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Monday Report
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Economy
The statistics published in the United States were rather reassuring. The ISM services index in particular surprised by rising from 54.9 to 56, whereas a fall to 53.8 was expected in October. Similarly, household confidence (Univ. of Michigan) rose in November from 70.5 to 73, higher than expected (71). In the eurozone, Sentix investor confidence rose in November (from -13.8 to -12.8), close to expectations (-12.6). Retail sales came as a pleasant surprise, rising by 0.5% m/m in September (+2.9% y/y). In China, in addition to new stimulus measures, the services PMI (Caixin) rose more than expected in October (from 50.3 to 52), as did exports (+12.7% y/y). Imports, on the other hand, disappointed (-2.3% y/y), a sign that domestic demand is weak and overcapacity high.
Planetary Limits
Prior to COP29, a report by the International Chamber of Commerce concludes that extreme weather events have caused economic losses of 2 trillion dollars, or 2,000 billion dollars, over the last ten years: the equivalent of one year’s GDP for Brazil, the world’s 10th largest economy.
Markets
The red wave of pro-corporate America Republicans in the US elections gave a boost to US equities (+4.8%) and the dollar (dollar index: +0.7%). Volatility on 10-year yields was high, but they ended the week down in the US (-8 bp), and also elsewhere (EUR: -4 bp), supported by the Fed’s key rate cut (-0.25%). Against this backdrop of strong risk appetite, gold is down 2.1%. Coming up this week: SME confidence (NFIB index), consumer and producer price indices, retail sales and industrial production in the United States; ZEW index and industrial production in the eurozone; producer and consumer price indices, industrial production, investment and retail sales in China.
Swiss Market
Coming up this week: October traffic statistics (Flughafen Zürich), Q3 labour market (FSO), October production-import price index (FSO), Q3 GDP (Seco), October accommodation statistics (FSO) and Sunrise’s first day of trading on the SIX. The following companies are due to release results: Lem, PSP Swiss Property, ON Holding, Alcon, SoftwareONE, Ypsomed, Orascom DH, Montana Aerospace, Swiss Life and Swiss Re.
Equities
We are adding DANONE to our satellite recommendations list. The group has shown clear signs of improvement in volume growth for several months, with a more disciplined execution of its “Renew Danone” strategy bearing fruit. Danone expects stable organic growth (+3-5%), with a portfolio strategically aligned to the growing demand for health and nutrition products.
NOVO NORDISK (Core Holdings): on the conference call, the CFO said he expected sales to rise by 17-19% (“high teens”) by 2025, compared with a consensus of around 20%, putting pressure on the stock price. These initial indications come as little surprise, as management has historically shown itself to be cautious at the start of the year in order to deliver better. Two major events are expected in the coming weeks: phase III data from CagriSema (a 3rd generation treatment for obesity) and the FTC’s decision on the Catalent acquisition (which will enable the expansion of production capacity).
VAT GROUP (new recommendation Swiss Convictions) is the world leader in the development and production of vacuum valves and critical components for production processes in the semiconductor industry. VAT Group AG combines a leading market position, stable margins and strong growth potential thanks to technology megatrends. After the recent price correction, the stock is once again attractive, offering an excellent entry opportunity for long-term investors.
Bonds
Following Trump’s victory, US yields were highly volatile, with the MOVE index regaining its 2022 levels and the 10Y approaching 4.5% before ending the week 8bp lower at 4.3%. Only the Bund yield was more agitated in view of the imminent end of the ruling coalition, ending the week lower nonetheless. The forthcoming announcements from the future US cabinet will reduce the uncertainty and hence the volatility seen in recent days. We will be keeping a close eye on the weekly US employment statistics on Thursday, following higher-than-expected data last Thursday.
Sentiment of traders
Stock markets
Trump’s election lifted US indices to all-time highs, which was not the case in Europe, where indices lost around 1% over the week. The coming days will be full of macro figures (US: CPI, PPI, retail sales, industrial production/ Eurozone: ZEW, GDP, unemployment). The US/EU dichotomy is set to continue.
Currencies
Following Trump’s victory, the dollar rose sharply €/$ 1.0690, $/CHF 0.8780, $/JPY 153.75. We remain positive on the dollar in the short term: the interest-rate differential and expectations of further US tariffs do not bode well for Europe. Our ranges are: €/$ 1.0600-1.0850, $/CHF 0.8610-0.8850. CHF is back in demand against the € at 0.9390, as the market is still anticipating a rate cut by the SNB (16/12 -0.25%), sup. 0.9340 res. 0.9440. The £ is down at £/$ 1.2900, sup. 1.2850 res. 1.3070. Gold is down at $2669/oz, sup. 2638 res. 2750.
Today’s graph
Performances
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