Ingenico hast lost its mojo. A 7% miss on market expectations on EBITDA for both 2018e and 2020e has been severely sanctioned by investors. Shares of the payment terminal manufacturer lost 16% of their value on Feb 22, leaving the market cap of the company at €4.8 billion. At first glance, the fall looks excessive. But it’s probably deserved.
Merrill issued its latest Fund Manager Survey last week, right after the sell-off in equity markets. The message to take out is: don’t buy on dips (well my view is that you always have to think long term, understand the fundamentals of any asset class and have a view on valuation, otherwise, don’t invest at all – but that’s not the point here, I think this survey is useful to gauge market sentiment).
Deutsche Bank’s strategist team published a report to figure out what’s currently priced in by financial markets after the bout of volatility. Rising real yields are a clear threat to the rebound in equity market. But having recently talked to fund managers in other asset classes, real yields are a threat to many asset classes where lots of money have flown other the last years (EM debt for instance).
Here’s DB’s take on European equities:
3 out of 10 companies had reported 4Q earnings at the end of last week. On average, 51% beat EPS expectations and 47% did better on sales expectations.
The macro (rising rates and inflation) and market (rising equity prices) backdrop has people compare the current situation with 1987… right before the equity market plummeted. Are we in the same situation and does it mean the worst has yet to happen. Maybe not.
Per SocGen’s real good quant team led by Andrew Lapthorne, « the use of the ‘Fear Index’ (VIX) as a predictor of future market performance has been rather mixed, with moves in VIX appearing more contemporaneous than forward looking. »
Well if VIX is not a great predictor of market returns what is ?
JPMorgan’s equity strategist team has published a report today trying to figure out if European stocks will finally break out the glassdoor of 400 points (for Stoxx Europe 600) that they have been hitting 3 times already (2000, 2007, 2015).
They argue that this time might be the time, IF a number of conditions are successfully met. Among them, earnings recovery, operating leverage, decent (!) valuations and direction of bond yields are important factors to consider. Big swing factor are FX.