“This decision by the Fed is a very, very big meeting for the stock market”

Dennis Lantoine: Hello everyone, I am delighted to meet you for this new chat.

With a quiet session this Monday. But what could be more normal, in France the day is stuck between the weekend and a public holiday (the Stock Exchange is open beware), and no statistics that have moved the market, not even the new record inflation which was published this morning for October in the euro zone. Investors had already made their calculations after the figures presented in France and Germany on Friday. And they are sure that the ECB will once again raise its key rates by 75 basis points. If it does more, it will be an indication of decision in “panic” mode, if it does less, no one will understand given this still very present surge in consumer prices.

Let’s start with some questions about values ​​to change a bit if you want.

samenco: Hello Mr. Lantoine, do you think there is still reason to hope for an improvement in Ubisoft’s situation? It’s a company that has great brands/franchises but seems to be struggling to find profitability. With a PRU of 40 euros, I thought I had a margin of safety, but here, at 26 euros, I wonder if I’m not in a value trap… (That’s 5% of my portfolio). I keep ? (I’ve got time…)

Yes, I admit it, it’s also a disappointment for me… who thought that at 40 euros, Ubisoft was an excellent purchase opportunity…

Since then, with the rise of the Chinese Tencent, the speculative aspect has completely melted away and the market for video games and consoles is very slow. Fewer new hardware than expected due to component shortages for consoles, resulting in less consumer eagerness for games, especially for those with big budgets, whose launches are mostly postponed, in partly due to the new post-Covid working methods, which do not seem to be successful for these industry players.

But if you have time, as you tell me at the end of your question, then no, now is not the time to sell, I am convinced that the best can only be yet to come. The annual objectives have also been confirmed despite the losses recorded in the first half, due to these postponements of game launches.

Nicolas: Hello Denis, my question concerns Vivendi. What objective can we aim for on the title which after having lost more than 30% since the beginning of the year (worst performance on the Cac 40) seems to vegetate around 8 euros. Does aiming for 12 euros seem feasible to you? Or can we hope for an exit from the rating with a revaluation? Thanks.

We continue with the disappointments, finally we should have started with the market!!! Yes, here too, we could have expected much better from Vivendi than this observation of a sharp drop since the beginning of the year.

Personally, I already think that certain investors only played Vivendi at the time for the dynamics of UMG, which is no longer integrated into the group.

As a result, activity is now very much centered on Canal+, which disappointed in the third quarter with an organic decline of almost 5%, which was not offset in the minds of operators by the good performance of Havas. But the comparison effects were unfavorable. We are still buyers of Vivendi, with a target of 10 euros. At the current price, the profit forecast for 2023 is only valued a little more than 11 times, that’s not much.

Epictète: Hello Denis Lantoine, I ask my unanswered question. You recommend Mc Phy Energies for purchase but on a speculative basis. There is no doubt that this midcap is becoming a major player in the hydrogen sector. Can we still invest with confidence even if it means placing a sell order with a trigger level of -10%? To read you with pleasure.

Hello, yes, it’s a value that we like in the editorial staff in the sector, in the same way as Neoen for example and Iberdola internationally, I was able to answer a question along the same lines two weeks ago.

It is indeed one of the French companies that can become benchmarks in the renewable sector.

But beware, as growth stocks, they are all hampered or affected by the tightening of central bank monetary policies. They are therefore not immune to a small blow of bamboo linked to a small movement of panic post-decision or comment from the Fed or other. As a result, the 10% in the context of a sell order at the trigger level may be a bit low, unless you are very active on the stock market and prepare to take it back lower later.

nanou17: Hello Mr. Lantoine. No questions today, it’s just to thank Investir for reading it and especially for having my newspaper every Saturday morning, very friendly.

It’s nice, and therefore no answer for me but I also thank you for your loyalty to our various supports.

I will pass it on to the entire editorial staff!

Charles: Hello, do you think the Fed will pivot on raising rates by the end of the year if it sees signs of improvement on the inflation front? If so, do you think growth stocks will rise? Is it relevant to continue to position oneself on “growth” stocks while waiting for this scenario? Have a good day. Charles.

That’s the whole question these days… And unfortunately, I don’t really have the answer to give you. If I could be in Jerome Powell’s head, it would be much easier…

In any case, one thing is certain, it is that this decision by the Fed is a very, very big meeting for the stock market. The reaction could be very strong, to the extent of expectations on this famous pivot, since an article in the Wall Street Journal put forward the hypothesis. The markets are only waiting for one thing, for the Fed to even begin to evoke the idea that it could soon slow the pace of its rate hikes.

As for this meeting at the beginning of November, of course, we should be entitled to the 75 basis points increase, but the Stock Exchange hopes that we will then return to 50 basis points, which would mean that the Fed members are beginning to believe that the action was strong enough to put the brakes on the economy, even if it meant plunging it into recession, but at least to allow inflation, too, to subside .

It is for this reason that the contractions observed in certain real estate indices in the United States last week were welcomed on Wall Street.

I think the information disclosed in the Wall Street Journal did not come out for nothing. It would just be necessary that the idea is simply mentioned to satisfy the market, otherwise, we will relapse the next day.

As for the Cac 40, it is, at 6,270 points today, almost in the middle of the 5,800 to 6,600 point zone, so it’s not easy, we should just go one way or the other… I’m aware that I’m not helping you much with that this week… But at least I’m being honest with you…

On the horizon of the end of the year, our central scenario is still with a probability of 30% at a Cac 40 between 5,700 and 6,000 points, 25% between 5,400 and 5,700 points, finally 20% between 6,000 and 6,300 points, I remove the extreme scenarios.

Beware, moreover, of false starts. If major economies fall into recession as feared (around zero growth at best, especially in the United States), that means that equity markets have not yet reached their peak. low before moving forward for a long time.

This is what the quarterly data published by American companies are beginning to reflect, with decreases in their turnover. In this case, the penalties were strong, with an average fall of 6% more than the S&P 500 index on the day of the announcement (6.7%, the largest in the history of the S&P 500, according to Bank of America data.

FALLOT: I have Linde shares bought on Xetra. What should I do with it since Linde will stop its listing in Frankfurt in 2023 to transfer completely to its listing in New York. The code is also the same for the action of Frankfurt and that of the NYSE. What?

I think you still have time to think about it, the project was just mentioned last week. And it’s not very complicated to keep a stock of this size listed in New York. And if I remember correctly, it is under Irish law (to be checked anyway), which would allow you to keep it in a PEA, unless there is a subsequent change of nationality.

BOURVIL: Hello. My UCs invested in China within my life insurance contracts are currently looking gray… They are BNP CHINE EQ and JPM CHINE. Do you think we should always be cautious on China or is it time to come back to take advantage of historic lows? Thanks Dennis.

I would still be cautious on the Chinese economy, whose growth is expected to slow down even if the latest GDP figures were in line with expectations when we were expecting a sharper deterioration. Emerging countries like India have stronger growth but their markets may be slowed down or affected by increases in the Fed’s key rates. But it is true that the Chinese market is inexpensive, it is to be kept in mind.

There you go, our hour of chat is over, it remains for me to thank you and give you an appointment for a next chat. And don’t forget our meeting with the Fed! It’s Wednesday, but at 7 p.m. given our change to winter time this weekend in Europe. Goodbye.


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