Wall Street hesitates before trading this Monday. The S&P 500 gains 0.1% and the Dow Jones loses 0.3% with Boeing. The Nasdaq rose by around 0.2%. After a delicate first stock market week in 2024, the American stock market remains uncertain, with news remaining mixed on the ‘Magnificent Seven’, notably Tesla and Apple… On the Nymex, the barrel of crude falls by almost 3.3 % to $71.3. An ounce of gold lost 1.1% to $2,027. The dollar index stabilizes against a basket of reference currencies. On the bond markets, the yield on the 2-year T-Bond is 4.37%, compared to 4.04% on the 10-year and 4.21% on the 30-year.
According to the CME Group’s FedWatch tool, it is very likely (95%) that the Fed will leave its rates unchanged on January 31 after its next monetary meeting, between 5.25 and 5.5%. The first relaxation could take place on March 20 during the next meeting (probability of more than 60%). The latest economic statistics showed, across the Atlantic, a fairly resilient job market but some additional signals of economic slowdown.
Lorie Logan of the Dallas Fed (non-voter) emphasized the Fed’s quantitative tightening plans, saying the central bank should slow the pace as slower normalization reduces the likelihood that “QT” must stop prematurely if the bank is under stress and something breaks. Logan’s comments follow December FOMC Minutes, in which officials suggested it would be appropriate to discuss the factors that determine the end of QT… Economists expect a formal announcement on QT at the March FOMC meeting and a slowdown starting in April. However, the timing of the end of QT is uncertain, with some seeing bank liquidity strong enough to further reduce the balance sheet significantly over a year, while others see the Fed exercising more caution.
On the economic front this Monday, operators will monitor consumer credit figures just this evening. Raphael Bostic of the Fed speaks during the day.
Tomorrow Tuesday, investors will follow the balance of international trade in goods and services. On Wednesday, wholesale stocks and weekly report on US domestic oil stocks will be monitored. John Williams of the Fed will also speak on Wednesday. The news will be a little more extensive on Thursday, with the American consumer price index for December, weekly unemployment claims, as well as the American budgetary balance. On Friday, markets will follow the producer price index and a speech from the Fed’s Neel Kashkari.
Concerning companies listed on Wall Street, Jefferies Financial is publishing its quarterly results this evening. Albertsons, Tilray and PriceSmart will be there on Tuesday. KB Home will announce on Wednesday, while Taiwan Semiconductor Manufacturing Company and Infosys will publish on Thursday.
On Friday, banks and financial institutions will kick off the fourth quarter results season. UnitedHealth, JP Morgan Chase, Bank of America, Wells Fargo, BlackRock, Citigroup and Bank of New York Mellon will reveal their accounts before the market. Delta Air Lines will also release Friday. Major US banks are expected to see a sharp increase in bad loans due to unpaid debts and the impact of high interest rates, says the Financial Times…
As for major market strategists, Michael Wilson of Morgan Stanley believes that American stocks will only continue their 2023 rally if economic growth resumes. Goldman Sachs’ strategy teams believe that company results could exceed expectations this year…
Values
Boeing weighs heavily on Wall Street today, losing more than 7% in pre-session. If, by some miracle, the incident that occurred on Friday on an Alaska Airlines B.737 Max 9 departing from Portland did not cause any injuries, the event will not be without consequences for the American giant. In addition to the new blow in terms of image for Boeing’s best-seller after previous quality and compliance problems encountered by the aircraft, the plane is now grounded in the United States. The American Federal Aviation Administration has in fact ordered the temporary immobilization of the 171 B.737 MAX 9s in service for inspection, after the Alaska plane lost an important fuselage part, leaving a hole rectangular in the cabin and forcing the crew to make an emergency landing. “We have grounded the affected aircraft, and they will remain grounded until the FAA is satisfied that they are safe,” the regulator said on Sunday.
Merck, the American pharmaceutical company, is in advanced discussions to acquire Harpoon Therapeutics for $23 per share, according to Bloomberg. People familiar with the matter say the transaction, in which Merck could pay $700 million for Harpoon, could be announced within days. Harpoon is an immuno-oncology group. Merck’s potential offer would feature a 118% premium to Friday’s closing prices, with Harpoon listed on the Nasdaq. Bloomberg, however, does not completely rule out a possible failure of the discussions.
BlackRock, the American asset management giant, plans to cut around 3% of its global workforce according to Fox Business. A source told Fox that the reduction of approximately 600 employees in the workforce is described internally as “routine,” following a series of similar layoffs last year, determined by employee performance metrics. The article reports that the layoffs are expected to be announced in the coming days.
You’re here. Tesla and SpaceX executives are reportedly concerned about Elon Musk’s alleged drug use, report Bloomberg and the Wall Street Journal. Citing people familiar with Musk, Tesla and SpaceX, a WSJ report notes that Musk’s alleged drug use – including LSD, cocaine, ecstasy, ketamine or psychedelic mushrooms – is believed to be ongoing. According to the article, former Tesla director Linda Johnson Rice reportedly did not seek re-election in 2019 due to her frustration with Musk’s behavior and concerns about his drug use. In response to the article, Musk tweeted: “After that puff with Rogan, I agreed, at NASA’s request, to do 3 years of random drug testing. No trace of drugs or alcohol was not found.” Remember that Musk then surprised by “shooting” on a cannabis joint live during the very popular podcast of comedian and presenter Joe Rogan…
The Wall Street Journal specifies for its part that Musk’s supposed drug consumption would therefore worry the managers and members of the boards of directors of the companies he manages. The WSJ cites unidentified people close to the billionaire and the companies. Musk allegedly used LSD, cocaine, ecstasy and psychedelic mushrooms, often at private parties, the newspaper said, citing anonymous witnesses and others with knowledge of the matter. People close to Tesla and the SpaceX CEO told the newspaper that he still uses drugs, particularly ketamine.
Apple is definitely worrying analysts at the start of 2024. After two downgrades of brokers last week (Barclays and Piper Sandler), it is Jefferies’ turn to sound the alarm. The broker judges that the decline in iPhone sales in China is increasing. This analysis by Edison Lee and his team is relayed by Bloomberg. The latest generation of iPhones thus had an atypical start in China last year, which recently extended to a drop of 30% year-on-year according to Lee, who cites industry controls. The rest of the country’s mobile market would have seen growth in December, with Huawei posting the fastest growth with the new Mate 60 range. Apple, for its part, would have recorded a double-digit volume decline in December in China, and Jefferies forecasts a similar decline for 2024.
Nvidia plans to launch mass production of its new AI chip in the second quarter of 2024 for China and complying with US rules on exports of advanced chips. At least that’s what Reuters says. Citing two people familiar with the matter, the agency specifies that the H20 chip will be designed to comply with new US regulations on exports of high-tech equipment to China. The initial shipment volume will be limited and will mainly fulfill orders from major customers, Reuters said.
