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Trend of disappointment in the USA – Monday Report by Bordier

In the euro zone, industrial production disappointed in April.


The statistics published in the United States have tended to disappoint. SME confidence (NFIB index) was fairly stable at 93.1 in May, while the Philadelphia Fed’s leading economic indicator fell from 2.6 to -3.3. Confirmation of the weakening of the property sector: developer confidence fell from 69 to 67 in June, housing starts and building permits contracted by 14.4% and 7% m/m respectively. Lastly, industrial production picked up less than expected (+0.2% m/m) in May. In the euro zone, industrial production disappointed in April (+0.4% m/m). In China, a more positive relative dynamic is emerging with better than expected figures on industrial production (+0.7% y/y), retail sales (-6.7% y/y) and investments ( +6.2% y/y).


Climate: At this point, the average temperature on the earth’s surface has increased by 1.2°C compared to the pre-industrial era. The trajectory of greenhouse gas emissions leads to an increase greater than the 2°C max of the Paris Agreement. The consequences of a world at +3°C are not intuitive in their magnitude.


For the first time since 1994, the Fed raised its key rate by 75bps (1.50-1.75%). Although this rise was anticipated by the market, it marks an important turning point and shows that the Fed will do whatever it takes to bring inflation down faster than expected. In Europe, the extraordinary meeting of the ECB did not lead to new measures but allowed to reduce the tension on peripheral sovereigns, the 10-year BTP-Bund spread has now returned to the level pre-speech of Mrs Lagarde ( c.200bp).

Trader Sentiment

Sotck exchange

Markets have continued to slide this week as talk of a recession begins. On the macro side, we will have real estate statistics in the US and Europe, while J.Powell will speak twice this week. With inflationary pressures still present, markets are likely to continue their slides.


Past week rich in volatility due to the various decisions of the central banks. Following the SNB’s surprise 50bp hike, the CHF soared, EUR/CHF 1.016 and USD/CHF 0.9650 GBP/CHF 1.1820 this morning. We anticipate the following ranges: EUR/USD sup. 1.04 res. 1.0630 USD/CHF over. 0.9550 res. 0.9850 EUR/CHF extra. 1.0090 res. 1.0320. The ounce of gold is at $1840/ounce


Another “risk off” week on the markets, against a backdrop of generalized monetary tightening (Fed in the US, BoE in the UK, BNS in Switzerland!). 10-year sovereign yields rise (US: +8bp; EUR: +15bp; CHF: +24bp), equities fall (US: -5.8%; Europe: -4.6%; EM: -4.7 %) and credit spreads widen. The ECB managed to convince the markets of its willingness and ability to manage the risk of fragmentation (ITA: -18bp). Oil prices fell -7.3% and gold (-1%) suffered from the rise in the dollar (+0.5%). To be monitored this week: leading economic indicators (Chicago and Kansas City Fed), US manufacturing and services PMI; household confidence, manufacturing PMI and services in the euro zone; 1- and 5-year borrowing rates in China.

Swiss market

To be monitored this week: Consensus Forecast (KOF), May foreign trade and watch exports (Ofdf), summer economic forecasts (KOF), Q1 balance of payments (BNS) and April construction price index (OFS). Klingelnberg and Carlo Gavazzi will publish their 2021/22 results.


DEUTSCHE TELEKOM (entry into Satellite): the stock offers visibility on growth as well as an attractive valuation. We expect annualized growth of 5% for EBITDA and 7% for free cash flow over 2022-2025e. In the US, the merger with Sprint offers significant cost reduction opportunities and will contribute to sales and profit growth.

MERCK & CO. (Core Holding): rumors appeared in the WSJ according to which the company would be interested in acquiring Seagen (30 billion dollars of market capitalization), American biotech specialized in oncology. Seagen notably develops next-generation conjugated antibodies. With the exception of size (vs. willingness to focus on bolt-on acquisitions), the therapeutic and technology areas would be in line with the company’s strategy.

SGS (Core Holding) announces a new share buyback plan of 250 million francs for capital reduction, up to 1.6% at the current price.

Chart of the day




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