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Monday Report
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Economy
The statistics published in the United States were fairly satisfactory. The manufacturing PMI rose modestly from 48.5 to 48.8, but the services PMI recovered much more strongly, from 55 to 57, whereas a stabilization was expected in November. In the same month, confidence among homebuilders (NAHB) came as a pleasant surprise, rising from 43 to 46, compared with the expected 42. However, building starts (-3.1% m/m) and building permits (-0.6% m/m) were disappointing in October. In the eurozone, disappointment is mounting: household confidence fell from -12.5 to -13.7 in November, more than expected, as did the manufacturing PMI (from 46 to 45.2 vs. 46 est.) and services PMI (from 51.6 to 49.2 vs. 51.6 est.). Finally, in China, 1-year (3.1%) and 5-year (3.6%) loan rates are unchanged.
Planetary Limits
The UK's National Oceanography Centre comes to a relatively blunt conclusion in its new report: in addition to their effects on coral reef bleaching and harmful algal blooms, increasingly severe marine heatwaves could destroy shellfish colonies and jeopardize fisheries along the UK coast.
Markets
Disappointment in the eurozone is causing 10-year sovereign yields to fall more in Ger (-10bp) than in France (unchanged), which is suffering from the difficulty of ratifying the 2025 budget. Interest rates fell less in the US (-4bp), allowing the dollar to appreciate by 0.8% (dollar index). Equities are back on the rise (US: +1.9%; Europe: +1.1%; emerging markets: +0.2%), as is gold, which rebounds strongly (+5.2%) after the "pause" of the previous week. Coming up this week: house prices (FHFA and S&P CoreLogic), new home sales, household confidence, Fed minutes, durable goods orders and PCE price index in the US; EC confidence indices (economy, industry and services) and consumer price index in the eurozone; industrial profits in China.
Swiss Market
Coming up this week: Q3 employment barometer (FSO), Q3 parahotel sector (FSO), UBS-CFA indices, wage trends in 2024 (FSO), November economic barometer (KOF) and Q3 GDP (Seco). The following companies are due to release figures: Epic, Salt, Varia US, Carlo Gavazzi and Dottikon ES.
Equities
Entry of ABBVIE (Biopharmaceuticals) into Core Holdings: the recent 16% fall in the stock price (impacted by a clinical failure and, to a lesser extent, the appointment of RFK Jr.) represents a buying opportunity. Given its solid fundamentals, visible sales growth to 2030 (+6%/year), and reasonable valuation (PE 2025 = 14.2x), we expect the stock to outperform its peers in the short to medium term.
Entry of ABBOTT (MedTech) into Satellites: diversified product portfolio, well positioned against peers, delivering solid sales growth (+7%/year). The standardization of Covid tests, which penalized business over 2022-24, is coming to an end. Performance will improve from Q4 onwards, enabling a return to EPS growth of 10-12%/year. The 20% discount in PE compared with peers is no longer justified.
ANGLO AMERICAN (Satellite) announces the sale of its metallurgical coal assets, the first step in its refocusing. Following the sale of its stake in the Jellinbah mine for $1.1 billion, the company has sold the rest of its assets to Peabody for $3.8 billion. This amount is significantly higher than the figures quoted in the press ($2.5-3.0 billion).
Entry of EMERSON into Satellites. The transformation begun in 2021 and the in-depth overhaul of the asset portfolio will position the American automation group in the megatrends of reindustrialization, energy security and transition, and give it growth and margin potential not yet reflected in the valuation, which is discounted by c.20% compared with its new peers.
Bonds
Last week, the US 10Y remained stable, losing just 4bp, supported by better-than-expected jobless claims and PMIs, as well as uncertainty over the next Treasury Secretary. Saturday's appointment of Bessent should have a positive impact on US rates, as he is seen as pragmatic and relatively moderate. In Europe, with disappointing PMIs in Germany and France, yields fell slightly, with the Bund losing 10bp over the week. This week, all eyes will be on the FOMC minutes and the PCE in the US.
Sentiment of traders
Stock markets
After a week dominated by reassuring results from Nvidia and positive performances from cryptos, traders should calm down a little with a truncated week due to Thanksgiving. However, we will be keeping a close eye on the US FOMC minutes, the core PCE price index and consumer spending, while the CPI will be published for the eurozone.
Currencies
The end of last week was highly volatile, with European PMIs sending the €/$ to a two-year low of 1.0332. The weakness in the € is set to continue this week, and we expect the following ranges: €/$ 1.0335-1.0500. The CHF hit an annual high of €/CHF 0.9206 before correcting to 0.9316 following the SNB’s talk of negative rates in the event of the franc appreciating too quickly. Our ranges are: €/CHF 0.9206-0.9375, $/CHF 0.8810-0.8980, £/$ 1.2450-1.2700 and XAU/$ 2535-2721.
Today’s graph
Performances
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