Intervention in the stock market by the Chinese governament reaches new dimensions
China’s Quant clampdown risks damaging fragile equity markets for years. It adds to a series of moves aimed at halting a multiyear plunge and the heavy-handed approach used to control sectors from internet to education platforms
- The equity risk premium has to go up
- Geopolitical concerns prevent many foreign investors to invest in Chinese stoc
- China’s economy suffers from structural problems
- Additionally the Chinese support for the global economic growth remains limited
Trump wins in Stn. Carolina
20-point victory over Nikky Haley in South Carolina. Convincing advance in the first 5 primary elections. Super Tuesday coming soon
- Nomination opening the way to a contest between two widely unpopular candidates
- Four indictments pending, totaling 91 felony charges. One implies ineligibility
- Vast consequences worldwide in case of re-election. Europe would face the need to start an arms race
From Mag-7 to Granolas
Europe’s response to the “Magnificent Seven”
- Glaxo, Roche, ASML, Nestlé/Novartis/Novo, l’Oréal, LVMH, Astrazeneca, SAP/Sanofi
- High sales margins, strong balance sheets
- Double-digit earnings growth, stable margins
- Sustainable dividends
- Low volatility
- Far better diversified: Tech but also Pharma, Luxury, Consumers
- No trillion-dollar behemoths (Novo is $550bn)
- In the last year, the have contributed 60% of the European’s market performance*
- High Return-on-Equity (but trailing the Mag 7)
- Premium to the market is justified by their prospect
All eyes on inflation
Inflation became more hesitant at the end of 2023 – Fed and ECB action function of the incoming data
- US: Thursday – PCE Core Deflator – 2.8% expected by markets y/y (prior 2.9%)–latest CPI and PPI point to a sharp rebound of the deflator in January. Will it be temporary?
- Europe: Friday – Core CPI for February- 2.9% expected by markets y/y (prior 3.3%)–disinflation should resume its course after December break
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