As has been the case in the recent past, the stock markets went a bit in all directions yesterday depending on the composition of their leading indexes. Too many defensive stocks, healthcare and banks? The British FTSE 100 lost 0.5% and the Swiss SMI lost 0.35%. Technology and oil? The US S&P500 gained 1%. The recent and fragile bullish backdrop is still based on the hope of an inflection in the austere monetary policies of central banks. And on an easing of the health policy in China, where the authorities are under pressure from an accumulation of depressing economic statistics, if not from the suffering of their population.

All eyes are now on the mid-term elections in the United States, which will determine the color of the two houses of Congress, currently controlled by the Democrats. The current majority is fragile: the Democrats have 221 seats out of 435 in the House of Representatives and are evenly matched in Congress (50 seats out of 100), but with a casting vote thanks to Vice President Kamala Harris' status as Speaker of the upper house.

The stock markets seem to like the election, as if a Republican comeback, as predicted by the polls, would benefit them. Personally, I don't know and I doubt that either side has the magic formula to fix the current mess, but historical records show that cohabitations are favorable to Wall Street, so... Meanwhile, the bond market is playing a different tune: the yield on US bonds is rising to its best recent levels (4.23% for 10-year debt), a sign that things are getting a little tense as the elections approach, and before the latest monthly inflation figures on Thursday.

Elon Musk advised on Twitter to vote Republican to have a legislature in one camp and a presidency in the other. Lately, he has to stick his nose in everywhere to convince others to adopt his worldview. So much so that he seems to be trapped in the role of the omnipresent guy who will do anything to get his army of trolls to like him. Even spending the equivalent of a small country's GDP to buy his favorite social network and turn it into a kind of Frankenstein's laboratory. I hear Donald Trump has an important announcement to make on November 15. Let's hope he doesn't endorse Elon Musk as his running mate for the 2024 presidential election, otherwise the world has a good chance of becoming even weirder than it already is.

But clearly, Musk's antics aren't amusing everyone, and especially not the shareholders of his old toy, Tesla. The stock has just lost 30% in 3 months and half its value in one year. Yesterday, it fell by another 5%. Perhaps the antics of the richest man in the world are starting to wear thin?

 

Economic highlights of the day:

There will be no major indicators today.

The dollar is very close to parity with the euro at EUR 0.9998 and is up to GBP 0.8736. The Gold ounce is consolidating around 1670 dollars. Oil is firm, with North Sea Brent at USD 97.25 per barrel and US WTI light crude at USD 90.97. The yield on 10-year U.S. debt is up 4.23%. Bitcoin is falling back below 19,590 dollars.

 

In corporate news:

* Dupont de Nemours - The industrial materials group reported a better-than-expected quarterly profit as strong demand more than offset the impact of rising costs. The stock gained nearly 3% in pre-market trading.

* Lyft - The VTC specialist's stock fell more than 18% in pre-market trading after it reported a revenue forecast for the current quarter that fell short of market expectations and announced the lowest growth in the number of active users since the beginning of the year.

* NVidia - The semiconductor manufacturer confirmed that it has released a new processor for sale in China that meets U.S. restrictions on high-tech exports to the People's Republic. Separately, BofA Global Research said it expects the stock to rebound after the earnings release scheduled for November 26. The stock gained 1.5% in pre-market trading.

* Amgen gained 2.7% in premarket trading on positive data on its Evolocumab cholesterol treatment.

* Mosaic - The fertilizer producer reported a lower-than-consensus quarterly profit on Monday evening due to the impact of Hurricane Ian and slower price increases for certain products, such as potash and phosphates.

* Tesla announced Tuesday the recall of just over 40,000 Model S and Model X cars manufactured between 2017 and 2021 due to a potential failure of the electric steering assist. Meanwhile, passenger car sales in China rose 7.2% year-on-year in October to 1.86 million vehicles, the industry's main federation announced Tuesday.

* Coty reported better-than-expected quarterly sales, as higher selling prices and strong demand offset the impact of the strong dollar and the exit from Russia. The stock was up 4% in pre-market trading.

* Take-Two Interactive Software lowered its annual sales forecast to take into account the impact of the stronger dollar and the slowdown in the video game industry. The stock fell nearly 18% in pre-market trading.

* Tripadvisor fell about 19% in premarket trading after it reported a below-consensus quarterly profit.

* Gap completed the sale of its China and Hong Kong operations to Baozun, the latter announced Tuesday.

 

Analyst recommendations:

  • Apple: UBS advises its customers to buy the stock. Previously set at USD 185, the target price has been slightly modified to USD 180.
  • GSK: J.P. Morgan remains neutral with a price target reduced from GBp 1900 to GBp 1600.
  • ITM Power: AlphaValue remains Buy with a price target reduced from GBp 206 to GBp 145.
  • Jack In the Box: Deutsche Bank downgrades to hold from buy. PT up 2.2% to $88.
  • Lyft: Evercore ISI downgrades to inline from outperform. PT up 27% to $18.
  • Marsh & McLennan: Atlantic Equities downgrades to neutral from overweight. PT up 13% to $185.
  • Mettler-Toledo: Goldman Sachs upgrades to neutral from sell. PT up 4.3% to $1,355.
  • Qualcomm: DA Davidson adjusts Qualcomm Price Target to $150 from $200, maintains Buy rating
  • Segro: Societe Generale starts tracking as a buy, targeting GBp 950.
  • Six Flags: Jefferies downgrades to hold from buy. PT up 13% to $24.
  • The Scotts Miracle-Gro Co: Barclays upgrades to overweight from equal-weight. PT up 45% to $75.
  • United States Cellular: J.P. Morgan upgrades to neutral from underweight. PT up 5.1% to $24.