Monday Report

Economy

US statistics were rather disappointing: consumer confidence plummeted from 125.1 to 113.8 and the economy added far fewer jobs than expected (235,000 vs. 733,000) in August. Inflationary pressures persist: hourly wages were up 0.6% MoM (up 4.3% YoY). The ISM Manufacturing Index held steady at 59.9 while its non-manufacturing counterpart fell from 64.1 to 61.7. In the eurozone, EC confidence indicators declined moderately, down from 119 to 117.5 for the economy, from 14.6 to 13.7 for industry and from 19.3 to 16.8 for services. Consumer prices are under pressure: up 0.4% MoM (up 3% YoY). Lastly, the Chinese manufacturing PMI declined from 50.4 to 50.1 while its services counterpart, hit harder by restrictions, fell from 53.3 to 47.5.

Climate

The European Investment Bank (EIB) has announced the creation of a Climate and Environment Advisory Council, chaired by Christine Lagarde. The news follows the EIB’s adoption in 2020 of a roadmap for implementing – together with the European Investment Fund – the €1trn Green Package and aligning financing activities with the objectives of the Paris Agreement. In short, the EIB is gradually transforming itself into the EU’s climate bank.

Markets

Markets had a risk-on week. Equities surged in Tokyo (up 5.4%) on news that Japanese PM Yoshihide Suga is to step down. Emerging equities also rose strongly (up 3.4%), while developed markets gained 1%. Gold (up 1.4%) benefited from dollar depreciation (with the dollar index down 0.7%), while 10-year sovereign yields rose slightly in the US and more sharply in the eurozone. To be monitored this week: producer price index and consumer credit in the US; Sentix (investors) and ZEW confidence indicators and ECB meeting in the eurozone; and trade balance, currency reserves, consumer and producer price indices and money supply in China.

Swiss Market

To be monitored this week: SECO August unemployment and SNB end August currency reserves. The following companies are due to report H1 results: Burkhalter, Partners Group, Villars, BKW, Poenina, Groupe Minoteries, Romande Energie, La Mobilière, Fundamenta and Medacta.

Equities

AMAZON (US Core Holdings) is planning to launch Amazon-branded TVs as soon as October in the US, according to Business Insider. The sets will be designed and manufactured by third parties including TCL.
SYMRISE (EU Core Holdings) has acquired a 25% minority stake in US firm Kobo Products, including an agreement regarding the future disposition of Kobo’s shares. Kobo adds to the range of natural ingredients in cosmetics, with leading positions in UV filters, powders and pigments for use in make-up. The financial terms have not been disclosed. Note that Symrise is due to join the DAX with effect from 20 September.
TSMC (Asia Satellites) is due to report its monthly sales on Friday 10 September. First-half sales were up 18% YoY.
VW and STELLANTIS (Satellites): the top two hot topics at the Munich Motor Show, which gets underway today, will be the flood of electric vehicles and risks posed by the semiconductor shortage. After a strong market run and very solid interim results, the auto sector has corrected, with the worsening shortage over the summer stoking uncertainty over Q3 results, while consensus estimates at this stage remain unchanged despite a very moderate valuation (2021 P/E: 7.5x)… Caution is called for in the short term!
ZALANDO (Satellites) is due to join the DAX with effect from 20 September… a support factor for the share price.

Bonds

In the US, despite a sharp slowdown in job creation (with 235,000 new jobs added, vs. an expected 733,000), wages rose more sharply than expected (up 0.6% MoM, vs. 0.3% expected), causing the curve to steepen as long yields rose. Ten-year yields climbed 2 bps to end the week at 1.32%, driven by rising real yields (up 6 bps). In credit, European high-yield indices continued to perform well, with spreads narrowing sharply in the US (down 15 bps) and Europe (down 9 bps), where they fell to a new post-Covid low of 355 bps.

Sentiment of traders

Stock market
With Friday’s disappointing job numbers delaying the prospect of tapering, core markets will be caught between two stools this week, so the next few days are likely to alternate between good and less good. Furthermore, with a lack of macro figures this week and the ECB unlikely to shed any light, markets are set to remain in the dark. We remain cautiously positive.
Currencies
Last Friday’s disappointing US job numbers delayed hopes of Fed tapering. EUR has consolidated its gains against USD and CHF at EUR/USD 1.1865 and EUR/CHF 1.0864. We anticipate the following ranges: EUR/USD 1.1770-1.1940 and EUR/CHF 1.0760-1.09. GBP has risen against USD and CHF: 1.3840 and 1.2680. Gold is trading at $1,826/oz.

Today’s graph

Performances

This document has been issued for information purposes and is exclusively supplied by Bordier & Cie SCmA in the framework of an existing contractual relationship with the recipient of this document. The views and opinions contained in it are those of Bordier & Cie SCmA. Its contents may not be reproduced or redistributed by unauthorized persons. The user will be held liable for any unauthorized reproduction or circulation of this document, which may give rise to legal proceedings. All the information contained in it is provided for information only and should in no way be taken as investment, legal or tax advice provided to third parties. Furthermore, it is emphasized that the provisions of our legal information page are fully applicable to this document and namely provisions concerning the restrictions arising from different national laws and regulations. Consequently, Bordier Bank does namely not provide any investment services or advice to “US persons” as defined by the Securities and Exchange Commission rules. Furthermore, the information on our website – including the present document – is by no mean directed to such persons or entities.