Monday Report


The few US statistics released last week were fairly encouraging. In particular, manufacturing and services PMIs rose from 59.1 to 60.6 and from 60.4 to 63.1 respectively in April, pointing to a sharp upturn in the economy. Meanwhile, the Kansas City Fed’s leading indicator confirmed these expectations, rallying from 26 to 31 in April, as did new home sales, up a higher than expected 20.7% MoM. Eurozone confidence indicators also pointed to strong momentum ahead: the manufacturing PMI continued to rise in April, up from 62.5 to 63.3, while its services counterpart topped the 50-point mark, climbing from 49.6 into expansionary territory at 50.3, and consumer confidence picked up from -10.8 to -8.1.


New Zealand’s Minister for Climate Change James Shaw has put forward a bill that would make it mandatory for all asset managers, banks and insurers with assets of more than NZD 1bn (only around USD 700m) and all issuers of debt and shares listed on the New Zealand stock exchange – more than 200 companies in all – to report their climate risks.


Strong macroeconomic and microeconomic releases were somewhat dampened by the prospect of hikes on US income and capital gains taxes, with the result that markets were fairly quiet. Equities (MSCI World) fell a modest 0.2% while sovereign yields and credit spreads were more or less unchanged in the week. Copper prices continued to rise (up 3.8%) and the dollar lost 0.8% (dollar index), though gold did not benefit (down 0.2%). To be monitored this week: durable goods orders, consumer confidence, Q1 GDP (first read) and Fed meeting in the US; EC confidence indicators, CPI, unemployment rate and Q1 GDP (first read) in the eurozone; and manufacturing and services PMIs in China.

Swiss Market

To be monitored this week: SNB Q1 results, FSO March retail sales, FSO 2020 wage growth and KOF April economic barometer. The following companies are due to report Q1 figures: Kühne+Nagel, Bucher, ABB, UBS, Novartis, Santhera, Logitech (Q4), Clariant, Straumann, Sulzer, Swiss, Swisscom, Financière Tradition, Schindler, PSP Swiss Property, Swiss Re and Wisekey (2020). Polypeptide Group is due to be listed on the Swiss stock exchange.


NESTLÉ (Core Holdings) is in talks to acquire The Bountiful Company, which makes vitamins and food supplements (protein-rich snacks). With sales of over $2bn and a forecast 2021 margin of 20% (Nestlé’s 2020 margin was 17.7%), the reported $5bn price tag equates to a reasonable valuation (EV/sales of 2.4x and EV/EBITDA of 17x). This acquisition would round out Nestlé’s health and nutrition portfolio.
UNILEVER (Core Holdings) is due to report its Q1 2021 sales this Thursday. Given that lockdowns were extended into Q1, the consensus forecast is cautious, putting organic sales growth at 3.9%, with sales nevertheless buoyed by the upturn in the US and, above all, emerging markets (Asia).
VEOLIA has been added to our European Satellites with the b-Transition label. The group’s operations span the full length of the value chain in water, waste and energy services. With the Suez acquisition finalised, the new group will be world number one and ideally placed on key ecological transition issues.
MICROSOFT, ALPHABET, VISA, APPLE, FACEBOOK and AMAZON (US Core Holdings) are all due to report results this week. This will give investors an idea as to the continued performance of Big Tech as the world continues to open up again. Unsurprisingly, these figures are likely to be very positive; they will also provide an indication of the overall trend in cloud computing, e-commerce and online advertising.


US yields moved lower for the third week running, with 10-year yields ending the week down 2 bps at 1.55%. In Europe, the ECB left official interest rates unchanged as expected and sovereign yields held steady. In credit, spreads widened slightly in the US and European high-yield segments (up 4 bps and 5 bps respectively). The US HY primary market had another busy week, with issues totalling c. $9bn. This brings year-to-date volumes to $189bn, 99% higher than at the same point last year.

Sentiment of traders

Stock market
After a stable week, markets are bracing themselves for five busy sessions, with US tech firms and 180 S&P 500 companies all set to report quarterly results. While there are no particular expectations for Wednesday’s FOMC meeting, Fed Chair Powell’s speech will come under close scrutiny as usual. US and European GDP numbers are also expected. We remain confident.
Concerns over Biden’s tax plans caused USD to fall to EUR/USD 1.2103 and USD/CHF 0.9135. Our expected ranges: EUR/USD 1.1980-1.2160 and USD/CHF 0.9054-0.9225. CHF and GBP are holding firm at EUR/CHF 1.1055 and GBP/USD 1.3905. Having failed to break through resistance at $1,800/oz, gold is currently consolidating at around $1,775.

Today’s graph


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