The S&P500 gained more than 2% last week, while the VIX index, which measures volatility on markets, continues declined to 24 points. However, investors remain on edge, trying to assess the trajectory of growth and inflation, ahead of the next Fed monetary policy meeting on July 27. 

The latest job report in the United States has undermined the bets of investors who were banking on the "it's going bad, so it's going well" scenario, thinking that the deterioration of economic indicators would limit the Fed's aggressive stance. But the labor market is doing much better than expected, as U.S. companies created 372,000 jobs in June, which is well above the 265,000 expected in a Bloomberg consensus. We are still far from recession, so investors are bracing for a strong rate hike in July, in the 75-basis points region. This is a necessary evil to dry up liquidity and the inflation that goes with it. Taking a look at CME's FedWatch tool, I found that the market has even opened the door to a 100-basis point rate hike, but the probability remains low (below 10%).

Central banks will be in the spotlight this week, with many comments and press conferences planned this week, including the Fed (today and Thursday), the Bank of England (today and tomorrow), the BOC (which will make a decision on its rates on Wednesday).

The first U.S. inflation figures for June are expected on Wednesday. Producer prices will follow on Thursday and retail sales on Friday, the same day as the University of Michigan's consumer confidence index. So, this will be more than enough to fuel the great debate on growth and inflation...

Today, US stock futures were in the red ahead of Q2 earnings season, which is set to kick off with US banks, as is customary. According to Refinitiv data, analysts expect JPMorgan Chase  to post a 25% drop in earnings on Thursday, while on Friday, Citigroup and Wells Fargo should record profit declines of 38% and 42%, respectively.

Joe Biden will go to Saudi Arabia at the end of the week to push for an increase in oil production.

 

 

Economic highlights of the day:

No major indicator today.

The dollar is trading at EUR 0.9920. The ounce of gold is down to USD 1735. Oil is also down, with North Sea Brent crude at $103.88 a barrel and U.S. light crude WTI at $101.08. The yield on 10-year US debt is up a bit to 3.08%. Bitcoin is losing ground at USD 20500.

 

On markets:

*Beijing fines Alibaba and Tencent for anti-trust violations.

*Elon Musk backs out of buying Twitter, which has filed suit.

*Tesla will halt production for two weeks at its new factory outside Berlin. 

*Dufry buys Italian group Autogrill.

*Volvo Cars will leave the European Automobile Manufacturers Association (Acea).

*Danske Bank lowers profit forecast for 2022.

*Aker BP discovers a gas field in the Norwegian Sea.

*Wind turbine manufacturer Nordex is launching a $215 million fundraising.

 

Analyst recommendations:

  • Agilent Technologies: Citigroup downgrades to neutral from buy. PT up 14% to $140.
  • Anglesey Mining: Stifel Canada initiated coverage with a recommendation of buy. PT up 90% to 5.50 pence.
  • Apartment Income Reit: Citigroup adjusts price target to $47 from $60, maintains buy rating.
  • Carnival: UBS lowers its price target to $12 from $23, maintains buy rating.
  • Cushman & Wakefield: Citigroup downgrades price target to $17 and maintains neutral rating.
  • Indus Realty Trust: Citigroup maintains neutral rating, PT down to $65 from $83.
  • Interactive Brokers Group: Jefferies & Co maintains buy rating. PT down to $77 from $79.
  • Lennox International: Cowen raised the recommendation to outperform from market perform. PT set to $260.
  • ManpowerGroup: J.P. Morgan downgrades to neutral from overweight. PT down 0.8% to $78.
  • Mattel: Goldman Sachs raised to buy from neutral. PT up 36% to $31.
  • Morgan Stanley: Jefferies & Co adjusts price target to $97 from $109, maintains buy rating.
  • Newmont: Jefferies & Co maintains hold rating and adjusts price target to $65.
  • Occidental Petroleum: Goldman Sachs cuts the recommendation to neutral from buy. PT up 15% to $70.
  • Prudential Financial: RBC Capital lowers price target to $112 from $125, maintains sector perform rating.
  • National Storage Affiliates Trust: Citigroup maintains neutreal rating. PT up to $56.50 from $65.50.
  • Trane Technologies: Cowen upgrades from market perform to outperform. PT up 38% to $180.
  • Walgreens Boots Alliance: J.P. Morgan maintains its neutral rating and cut the target to $45 from $52.
  • Workspace Group: Kempen & Co downgrades to sell from neutral. PT down 8.7% to 500 pence.
  • Twilio: Oppenheimer downgrades price target to $260 from $320, keeps outperform rating.