Wall Street, closed yesterday for Martin Luther King Jr. Day, resumes on a hesitant note this Tuesday. The S&P 500 returned 0.04% to 4,782 pts, while the Dow Jones lost 0.32% to 37,472 pts. The Nasdaq gains 0.17% to 14,997 pts. Last week was marked by a slightly higher than expected increase in the consumer price index, but also by a reassuring producer price index. The quarterly banking results, which kicked off the publication season on Friday, did not reveal any major surprises. This start of the week is notably marked by the opening of the World Economic Forum in Davos. Banking results announcements also continue with Goldman Sachs, Morgan Stanley and PNC.
Raphael Bostic, the head of the Atlanta Fed, judged, cited by the Financial Times, that rates should be maintained at this level until the summer in order to bring down inflation.
On the economic front today, the fall in the New York Fed’s Empire State manufacturing index is impressive! The indicator collapsed to -43.7 in January 2024, compared to -6.5 market consensus and -14.5 a month earlier. The index therefore reflects a complete collapse of manufacturing activity in the region considered at the start of 2024. This is also the lowest level of this indicator since May 2020 and one of the worst periods of covid!
Operators will still be following an intervention today from Governor Christopher Waller of the Fed.
On Wednesday, US retail sales, import and export prices, industrial production, business inventories, the US housing market index and the Fed’s inflation expectations index Atlanta will be on the afternoon agenda, while the Fed’s Economic Beige Book will be published in the evening. John Williams, Michael Barr and Michelle Bowman from the Fed will speak during the day on various economic and monetary topics.
On Thursday, investors will follow housing starts and building permits, weekly jobless claims, the Philadelphia Fed manufacturing index, the weekly report on US domestic oil stocks, as well as two interventions by Raphael Bostic of the Fed .
Finally, on Friday, resales of existing homes, the consumer sentiment index from the University of Michigan, as well as speeches from Michael Barr and Mary Daly of the Fed, will be to follow.
This week, the results announcements will accelerate, including Morgan Stanley, Goldman Sachs and PNC Financial this Tuesday, Prologis, Charles Schwab, US Bancorp, Kinder Morgan, Discover Financial Services, Citizens Financial and Alcoa on Wednesday, then Truist Financial, Fastenal, M&T Bank, JB Hunt, Northern Trust, KeyCorp, Birkenstock, First Horizon and PPG on Thursday. Schlumberger, The Travelers Companies, Fifth Third Bancorp, State Street, Comerica, Huntington Bancshares and Regions Financial, among others, will announce Friday.
On the Nymex this Tuesday, a barrel of WTI crude fell 1% to $72. An ounce of gold lost 0.3% to $2,045. The dollar index rose by 0.7% against a basket of reference currencies.
Values
Goldman Sachs (+2%), the American investment banking giant, posted profits up more than 50% for its fourth fiscal quarter. Quarterly profits and revenues beat market consensus. Earnings per share for the quarter ended $5.48, well above the consensus of around $3.6. The group benefited from the recovery of financial markets with its trading activities, as well as performance in wealth management, which offset weakness in investment banking. Net profit was $2.01 billion, compared to $1.33 billion a year earlier. Equity trading revenues increased by 26%, while wealth management revenues appreciated by 23%. Investment banking fees, on the other hand, fell by 12%. Consolidated revenues reached 11.3 billion.
PNC Financial Services (-1%), the American regional bank, revealed for its fourth fiscal quarter a net profit of $0.88 billion, down 44%, or an adjusted earnings per share of $3.16 compared to 3 $.47 a year ago. The institution’s revenue for the quarter ended December was $5.36 billion. The consensus was for $2.94 in quarterly adjusted EPS and $5.3 billion in revenue. Net interest income fell 8% to $3.4 billion. PNC has set aside $515 million for a fee to the FDIC, the American bank deposit guarantee agency. Net income for the year was $5.6 billion, or adjusted EPS of $14.10.
Morgan Stanley (-4%) published revenues of $12.9 billion for its fourth quarter, compared to a consensus of $12.7 billion. Investment banking revenues increased 5%. The bank incurred $535 million in non-recurring charges over the period, including $286 million for an exceptional commission to the regulator and $249 million in legal charges. Wealth management revenues were stable. For the year, revenues reached $54.1 billion, while earnings per share fell to $5.18, compared to $6.15 a year earlier.
Microsoft (+1%) has sealed a ten-year partnership with British telecom operator Vodafone, under which Vodafone will invest $1.5 billion in customer-focused AI developed with Microsoft’s Azure OpenAI and Copilot technologies. and will replace physical data centers with cheaper and scalable Azure cloud services. Microsoft, for its part, will become an equity investor in Vodafone’s managed IoT (Internet of Things) platform when it becomes a standalone company by April 2024, specifies Reuters. The software group will also contribute to developing Vodafone’s mobile financial platform in Africa. Vodafone management said Microsoft’s leadership in AI, supported by its partnership with OpenAI, creator of ChatGPT, would transform the telecom company’s customer services.
