” is played from within and is supposed to be unfavorable to other economies. The DAX, despite the setbacks of the German economy, is the index that is doing best for the moment in 2024. It gained 2% in November. The French CAC40 fell 2.35% in November and more than 4% since the start of the year.

The United States is therefore entering the last month of the year under good auspices, with 26.5% gained by the S&P500 since 1^is January. December is known for hosting the “end of year rally”, that is to say a period of increase. This is also a statistical reality: of the 12 months of the year, December is the most favorable for investors with 70 increases over the last 96 years on the S&P 500 (Source Yardeni Research).

Let's return for a moment to France, which has become the weak link in the euro zone since the dissolution of the national assembly on June 9. Michel Barnier's patchwork government could fall in the coming days, and perhaps even today. The situation is closely scrutinized by the financial markets which do not like this type of situation, because it constitutes a good breeding ground for regional crisis. Suffice to say that in the event of censorship due to a budgetary impasse, investors would strengthen their withdrawal towards the United States. On Friday, the S&P agency maintained France's financial strength rating at “AA-” and even retained a “stable” outlook, which was far from certain.

In the macro aspect, the yields on Chinese 10-year bonds fell below 2% for the first time since 2002. That doesn't mean much to you said like that, but it's the sign that the markets are expecting that the Chinese central bank continues to lower its rates to support the recovery. Those who were hoping for new announcements are at a loss: the local Communist Party has not published the minutes of its November meeting, leaving investors in the dark. Poor satisfaction: the November manufacturing PMI indicators confirm an upward movement. But specialists put this jump down to the over-shipment of goods to anticipate the rise in customs barriers. The services PMIs, for their part, are disappointing.

After focusing his threats on Canada, Mexico and China, Donald Trump this time attacked the BRICS and their desire to free themselves from the tutelage of the dollar. The president-elect essentially demanded that these countries commit not to create a new currency or use an existing currency to compete with the dollar, otherwise, I quote “they will face 100% tariffs and must expect to say goodbye to the prospect of selling into the magnificent American economy“.

Information not to be missed to start the week:

• In the Trumposphere, the future president named Charles Kushner, his son-in-law's father, American ambassador to France. Donald Trump also met Canadian Prime Minister Justin Trudeau in his stronghold of Mar-a-Lago in Florida, probably to discuss customs duties.
• In the series we believe we are dreaming, Joe Biden pardoned his son Hunter. After this act by the prince, the future-ex-president is attacked by all the press, especially those who historically supported him.
• In the Middle East, one conflict chases another. After the ceasefire in Lebanon, Syria is set ablaze again following the offensive by opponents of the ruling power, who recaptured Aleppo, the country's second city.
• UN negotiations on plastic fail to reach an ambitious compromise.
• On the macro agenda: a speech from the head of the Fed (Wednesday evening) and American employment statistics for November (Friday) in the United States, plus a speech from the head of the ECB, Christine Lagarde (Wednesday) and the OPEC+ meeting (Thursday).
• On the corporate agenda, there's not much left except Prosus, Salesforce or Marvell.
• We end on the moment Meow: love is the best Christmas gift, said Princess Kate in the United Kingdom. When I was little, we always had someone tell us that the best gift was an orange. Was someone lying to me?

In Asia Pacific, the indices started the week and month with moderate increases in Australia, India and Hong Kong. It is more solid in Japan (+0.6%) and mainland China (+0.8%). Only South Korea is losing a little ground. European leading indicators are bearish, nervous because of political news in France.

Today's economic highlights

The second reading of the manufacturing PMI indices of the major economies will be given throughout the session. In the United States, it will be completed at 4:00 p.m. by the manufacturing ISM. The whole agenda here.

