Halftone economy in the USA and stable in the euro zone – Monday Report by Bordier

In China, industrial production, retail sales, and investment disappointed in April.


The statistics published in the United States are mixed. While activity remained buoyant in April, with industrial production up 1.1% m/m and retail sales also up more than expected (+0.9% m/m), leading indicators flex. Thus, Empire manufacturing collapsed in May, from 24.6 to -11.6, as did that of the Philadelphia Fed (from 17.6 to 2.6), and the real estate sector weakened: consumer confidence developers fell from 77 to 69 in May and building permits contracted by 3.2% m/m in April. In the euro zone, household confidence remains weak but did not deteriorate further (to -21.1) in May. In China, industrial production (-2.9% y/y), retail sales (-11.1% y/y) and investment (+6.8% y/y) disappointed in April.


Germany, Denmark, the Netherlands and Belgium have announced a partnership to quadruple their offshore wind power capacity by 2030 (65 GW) and by ten by 2050 (150 GW) . Irrespective of the question of intermittency, such power combined with a utilization rate of 35% -for the example- would represent 460 TWh of annual electricity production, ie the current consumption of France.


Market attention continues to turn to slowing growth, rather than inflation. In this context, US rates fell for the second consecutive week (10y -14bp), mainly due to the fall in inflation expectations (10y -15bp), which settled on pre-invasion levels in Ukraine . In Europe, the ECB is perceived as being increasingly “hawkish” and sovereign yields have risen on the short end (Bund 2Y +11bp). On credit, spreads widened on IG (EU +4bp/US +9bp) and on HY (EU +7bp/US +27bp).

Trader Sentiment

Sotck exchange

Seventh week of decline on the S&P, and as investors see the glass half empty these days, this may not be the last. Especially with a busy agenda: May PMI, durable goods, Nvidia results, 1Q GDP, PCE inflation, monkeypox, the risks of bad news are very present. It could therefore well be that an eighth sad week is looming on the horizon.


The ECB is approaching the end of negative rates (July/September), which momentarily supports the € €/$ 1.0603, a breakout of the res. 1.0640 would open the way towards 1.0758 otherwise 1.0370 support remains valid. The $ took profits $/CHF 0.9719, sup. 0.9616 res. 1.0066. Our CHF appreciated quickly to €/CHF 1.0299, sup. 1.0170 res. 1.0550. The ounce of gold is at $1,854.


Another “risk off” week, particularly in the United States where equities fell by 3% (Europe: -0.5%; emerging: +3.1%) and 10-year sovereign yields fell by 14bp. Gold (+1.6%) benefited from this, also supported by the weakness of the dollar (dollar index: -1.4%). Oil prices remain high, up slightly (+0.9%). To be monitored this week: manufacturing and services PMI, new home sales, durable goods orders, Chicago Fed and Kansas City Fed leading indicators, Fed minutes, personal income and spending in the United States ; manufacturing and services PMI and EC confidence indices (economy, industry and households) in the euro zone; industrial profits in China.

Swiss market

To follow this week shortened by Ascension: World Economic Forum 2022 and Q1 employment barometer (OFS). Lem and Ypsomed will publish 2021/22 results. Otherwise, EPIC will enter the Swiss stock exchange after its IPO. Finally, COMET (Swiss conviction) announces the surprise departure of its CEO for personal reasons. He will be replaced by the head of the X-ray division, who joined the group in 2007.


STELLANTIS (Satellite): During a roadshow, management indicated that the H1 results, which will be published at the end of July, should show an improvement in the margin compared to the already high level at the end of 2021 as well as a better generation of FCF. All this despite production constraints. The levers being: positive price effect / improvement in the product mix / productivity gains / favorable currency effect / improvement in the supply of seedlings.

STRAUMANN (Core Holding) announces the acquisition of PlusDental, a German company specializing in transparent aligners, for CHF 135 million. With a large network of clinics across Europe, the transaction will accelerate the group’s expansion in this area, particularly in the Netherlands, Sweden and the United Kingdom.

WALMART: if Walmart’s price/product positioning will enable it to attract consumers in this period of high inflation (down trading), the results of Q1 clearly show that the group does not have effective levers (pricing power / notoriety brands ) to act on incoming costs and preserve its profitability. We are entering a correct volumes / low margin phase without being able to determine the exit horizon. We take out the title of our Satellites recommendations.

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