Wall Street was hesitant on Monday evening, down slightly at the close with the S&P 500 losing 0.38% to 5,069 pts and the Dow Jones falling 0.16% to 39,069 pts. The Nasdaq lost 0.13% to 15,976 pts. Pending numerous economic indicators and the intervention of a multitude of Fed officials this week, Wall Street therefore remains close to its peaks by restoring a little ground…
This week, investors’ attention should therefore shift from company results to a series of economic data, including the price index of personal consumption expenditures (the famous PCE unveiled Thursday), an indicator closely monitored by the Fed . Fourth-quarter US GDP figures are due on Wednesday…
According to the CME Group’s FedWatch tool, the probability of a new monetary status quo on March 20, following the next Fed meeting, now reaches 97.5%. For the next meeting, the probability of status quo stands at over 82%, which would leave rates between 5.25 and 5.5%. The first relaxation could take place on June 12 but the market is very divided…
“A lot of economic data will arrive this week, which will be more decisive in knowing whether investors will remain in the mood to take risks,” said Tatjana Puhan, investment director at Copernicus Wealth Management. “We should take into account the possibility that if the U.S. economy remains strong for a few more months, along with U.S. corporate profits, we should see, at least in the U.S. market, further potential for positive momentum.”
On the oil market, a barrel of WTI rose 0.9% to $77.80 on the Nymex. Finally, the dollar index fell by 0.1% against a basket of reference currencies to 103.7 pts, while Bitcoin climbed to $56,000!
Values
* Domino’s Pizza climbs 5.8%, supported by quarterly results above market expectations, the overhaul of its loyalty program and a delivery partnership with Uber Eats having stimulated the appetite for its pizzas and chicken wings. After facing a slowdown in sales in early 2023, the company has rolled out several initiatives in recent months that appear to be paying off. The global pizza giant saw its U.S. same-store sales increase 2.8% in the quarter, compared to a consensus of 2.2%. Profit from operations reached $257.2 million versus a consensus of $250.7 million for revenues of $1.4 billion (+0.8%). The company also increased its quarterly dividend by 25% to $1.51 per share, and announced an additional $1 billion stock repurchase plan.
* General Motors (+0.4%) has unveiled the model with which it intends to make its comeback in France, “Lyriq”, a premium electric SUV from the Cadillac brand.
* Intuitive Machines plunges 34.6% after the announcement by the lunar spacecraft manufacturer that its Odysseus module overturned shortly after touching the lunar surface. The Texas company, which became the first private company to land on the Moon and the first American since 1972, said all but one of NASA’s six science and technology payloads were facing upward and receptive to communications. The payload that tilted sideways contains a work of art including miniature stainless steel sculptures by artist Jeff Koons, Intuitive Machines said, adding that the rest of the payloads are expected to achieve their scientific goals.
* Alcoa (-4.4%) wants to buy the entirety of its Australian partner Alumina for $2.2 billion as part of an agreement that would simplify its operations. Alumina’s only asset is a 40% stake in the joint venture Alcoa World Alumina and Chemicals (AWAC), which is controlled by Alcoa, and has interests in bauxite, alumina and aluminum mining. in Australia, Brazil, Spain, Saudi Arabia and Guinea.
According to William Oplinger, head of Alcoa cited by ‘Reuters’, the deal would eliminate Alumina’s 12 million Australian dollars ($7.87 million) in overheads per year and allow the merged company to benefit tax advantages linked to the holding of debts. The larger global footprint will also provide Alcoa with more growth options. Under the proposed deal, Alumina shareholders would receive 0.02854 shares of Alcoa common stock for each security held, giving them a 31% stake in the combined company. This would imply a value of AU$1.15 per Alumina share, based on Alcoa’s closing price on Friday.
The Melbourne-based company said its board supported the deal in the absence of a higher offer, while stressing there was no certainty the proposal would be made binding. Alumina’s largest shareholder, Allan Gray Australia, which has a stake of just under 20% in the company, announced that it had agreed to sell to Alcoa. “To a very large extent it simplifies the structure of the business,” portfolio manager Simon Mahwhinny of Allan Gray said of the deal.
* United Airlines (-1.1%) became the third major American airline on Friday evening, after American Airlines and Jetblue Airways, to increase its prices for baggage checked by customers on routes in North America.
* Broadcom (+1%) is close to an agreement to sell its end-user computing (EUC) division to private equity fund KKR for $3.8 billion, a reported ‘Reuters’, citing sources familiar with the matter.
* Goldman Sachs (-0.2%). Abu Dhabi’s sovereign wealth fund, Mubadala Investment Company, has entered into a $1 billion deal with the US bank to co-invest in private credit operations in the Asia-Pacific region. The private credit market, estimated at $1.7 trillion, has more than doubled in size over the past five years, as investors flock to the asset class in search of higher returns, Bloomberg explains. “Some investors may be under-penetrated in private credit in general and are looking to gain greater exposure to this asset class,” James Reynolds, Global Head of Direct Lending at GS Alternatives, told the agency. “This is where partnering with these powerful institutions creates a win-win situation.”
Mubadala, which manages around $300 billion in assets and is one of Abu Dhabi’s three largest sovereign wealth funds, is seeking to double its exposure to Asia by 2030 to capitalize on faster-growing economies and diversify your investment portfolio. GS oversees approximately $110 billion in private credit assets and has signaled plans to double that amount in the coming years.
* Berkshire Hathaway lost 2.1%. Warren Buffett’s holding company reported an operating profit of $8.48 billion in the fourth quarter, compared to $6.63 billion for the same period a year earlier, helped by the good performance of its insurance business and a increase in its investment income in a context of higher interest rates and milder weather conditions.
Berkshire’s cash pile has hit a record $167.6 billion as the conglomerate struggles to find deals at attractive valuations. In his annual letter to shareholders, the 93-year-old investing legend reassured investors that Berkshire was “built to last” but dampened market expectations that there wasn’t much left lucrative investment opportunities. The guru said Berkshire would perform slightly better than an “average American company”, but that anything beyond that was “wishful thinking”, despite its war chest. Annual net income also hit a record $96.2 billion as a rising stock market boosted the value of Berkshire’s stock portfolio.
