What do investors expect from the Fed? Let’s say the usual balanced speech, a marshmallow grip on a velvet glove. Of course, Jerome Powell, the chairman of the central bank, has been relatively less marshmallowy recently, concerned about rapid inflation that, in a year, raises the price of energy by 29%, of food by 6% or of consumption. . cars by 37%. But on the whole, the market subscribed to what some economists call the “Goldilocks scenario”, with soup served without being too hot or too cold, just perfect. Without a metaphor, this would result in a cycle of rate increases and reduced monetary support capable of curbing inflation with a moderate effect on growth.
The content of the Fed statement is consistent with Goldilocks, at least on paper. The problem was Jerome Powell launched into some improvisations during the press conference that followed the announcement of the decision. First, he confused investors on the speed and pace of rate increases, suggesting that the agenda was not fully set and stressing that the Fed had plenty of room to maneuver without affecting the labor market. Investors translated this into: the double rate hike in March is not prohibited and the scenario of five rate increases in the early part of this year cannot be included.
Economist Joachim Klement believes the mention of leeway in the labor market is a “rookie mistake” comparable to what Powell did in 2018. He added that the Fed boss made another when he abruptly stepped down to end the conference. that “asset prices are relatively high.” Klement thinks Fed members will need to do some backpedaling in the coming weeks on their various public outings, just to cover up the boss’s mistakes. This is especially silly, the economist believes, because Powell clarified at the start of the conference that the FOMC was extremely pleased with its communication with the market, which means he confirmed that rate expectations were fairly correct. Expectations of a 25 point rate hike are certain in March, to be followed by two to three additional rate hikes by the end of the year.
Now, Wall Street futures are all in green after being in red. As with every stage of this type, the reactions initially worsen, before the anxiety subsides and gives way to more rational approaches. After all, could Powell not have made a mistake and may have just wanted to show the Fed’s determination, just to make up for lost time in the fight against rising prices?
Economic highlights of the day:
Big macroeconomic news in the US with strong commodity orders, the first Q4 GDP estimate and weekly jobless claims. Durable products fell in December for the first time in three months, by 0.9% from November, showing a decline in orders for commercial aircraft and communications equipment.
The dollar is up 0.8975. An ounce of gold dropped to $ 1803. Oil rallied after its new highs, with Brent at USD 90.69 and WTI at USD 88.10. The US 10-year yield rose 1.85%. Bitcoin trades at USD 36843.
In the markets:
* Comcast – The U.S. media company reported quarterly revenue on Thursday that fell short of Wall Street expectations, driven by its NBCUniversal division. The stock rose 1.3% in premarket trading.
* McDonald’s Corporation: reported lower-than-expected quarterly earnings and profit, with disappointing performances in Australia and China due to pandemic-related restrictions that outpaced U.S. sales growth in the fourth quarter. The fast-food group’s stock lost 3% in pre-market trading.
* Tesla – The automaker said Wednesday night that it expects vehicle deliveries this year to grow more than 50 percent despite supply problems that Tesla expects to ease only next year.
* Apple – The iPhone maker, which is due to report its first quarter fiscal results after the New York Stock Exchange closes on Thursday, plans to turn its smartphones into payment terminals for small businesses , Bloomberg reported, citing sources close to the object.
* Intel-The U.S. semiconductor maker reported record fourth-quarter earnings on Wednesday but announced a lower-than-expected earnings forecast on Wall Street for the current quarter.
* Netflix – Billionaire William Ackman, through his Pershing Square Capital Management fund, has taken a new stake in Netflix worth more than $ 1 billion since the stock fell Thursday to a disappointing fourth -quarter figure. of new subscribers. The stock rose 4.5% in pre-market trading.
* Moderna-The U.S. drugmaker is gaining 4% in premarket trading after announcing on Wednesday that it will begin clinical trials of its COVID-19 vaccine specifically targeting the Omicron variant of the coronavirus in a booster dose.
* Blackstone – The US investment fund reported record quarterly earnings on Thursday, up 55%. The stock jumped 4.5% in pre-market trading.
* Southwest Airlines – The airline said Thursday that it has posted its first quarterly profit in two years in the last three months of 2021 and expects to earn for all of 2022, despite the expected net loss in the current quarter due in the Omicron variant of COVID -19.
* The Dow gained 1.4% in pre-market trading after reporting better-than-expected sales forecast for the current quarter at a higher price.
* Textron – The aerospace and defense group reported lower -than -expected fourth -quarter sales on Thursday due to labor and supply shortages.
* Valero Energy – The U.S. oil company posted a quarterly profit that exceeded analysts ’expectations, with margins nearly tripled as demand rose in the economic recovery. It gained almost 3% in pre-market trading.
* Bank of America – The US bank has decided to raise the salaries of its top executives to keep them, according to a source close to the matter.
* Advanced Micro Devices (AMD) – China’s market regulator announced on Thursday that it has given the conditional green light to AMD’s proposed $ 35 billion purchase of XILINX. Xilinx gained 5.5% in pre-market trading.
* Micron Technology – The semiconductor manufacturer announced Wednesday that it plans to close its DRAM chip design site in Shanghai by the end of the year.
Analyst recommendations:
- Albemarle: HSBC upgraded to buy from hold. PT rose 36% to $ 280
- Berkshire Hathaway: UBS adjusts PT to $ 530,294 from $ 520,652, maintaining Buy rating
- Beyond Meat: Mizuho Securities started coverage with a neutral recommendation. PT dropped 2% to $ 59.
- Derwent London: Exane BNP Paribas has upgraded from neutral to outperform, targeting GBp 3820.
- Fresnillo: Berenberg remains a Hold with a reduced target of GBp 1,000 to GBp 700.
- Hershey: Mizuho Securities started coverage with a neutral recommendation. PT up to 1% up to $ 196
- HSBC: Exane BNP upgrades from neutral to outperform with a target of GBp 650.
- Intel: Credit Suisse maintains Buy rating. The target price has been lowered from USD 80 to USD 70.
- Microsoft: Citigroup adjusts Microsoft’s PT to $ 386 from $ 376, maintaining Buy rating
- Occidental Petroleum: Citigroup adjusts Occidental Petroleum’s PT to $ 40 from $ 38, maintaining Buy rating
- PayPal: Citigroup adjusts PT to $ 235 from $ 250, maintaining the Buy rating
- Prudential: Jefferies remains Buy with a target price raised from GBp 1,750 to GBp 1,800.
- Raytheon Technologies: Morgan Stanley adjusted PT to $ 118 from $ 110, maintaining Overweight rating
- Rentokil: Exane BNP Paribas downgraded from Outperform to Neutral with a target price of GBp 550.
- Sage: Jefferies remains Buy with target price reduced from GBp 900 to GBp 890.
- ServiceNow: Piper Sandler upgraded to overweight from neutral. PT rose 34% to $ 650
- Superdry: Berenberg remains Hold with target reduced from GBp 280 to GBp 265.
- Tesla: JP Morgan maintains its Sell rating on the stock. The target price is evaluated upwards from USD 295 to USD 325.
- The Boeing Company: Goldman Sachs still considers the stock as a Buying opportunity. The target price is now set at USD 307 compared to USD 300.