During phases when the markets seem unable to fall, there is always a session when indices go down sharply, the kind that wakes up the usual anxieties. European indices fell heavily yesterday, although on Wall Street, the decline at the close was more modest, with less than 1%.

Despite these jolts, investors are still favoring sectors considered to be at a discount to growth companies. At least, this is what is apparent from all the charts that have pitted value and growth strategies against each other since last November. In reality, the situation is a little more subtle and is best illustrated by the Nasdaq 100. Investors continue to favor technology companies with solid fundamentals and an undeniable competitive advantage. Hence the 16% gain for Microsoft or the 30% gain for Alphabet in 2021. On the other hand, they tend to shy away from riskier bets, such as companies with more uncertain earnings trajectories or whose balance sheets and income statements show a reality very different from the story sold by executives.

The Bear Trap community, active on Bloomberg, put forward last week a chart that shows the decorrelation since the beginning of March between a Nasdaq 100 that is skyrocketing and the fashionable bets of the moment, i.e. SPACs, Cathie Wood's ARK funds or Cannabis stocks. The bitcoin ecosystem has probably been added to the mix this week. Bear Trap also illustrates this situation with a second chart that shows Buffett's outperformance of Berkshire Hathaway, the quintessential value fund ARK Innovation, the growth fund of Wood, boosted by momentum (i.e. overexposure to the current growth themes).

As usual - and this is a golden rule in finance - we should not jump to conclusions about movements that are only in their infancy. But it does illustrate a renewed distrust of overly crowded or very aggressive bets. The Greensill or Archegos cases have demonstrated the existence of excessive leverage at work in the background. Growth is great, healthy growth is even better.

Macroeconomic news is almost devoid of major indicators. On the geopolitical front, Xi Jinping will participate on Thursday in the climate summit organized by Joe Biden: a strong signal in the middle of the pile of disagreements that tear the two countries apart. On the pandemic front, the resurgence of cases in some Asian countries is creating tensions, particularly in Japan.


Today's economic highlights

The British consumer price index for March and the weekly US oil inventories are released today.

The dollar is holding on to its recent positions at EUR 0.8328. The ounce of gold is up to USD 1783. The oil market contracted slightly to USD 65.32 per barrel of Brent and USD 61.34 per barrel of WTI. The US 10-year yield is down to 1.56%. Bitcoin retreats to USD 55228.


On markets:

*Netflix attracted significantly fewer new subscribers than expected in the first quarter, while its growing catalog size suffered from production delays due to the pandemic. In pre-market trading, the stock lost about 8%.

* Telecom operator Verizon announced Wednesday that it lost more mobile subscribers than expected in the first quarter, hurt by competition.

* Instagram, owned by Facebook, launched a feature designed to prevent its users from viewing insulting or hateful messages through filters.

* Amazon.com announced the launch of biometric technology that allows customers at its Whole Foods stores in the Seattle area to pay with the palm of their hand.

* Deutsche Börse announced Wednesday that it would remove Coinbase from the German electronic trading platform Xetra and the Frankfurt Stock Exchange after Friday's trading session due to the lack of a benchmark for the shares.

* Anthem gains 2% in pre-market trading after raising its profit target for the year as strength in its pharmacy benefit management business helped the health insurer beat earnings expectations in the first quarter.

* Baker Hughes reported a 40% drop in quarterly profit as the cold snap that hit parts of the U.S. in February affected its drilling operations and demand for oilfield equipment and services.

* Halliburton reported a 6% increase in first-quarter adjusted earnings on Wednesday, buoyed by a rebound in crude oil prices.

* The U.S. railroad operator CSX reported Tuesday a lower-than-expected quarterly profit due to the February cold snap, the impact of the COVID-19 pandemic and higher fuel prices. The stock is down 1% in pre-market trading.

* The Transportation Department's Office of Inspector General announced Tuesday that it will review, among other things, the Federal Aviation Administration's (FAA) November decision to lift the flight ban on the Boeing 737 MAX.