Apple (-1%) could use a design change to circumvent an import ban on new Apple Watch models stemming from its patent infringement dispute with Masimo, according to the medical monitoring technology company, citing a US law enforcement agency as part of the court case. The import ban issued by the ITC, United States International Trade Commission, applies to Apple Series 9 and Ultra 2 watches and came into effect on December 26, recalls Reuters. Apple convinced the US Court of Appeals for the Federal Circuit to suspend the ban.
Apple is also reportedly offering rare discounts on its iPhones in China, reducing retail prices by up to 500 yuan ($70) amid growing competitive pressure in the world’s largest smartphone market, reports Reuters . The Californian technology giant has reduced the prices of certain iPhones by 5%, the agency adds, citing the Apple group’s Chinese website. “The limited-time promotion, billed as a Lunar New Year event, will last from January 18 to January 21, in the run-up to the mid-February holiday,” Reuters adds. Sales of Apple’s latest iPhone 15 series of handsets have indeed been “much worse than previous models in China”, with competition from local giants such as Huawei Technologies and Xiaomi to competitive models. Reuters sources also indicated that some companies and ministries were limiting the use of Apple devices by their staff…
Tesla (+1%) remains under surveillance on Wall Street today, following a series of tweets from its boss Elon Musk concerning the level of its capital participation and governance issues. “I’m not comfortable making Tesla a leader in AI and robotics without having around 25% voting control. Enough to have influence, but not so much that I can’t be knocked down. Unless that’s the case, I’d rather build products outside of Tesla. You don’t seem to understand that Tesla is not just one startup, but a dozen. Just look at the gap between what Tesla is doing and GM. As for the fact that stock ownership itself is sufficient motivation, Fidelity and others have issues similar to mine. Why aren’t they showing up for work?” Musk said on his social network ex-Twitter, responding to a user of the platform judging that Musk’s 411 million Tesla shares constituted sufficient motivation and that there was no need for a new compensation plan.
Nvidia (+3%) faces American restrictions on the export of advanced chips to China. However, according to Reuters, Chinese military agencies, state artificial intelligence research institutes and universities have purchased small batches of Nvidia chips banned by the United States from export to China over the past year. China. Reuters mentions an examination of the tender documents. “Sales by largely unknown Chinese suppliers highlight the difficulties Washington faces, despite its bans, in completely cutting off China’s access to advanced U.S. chips that could power breakthroughs in AI and technology. sophisticated computers for its army”, summarizes Reuters. Buying or selling high-end U.S. chips is not illegal in China and accessible bidding documents show according to Reuters “that dozens of Chinese entities have purchased and received Nvidia chips since the imposition of restrictions.
Broadcom (+1%) would have attracted the interest of EQT AB, KKR and Thoma Bravo, ready to invest in its software activity. According to Bloomberg, private equity firms would be interested in acquiring the software business sold by Broadcom Inc. following the takeover of VMware Inc. This is what sources familiar with the matter said. The business, which provides software that lets users access desktops and applications remotely, could be valued at around $5 billion, including debt.
Boeing (-7%) is not out of the woods regarding its 737 MAX 9. The FAA, the government agency responsible for regulations and controls in American civil aviation, asked Boeing to provide additional data before approving an extensive and rigorous inspection and maintenance process with a view to returning the device to service. Bloomberg reports that certifications of the 737 MAX 7 and 10 are expected to be delayed until the MAX 9 issues are fully resolved. Reuters specifies for its part, citing the Wall Street Journal, that the resumption of deliveries of the 737 MAX in China faces new delays following the Alaska Air incident, the Chinese regulator having also asked local airlines to conducting safety inspections and China Southern Airlines planning additional inspections. China should wait for more clarity regarding the US investigations before deciding on significant actions. Alaska Air, for its part, has begun preliminary inspections on its grounded fleet of 737 MAX 9s, following the January 5 incident.
Synopsys, the American software group, climbed 4% on Wall Street, posting a capitalization of $78 billion. The group will in fact acquire Ansys as part of a $35 billion transaction in cash and shares, which so far constitutes the largest technology deal in the US market this year! Ansys shareholders will receive $197 in cash and 0.345 Synopsys shares per share held. The operation will give birth to a new giant in design solutions. Combining Synopsys’ pioneering semiconductor electronic design automation with Ansys’ broad simulation and analysis portfolio will therefore create a leader in design solutions.