The main changes in recommendations

• Air Liquide: JP Morgan goes from neutral to overweight with a price target raised from 161 to 195 EUR.
• Airbus: Bernstein maintains its outperformance recommendation with a price target raised from 160 to 166 EUR.
• Akzo Nobel: JP Morgan improves its recommendation from neutral to overweight with a price target of 70 EUR.
• AstraZeneca: Baptista Research moves from Hold to Buy with a reduced price target of USD 88.80 to USD 87.10.
• Buzzi: Morgan Stanley maintains its market weighting recommendation with a price target raised from 41 to 44 EUR.
• CMC Markets: Jefferies goes from underperformance to hold with a price target raised from 135 GBX to 275 GBX.
• Compagnie Financière Richemont: HSBC maintains its buy recommendation with a price target raised from 155 to 157 CHF.
• EssilorLuxottica: JP Morgan maintains its recommendation to overweight with a price target raised from 225 to 255 EUR.
• Hermès International: HSBC moves from hold to buy with a price target raised from 2,250 to 2,500 EUR.
• Holcim: Morgan Stanley maintains its overweight recommendation and raises the price target from 94 to 103 CHF.
• Johnson Matthey: JP Morgan improves its recommendation from underweight to neutral with a price target of 1600 GBX.
• Kering: JP Morgan goes from neutral to underperformance with a price target reduced from 220 to 195 EUR.
• Lindt: JP Morgan maintains its recommendation to underweight with a price target raised from 90,000 to 95,000 CHF.
• LVMH: HSBC improves its recommendation from hold to buy with a price target raised from 700 EUR to 727 EUR. JP Morgan maintains its neutral recommendation with a reduced price target of 685 to 650 EUR.
• Philips: Jefferies goes from underperformance to hold with a price target raised from 18.70 USD to 26.40 USD.
• Salvatore Ferragamo: JP Morgan maintains its underweight recommendation and reduces the price target from 6.50 to 5.30 EUR.
• Swatch Group: HSBC maintains its recommendation to hold with a reduced price target of 200 to 180 CHF. JP Morgan goes from neutral to underperformance with a price target reduced from 180 CHF to 135 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)

• In France, new car registrations were down 12.7% in November according to the PFA.
• Carlos Tavares will not complete his term at Stellantis: he has resigned. Interim management will be provided by a committee headed by President John Elkann. Maxime Picat and Antonio Filosa are in the running, according to Le Monde.
• Covivio and AccorInvest (Accor) are finalizing the operation to consolidate the ownership of the premises and business of their hotels for a total exchange value of nearly €800 million.
• Worldline experienced disruption in Italy after roadworks accidentally damaged its network connection to its data centers in the country.
• Bureau Veritas finalizes the acquisition of the APP group.
• Ipsos is considering making an offer to buy Kantar Media, the company has confirmed.
• Alten completes the acquisition of Worldgrid from Atos.
• Eutelsat exercises its put option and signs a share sale contract with EQT Infrastructure for the sale of a majority stake in a newly created entity which will be endowed with its terrestrial infrastructure assets.
• Altarea announces several major disposals in Logistics for a total amount of approximately €390 million.
• Fnac Darty finalizes the sale of 17% of France Billet to CTS Eventim.
• Icade raises its net cash flow forecast for 2024 thanks to an interim dividend.
• Pizzorno Environnement Group acquires the contract for the collection and transport of residual household waste and recyclable waste from the Pays de l'Ozon community of communes.
• The takeover bid for Eurobio reopens after the initiators obtained 82.68% of the capital.
• Europlasma takes over a recycling company in court.
• The main publications of the day : GEA (Grenobloise d’Electronique et d’Automatismes), Dekuple… The rest here.

In the big world

Important (and not so important) announcements

D’Europe

• Italy is reportedly looking for ways to counter UniCredit's takeover bid for Banco BPM, according to the FT.
• German Volkswagen employees are on strike from today.
• Prosus almost doubles its profit in the first half.
• Nexi opens an investigation into the dysfunction of payment services in Italy.
• Holcim sells its Nigerian division to Chinese cement manufacturer Huaxin.
• Implenia wins several major building construction contracts in Switzerland and Germany.
• Telefónica's attempt to sell a majority stake in its Peruvian fiber operations failed.
• Pierer Mobility launches insolvency proceedings for KTM.
• The main publications of the day : Prosus…

From North America

• “Moana 2” (Walt Disney) sets a record for Thanksgiving weekend revenue.
• JPMorgan drops lawsuit against Tesla over stock warrants.
• The main publications of the day : Zscaler…

From Asia Pacific and beyond

• Nissan's chief financial officer will resign, according to Bloomberg.
• Kioxia is pricing its IPO at JPY 1,390 to JPY 1,520 per share, according to multiple sources.
• The main publications of the day : nothing…

The rest of the global publications calendar here.

Lectures