CAC40 has lost more than 20% since the start of the year, another 4.96% drop this week. And for next week?

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On this day the meeting, said of the 4 witches, took place, but without real impact. Financial markets remained calm.

Climb all-out key rates!

After the FED, the Bank of England, the Swiss Bank… All that’s left is the ECB, which is slow to raise its rates. Meanwhile, the euro is hitting the glasses against the dollar. The consequence is that energy prices are rising for Europeans. Russia is taking the opportunity to end its gas deliveries, so that next winter prices will continue to rise.

Fragmentation flying high

Financial fragmentation in the euro area remains a problem. Germany’s 10-year sovereign rate is around 1.7%, while Italy’s is over 4% and Greece’s is 4.3%. What is certainly more worrisome is not so much the level, but the pace of appreciation, which is very fast in a market context marked by a very sharp drop in liquidity.

Even if the European Central Bank (ECB) decides to reinvest all public debt acquired under the pandemic buyback program, it is unlikely to be effective in curbing the current panic, confirms the Saxo Bank analysis note.

CAC40 in the bear market

A 20% drop since the start of the year is done for the CAC40, with no real surprises. And the legislative elections could very well push the cursor down a little further if the NUPES demonstration fulfilled all their hopes. The CAC fall is again close to 5% for the second week in a row. However, no accidents are feared in the trading rooms. The correction is severe, but we’ve been playing with fire for a long time.

And you, do you think…

In the US, 92% of investors are bearish… What about you?

The most worrying comes from the USA

Yields on investment-grade bonds in the US peaked at 5% – the highest level since 2009. The Fed’s offensive is unlikely to improve the situation. We will really have to pay attention to the evolution of the bond market and, more generally, to the cost of capital this summer.

In the United States, we may be facing a wave of bankruptcies. Cosmetics company Revlon has filed for Article 11 bankruptcy protection in the United States. Just a few days ago, a Wall Street Journal article claimed that a bankruptcy filing was not right and that the company’s financial situation was “fluid.” The company’s problems have recently been compounded by inflation and supply chain difficulties. But their concerns date back to before the pandemic (a very high level of indebtedness). Revlon has a turnover of 2 billion dollars.

US growth is slowing. When integrating the last number of retail sales for May (surprise contraction of 0.3% in one month), the leading indicator GDPNow (which allows estimating the real-time evolution of US growth) indicates that real GDP may be stagnant in the second quarter of this year, up from an increase of 0.9% estimated on June 8. This is an indicator that mainly provides information about the direction of economic activity. It seems obvious that decline wins (just like in stock markets).

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