Wall Street is progressing this Thursday, the day after a hesitant session. The S&P 500 rose 0.69% to 5,247 pts, the Dow Jones 0.43% to 39,296 pts and the Nasdaq 0.84% to 16,414 pts. The markets are digesting the latest comments from Fed boss Jerome Powell while awaiting employment figures tomorrow. On the Nymex, a barrel of WTI crude lost 0.1% to $85.3. An ounce of gold gains 0.1% to $2,317. The dollar index lost 0.3% against a basket of currencies.
Powell indicated last night that the Fed had time to consider its first rate cut, after an accelerated cycle of monetary tightening and then a period of status quo. The Fed boss notes the strength of the economy and recent inflation data. Recent figures for job creation and inflation have been higher than expected, the Fed helmsman noted during a speech at the Stanford Graduate School of Business. “Recent data does not, however, significantly change the overall picture, which remains that of solid growth, a robust but rebalancing labor market, and inflation which is certainly approaching 2%. on a sometimes bumpy road,” summed up Powell.
Given the strength of the economy and the progress made so far in terms of inflation, the head of the Fed judges that the American monetary institution has time to let future data guide its decisions. Thus, decisions will be made meeting after meeting. “If the economy generally evolves as we expect,” noted the Fed chairman, a broad consensus is emerging that a rate cut would be appropriate “at some point during the year.” But this will only happen if Fed officials “are more confident that inflation is sustainably approaching” the 2% objective. Thus, the Fed wants to find a balance between premature monetary easing and excessive damage to the economy.
Investors are still expecting a first rate cut from the Fed following its meeting on June 11 and 12 (probability close to 60% according to FedWatch). The likelihood of such a decline has, however, diminished due to recent macroeconomic data showing the robustness of the economy. The Fed’s next monetary policy meeting is scheduled for April 30 and May 1. At the end of the March meeting, monetary officials left the ‘fed funds’ rate target unchanged in a range of 5.25% to 5.5% and confirmed that they were still planning three rate cuts this year.
Among the Fed speakers this Thursday are Patrick Harker, Thomas Barkin, Austan Goolsbee, Loretta Mester, Kathleen O’Neill Paese, Alberto Musalem, Neel Kashkari and Adriana Kugler. Susan Collins, Thomas Barkin, Lorie Logan and Michelle Bowman speak tomorrow. Harker, the president of the Philadelphia Fed, estimated that American inflation was still too high (!).
The monthly report on the employment situation in the United States for the month of March will be known tomorrow (consensus 3.8% unemployment, 200,000 non-agricultural job creations and 172,500 in the private sector).
Job creation in the United States in the private sector for the month of March stood at 184,000 yesterday according to ADP, compared to a FactSet consensus of 150,000 and a level of 155,000 a month earlier, in revised reading… Previous reading for the month of February was 140,000. “The month of March was surprising not only in the wage increases, but also in the sectors that recorded them. The three largest increases for job changers were in construction, financial services and “manufacturing industry. Inflation has slowed, but our data shows that wages are increasing, both in goods and services,” said Nela Richardson, chief economist at ADP.
The Challenger, Gray & Christmas report on job destruction announcements for the month of March in the United States revealed 90,309 layoffs announced compared to 84,638 a month before.
Unemployment claims rebounded last week in the United States. The US Department of Labor has just announced, for the week ending March 30, that unemployment claims amounted to 221,000, an increase of 9,000 compared to the previous week. The consensus was positioned at 214,000.
The American deficit in international trade in goods and services for the month of February 2024 stood at $68.9 billion according to today’s report, compared to a FactSet consensus of $67 billion and a deficit of $67.6 billion for the month of January. .
In the news of companies listed on Wall Street, Levi Strauss and BlackBerry published their accounts last night. Lamb Weston, RPM International and ConAgra Brands announce today.
Values
Levi Strauss (+17%!), the American jeans giant, posted fiscal first quarter results above market expectations, generating revenues of $1.56 billion for adjusted earnings per share of 26 cents. The consensus was for 21 cents in adjusted EPS and 1.55 billion in revenue. For the comparable period last year, adjusted earnings per share were 34 cents and revenues reached $1.69 billion. The gross margin was 58.2%, up 240 basis points with lower product costs and a more favorable mix. The group raised its annual estimates for adjusted earnings per share and indicated that its direct-to-consumer sales now represented almost 50% of the business. Levi Strauss expects full-year revenue growth of 1 to 3% and adjusted earnings per share of $1.17 to $1.27 – up from $1.15 to $1.25 previously.
