Wall Street goes into the red before market trading this Tuesday, following worrying producer price figures. The S&P 500 is now down 0.2%, the Dow Jones 0.1% and the Nasdaq 0.3%. Thus, the US producer price index increased more than expected. Operators are now feverishly awaiting the consumer price index. In corporate news, the ‘meme stocks’ GameStop and AMC continue their insolent rally, while announcements multiply in the field of AI… On the Nymex, the barrel of WTI crude yields 0.6% at $78.6. An ounce of fine gold gained 0.5% to $2,354. The dollar index stabilizes against a basket of currencies.
The American producer price index for the month of April 2024 showed an increase of 0.5% compared to the previous month, against +0.3% consensus and +0.2% a month earlier . Over one year, the producer price index increased by 2.2%. Excluding food and energy, the PPI increased by 0.5% month-on-month against 0.2% consensus, an increase of 2.4% year-on-year compared to a market consensus of 2. 3%.
Yesterday Monday, the vice-president of the American central bank, Philip Jefferson, did not really provide anything new regarding monetary policy. He spoke about the value… of clear communication from the Fed and central banks to improve the effectiveness of policy. At a conference organized by the Cleveland Fed, Jefferson said that while waiting to see more evidence of a return of inflation towards the 2% objective, it was appropriate to maintain rates on their current level. In addition, the resilience of the economy and employment in the United States allows the Fed to focus on achieving this inflation objective…
The Fed is expected to cut rates twice this year, starting in September, according to the majority of economists polled by Reuters, who at the same time significantly raised their inflation forecasts for the second consecutive month. According to the study, nearly two-thirds of the economists surveyed, or 70 out of 108, predict a first reduction in the federal funds rate in September, to a range of 5 to 5.25%. These results come from a survey conducted from May 7 to 13. In the previous survey last month, just over half of economists expected easing in September.
Lisa Cook, Governor of the Fed, Jeffrey Schmid, President of the Kansas City Fed, and especially Jerome Powell, head of the Fed, are speaking today. Powell is taking part in a discussion in Amsterdam with Klaas Knot, the president of the Dutch central bank DNB (De Nederlandsche Bank), on the occasion of the annual meeting of the Foreign Bankers’ Association.
Tomorrow, the consumer price index for the month of April will take the spotlight at 2:30 p.m. (consensus +0.4% compared to March and +3.4% year-on-year; +0.3% and +3, 6% excluding food and energy). At the same time, operators will monitor retail sales for the month of April (consensus +0.4%), as well as the New York Fed’s Empire State manufacturing index for the month of May. Corporate stocks and the US housing market index will be announced at 4 p.m., while the Department of Energy’s weekly report on domestic oil stocks will be revealed at 4:30 p.m. Neel Kashkari, head of the Minneapolis Fed, as well as Governor Michelle Bowman, will also speak tomorrow.
Thursday, the day will be busy again, with housing starts and building permits at 2:30 p.m., weekly unemployment registrations, as well as the Philadelphia Fed’s manufacturing index and even import and export prices. ‘export. Industrial production figures will be announced at 3:15 p.m. by the Fed. Patrick Harker, Michael Barr, Loretta Mester and Raphael Bostic from the Fed will speak during the day.
Finally, on Friday, the Conference Board Leading Indicator Index will be followed at 4 p.m.
Corporate news on Wall Street, apart from the numerous expected announcements in the field of artificial intelligence (OpenAI or Alphabet in particular), will be marked by the quarterly results of retailers Walmart and Home Depot, as well as those of Cisco. Home Depot and Alibaba announce before market today. Cisco publishes tomorrow evening. Walmart, Deere, Baidu and JD.com report Thursday before market, while Applied Materials, Copart and Take-Two Interactive reveal their accounts after the close.
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Microsoft. OpenAI, the AI startup behind Microsoft-backed ChatGPT, yesterday unveiled a faster and cheaper version of its artificial intelligence model. Thus, Sam Altman’s group unveiled GPT-4o, an updated version of GPT-4. The new model will be better equipped to process text, images and audio. These adjustments will be available in the coming weeks. In particular, the new system is now capable of providing an audio response in a fraction of a second, allowing a fluid conversation. During yesterday’s presentation, CTO Mira Murati held a conversation with ChatGPT. The conversational robot has also shown itself capable of effectively translating audio text, almost instantly. The tool therefore becomes even more collaborative, offering new perspectives. “It looks like movie AI, and it’s still a little surprising to me that it’s real,” said Altman, noting the significant change represented by these “human-level” responses. As part of the updates, OpenAI also now allows anyone to access the GPT Store offering bespoke user-designed chatbots.
