In China, industrial production, retail sales and investment disappointed in April.
Statistics published in the United States are mixed. While activity remained buoyant in April, with industrial production up 1.1% m/m and retail sales also more than expected (+0.9% m/m), the leading indicators ranked. Thus, Empire’s manufacturing collapsed in May, from 24.6 to -11.6, as did the Philadelphia Federal (from 17.6 to 2.6), and the real estate sector weakened: Consumer confidence developers fell from 77 to 69 in May and building permits contracted by 3.2% m/m in April. In the Eurozone, household confidence remains weak but did not deteriorate further (to -21.1) in May. In China, industrial production (-2.9% yoy), retail sales (-11.1% yoy) and investment (+6.8% yoy) were disappointing in April.
Germany, Denmark, the Netherlands and Belgium announced a partnership to quadruple their offshore wind capacity by 2030 (65 GW) and by 2050 (150 GW). Regardless of the intermittency issue, this energy combined with a 35% utilization rate – for example – would represent 460 TWh of annual electricity production, that is, France’s current consumption.
Market attention continues to shift to slower growth rather than inflation. In this context, US interest rates fell for the second week in a row (10 years -14 basis points), mainly due to lower inflation expectations (10 years -15 basis points), which stabilized at pre-invasion levels in Ukraine. In Europe, the European Central Bank is seen as increasingly “tough” and sovereign debt yields are up in the short term (2Y bond + 11 basis points). On credit, spreads widened on IG (EU + 4 bps / US + 9 bps) and on HY (EU + 7 bps / US + 27 bps).
exchange your suit
The seventh week of declines in the S&P Index, and as investors see the glass as half empty these days, this may not be the last. Especially with a busy schedule: May PMI, Durable Goods, Nvidia results, Q1 GDP, PCE inflation, monkeypox, and the risks of bad news are very present. So there may be an eighth sad week on the horizon.
The European Central Bank is nearing the end of negative interest rates (July/September), which temporarily supports EUR/EUR 1.0603, breaking through the accuracy. 1.0640 will open the way towards 1.0758 or else 1.0370 support will remain. Profit taken in USD/CHF 0.9719, sup. 0.9616, accuracy 1.0066. Our Swiss Franc quickly rose to 1.0299€/CHF, sup. 1.0170 Accuracy 1.0550. An ounce of gold is at $1,854.
Another “risk off” week, particularly in the US as stocks fell 3% (Europe: -0.5%; Emerging: +3.1%) and the 10-year sovereign debt yields fell 14 basis points. Gold (+1.6%) benefited from this, also supported by a weak dollar (dollar index: -1.4%). Oil prices are still high, slightly up (+0.9%). To be watched this week: Manufacturing and Services PMI, New Home Sales, Durable Goods Orders, Chicago Fed and Kansas City Leading Indicators, Fed Minutes, US Personal Income and Spending; Confidence indicators for the manufacturing and services PMI and the European Commission (economy, industry and households) in the euro area; Industrial profits in China.
This week follows its acronym by Ascension: World Economic Forum 2022 and First Quarter Employment Barometer (OFS). Lem and Ypsomed will publish results for 2021/22. Otherwise, EPIC will enter the Swiss Stock Exchange after the IPO. Finally, COMET (Swiss Conviction) announces the sudden departure of its CEO for personal reasons. He will be replaced by the Head of Radiology, who joined the group in 2007.
Stilants (Satellite): During a roadshow, management indicated that first-half results, which will be published at the end of July, should show margin improvement over the already high level at the end of 2021 as well as a better generation of FCF. All this despite production constraints. The influencing factors are: Positive price effect/Improvement in product mix/Productivity gains/Positive currency effect/Improvement in supply of seedlings.
Strowman Core Holding announces the acquisition of PlusDental, a German company specializing in transparent aligners, for 135 million Swiss francs. With a large network of clinics across Europe, the deal will accelerate the group’s expansion in this field, particularly in the Netherlands, Sweden and the UK.
Walmart: If Walmart’s price/product positioning will enable it to attract consumers in this period of high inflation (low trading), the first quarter results clearly show that the group does not have effective leverage (pricing power/notorious brands) to act on incoming costs and keep on its profitability. We are entering the phase of correct volumes / low margin without being able to determine the exit horizon. We take out the address of our satellite recommendations.