BlackBerry (+4%) published adjusted earnings per share of 3 cents for its fourth fiscal quarter, compared to a consensus of -2 cents. Revenues came to 173 million dollars against 151 million consensus. IoT revenues were $66 million (+25%), a quarterly record, while cybersecurity revenues were $92 million (+5%). For the full fiscal year 2024, the fallen personal assistant star posted revenue of $853 million and adjusted earnings per share of 5 cents. For the just-started 2025 financial year, the group expects revenues of $586 million to $616 million, adjusted Ebitda close to breakeven (plus or minus $10 million) and an adjusted loss per share of 3 to 7 cents.
ExxonMobil (stable) indicated that its results are likely to decline in the first quarter, compared to the previous quarter, due to the fall in crude and gas prices as well as the impact of derivatives trading. The upstream division would thus be affected by up to a billion dollars by the impact of oil and gas prices. The Texan oil group also warns of “timing effects” of up to $1.3 billion including the impact of derivatives. The gains in terms of refining margins will also be erased by the effect of maintenance costs, according to the group’s statements. The group is therefore forecasting a quarterly operating profit of around 6.65 billion dollars, compared to 7.63 billion for the previous quarter and 11.6 billion for the first quarter of last year.
RPM International (-3%), an American specialist in construction materials, announced record revenues of $1.52 billion for its third fiscal quarter of 2024, a slight increase (+0.4%) year-on-year, for a historic net income of $61.2 million and diluted EPS of $0.47. Ebit is also historic for the period at $93.4 million. Adjusted earnings per share were 52 cents, while adjusted EBIT reached $110.1 million, an increase of 31%. The consensus was for 46 cents in adjusted EPS on $1.52 billion in revenue. The group expects, for its fourth fiscal quarter, stable sales and “high single-digit” adjusted Ebit growth. Over the financial year, revenues are expected to grow in the low single digits, for an increase in adjusted Ebit of 10-15% – more towards the mid-range.
Conagra Brands (+4%), which had lowered its forecasts for organic sales and profit growth for the 2024 financial year in its previous quarterly publication, seems to be reassuring with its announcements today, with the stock expected to rise. The group, known in particular for its Slim Jim beef jerky, posted revenues of $3.03 billion in the third fiscal quarter ended at the end of February, slightly above consensus despite their organic decline of 2%. Adjusted earnings per share were 69 cents, down 9%, compared to a consensus of 65 cents. The group raises its 2024 adjusted operating margin forecasts and reaffirms its guidance in terms of organic sales and adjusted profit per share ($2.60 to $2.65).
Tesla (+1%) will send a team to India at the end of the month to study sites for a potential $2 billion to $3 billion electric car production plant, says the Financial Times, citing figures people familiar with the matter. This supposed offensive in India comes against a backdrop of slowing demand in Tesla’s main markets, the United States and China, where competition is fierce. This context caused an unexpected drop in deliveries in the first quarter. According to the FT, Elon Musk’s group should focus on Indian states with automotive hubs, such as Maharashtra, Gujarat or Tamil Nadu. Reuters adds that last month, India lowered import taxes on certain EVs produced by manufacturers pledging to invest at least $500 million and begin local production within three years.
Tesla has also started producing cars in Germany for export to India later this year, according to three people about the plans cited by Reuters.
Paramount Global (-9%). According to Bloomberg, Shari Redstone, controlling shareholder of Paramount Global, has reached an agreement in principle with a view to selling her stake to David Ellison’s Skydance media firm. Bloomberg cites sources familiar with the matter. Skydance is reportedly holding exclusive discussions with a panel of independent Paramount directors as part of the potential deal to acquire the Redstone family’s National Amusements holding company. The New York Times had previously indicated that discussions were active between the American entertainment giant and Skydance, with a view to a potential operation. Finally, the Wall Street Journal for its part mentions exclusive discussions between Paramount and Skydance Media, Paramount having paused discussions with other potential buyers for 30 days – including Apollo Global Management.
Google (Alphabet -1%) plans to charge for AI-based search as part of a major change in its economic model, reports the Financial Times. “The proposals would mark the first time a core product from the software group has fallen behind a paywall,” the FT adds. Concretely, the group would therefore consider charging for new premium features powered by artificial intelligence, which could constitute the biggest historical evolution of its research activities. Faced with rivalry from OpenAI’s ChatGPT, supported by Microsoft, Google is therefore studying options including adding certain AI-powered search functionalities to its premium subscription services, which already offer access to the new assistant. Gemini AI on Gmail and Docs. The FT cites three people with knowledge of the plans in this regard.
Apple (+1%) is working on the development of personal and domestic robots after abandoning its electric vehicle project, according to Bloomberg. Engineers at the US giant are working on a robot that can follow users around their homes and a desk-top device that uses robotics to move a display screen. The group closed its team working on electric cars in February. He had started working on a car around 2014, aiming for a fully autonomous electric vehicle with a limousine-style interior and voice-guided navigation.