The “o” in GPT-4o stands for “omni,” signaling that the system now combines voice, text, and vision. OpenAI estimates that the new model is twice as fast and much more efficient than the previous one, which was more than a year old… Bloomberg had also previously reported that the group was developing its own search functionalities for ChatGPT, which could thus soon competing with Google Search…
Alphabet… OpenAI’s announcements yesterday came on the eve of the Google I/O 2024 conference, which will allow the Californian group to in turn present its latest advances in AI. Alphabet’s stock suffered yesterday at the start of the session on fears of a ChatGPT search engine, before ending in positive territory.
Apple. Its flagship supplier Foxconn announced a sharp increase of 72% in its profit for the first quarter, with demand for AI servers. The basis of comparison, however, was weak due to writedowns last year, and Hon Hai Precision Industry Co., better known as Foxconn, posted slightly lower profits than expected with the slowdown in China. First quarter revenue corrected 9% with weaker demand for consumer electronics. The Taiwanese giant, a key partner of Apple but also of Nvidia, posted a profit of $679 million for the March quarter, which therefore reflects growth of more than 70% but is lower than consensus.
Foxconn expects “significantly positive” growth for the year. Management maintains the forecast of a 40% increase in AI server activity over the financial year. Earlier this month, the group announced historic revenues for April.
Alibaba, the Chinese online commerce giant, is losing ground before the stock market on Wall Street. The group published adjusted earnings per share of $1.40 for its first quarter, compared to a consensus of $1.42. Revenue was $30.7 billion, compared to the average analyst forecast of $30.4 billion. Revenue growth still reached 7% year-on-year. Net profit attributable to ordinary shareholders was $453 million, while consolidated net profit was $127 million, down 96% with a net loss on the group’s investments in listed companies. Non-GAAP profit declined 11% to $3.38 billion. Adjusted EPS fell 5%. Alibaba also declared an exceptional dividend of $0.66 and a regular annual dividend of $1 per share.
Home Depot, the American leader in the distribution of home-related products, announced revenues of $36.4 billion for its first fiscal quarter of 2024, down 2.3% compared to the previous year and slightly lower to expectations (36.7 billion). Like-for-like sales fell 2.8%, with a 3.2% decline in the United States. Quarterly net profit was $3.6 billion, or $3.63 per share, compared to $3.9 billion a year earlier, during the same period. The consensus was $3.6 EPS. Ted Decker, the group’s CEO, believes that Home Depot performed at a high level in the quarter and continued its market share gains. The group also reaffirms its forecasts for the 2024 financial year, expecting total sales growth of 1%, a decline of around 1% on a comparable basis, a gross margin of around 33.9% and an operating margin of 14.1 %.
Walmart, the American retail giant which publishes its accounts on Thursday, could cut hundreds of jobs and ask most teleworking employees to return to the office. At least that’s what the Wall Street Journal reports, citing sources familiar with the matter. These would be corporate jobs. The retailer also reportedly asked its employees from smaller offices in Dallas, Atlanta and Toronto to join central sites in Bentonville, Hoboken or Southern California. The group could still tolerate a dose of teleworking if employees are in the office most of the time…
Uber Technologies is buying Delivery Hero’s Foodpanda business in Taiwan for $950 million, strengthening its control of a key Asian market. The American group will also acquire additional newly issued shares of the German company for $300 million. Delivery Hero would use the proceeds from the transaction to repurchase its convertible debt. Foodpanda and UberEats have been neck and neck in Taiwan’s food delivery sector for years, Bloomberg reports.
AMC posts a gain of almost 120% before market on Wall Street, benefiting from the ‘meme stock’ effect in the wake of GameStop. However, true to form, the management of the cinema chain decided to further dilute it by selling shares for $250 million yesterday, taking advantage of the current liquidity. AMC sells 72.5 million shares and recovers additional capital. The average price for this operation is $3.45 before commissions. The average selling price is at the bottom of the range of the previous day’s prices, but it obviously doesn’t matter for small American investors who are ready to pay double or triple…
GameStop soars 126% in pre-session after a jump of 74.4% last night! The star ‘meme stocks’ of 2021 on Wall Street have seen a very strong surge of interest since yesterday from small American investors. The first tweet in three years from Keith Gill, better known to small American shareholders as “Roaring Kitty”, seems to have ignited the powder. We are far, very far, from any notion of fundamental analysis. Our man communicates in the form of videos and images which seem to trigger a certain euphoria among small shareholders. This is therefore a typical phenomenon of “FOMO”, the famous fear of missing out on the increase, even if the latter is not based on any tangible element… In 2021, small American carriers banded together en masse to to make certain securities massively sold short take off.
