The picture hasn’t changed much. Everyone is shouting about inflation and recession, but the first is on the negative side, and recession is not yet on the horizon. It’s like a concert where the musicians always play the same chorus and the conductor can’t stop them. We see the chorus, even if readers know it by heart.
In the US, the services sector continues to show positive signs of growth. The index released today by the Institute for Supply Management (ISM) showed a value of 54.5, supported by an increase in new orders, up from 52.7 in July. This figure confirms a certain strength of the current economic trend, at least with regard to the respective sector.
The Fed’s stance is cautious. Suzanne Collins, president of the Boston branch, stressed the importance of patient handling of interest rates. Her main concern is inflation, and she says it will take more time and hard data to convince her that inflation is indeed under control. It is a view that goes hand in hand with his expectations of a possible economic slowdown in the near future.
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In anticipation of the Monetary Policy Committee meeting scheduled for September 19-20, the Fed will present its “Livre Beige” report at 8pm. This document presents an analysis of the country’s economic trend and provides valuable pointers to the committee members. According to CME Group’s “Fed Watch” analysis, there is a 93% chance that the Fed rate will remain unchanged, ranging between 5.25% and 5.5%. Forecasts for November indicate a 60.3% chance that the rate will remain stable, down from the 71.8% estimated just a month earlier.
We have written that the priority is inflation, and as the priority we reach the stagnation that everyone talks about like the Phoenician Arab, but no one sees his horns yet. I remember this “thing” going on for 10 years throughout the 90’s and we had the biggest bull market that history had seen up to that point. Many say that it will not be the case because history repeats itself but never repeats itself, and therefore it is possible that we will never experience a recession and that the economy will grow more than inflation.
we will see.
In the Eurozone, the latest data for July that arrived today shows that retail sales will continue to decline throughout the year due to the effects of the gradual tightening of monetary policy affecting consumers. The situation in Germany is more complex than in the rest of Europe. In fact, German Industrial Orders fell sharply by 11.7% in July, much higher than the 4.3% expected by analysts.
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The data comes right after the US services sector contracted, adding pressure on the European Central Bank ahead of its next monetary decision scheduled for September 14th. Claes Nott, a member of the ECB’s Governing Council, noted in a recent interview with Bloomberg that investors who bet on the ECB keeping interest rates unchanged at the next meeting could underestimate the real possibility of a rate hike. The old slogan “Wall or no wall, one step forward” applies to the ECB chain. Now let’s see which action attracts our attention.
Ferrari shares: Indeed, Ferrari had an excellent year. The automaker announced a staggering 42% increase in the value of its shares since the start of the year. This growth prompted the stock to close again to a record high of €300 which it reached in July, seven times its value at the time of its public offering in January 2016. This performance has led Ferrari to be valued at around €54 billion, or about €41 million. for each car sold in the previous year, totaling 13,221 vehicles.
Looking at Ferrari’s results, one realizes the company’s amazing pricing power. In the first half of the year, 6,959 vehicles were sold, an increase of 3.8% over the previous year. However, what is really remarkable is that turnover rose by 17.2% (or 15% at par), to €2.9 billion. Operating profit jumped 30.5% to $822 million, with an operating margin of 28.3%, compared to 25.4% in the previous year. The net result increased by 29% to 631 million euros. Even more surprising were the results for the second quarter, where operating margin approached 30%, despite a 2% drop in sales volume.
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In the most recent earnings conference call on August 2, Benedetto Vigna, CEO of Ferrari, highlighted the “outstanding performance in customization”. These programs allow customers to customize their cars, a service that has become incredibly popular. This, along with the highly profitable Limited Series, further strengthened Ferrari’s market position. According to analysts at Bloomberg Intelligence, EBITDA per car sold reached a record 173,000 euros in the second quarter.
With these impressive figures, Ferrari has revised its full-year forecast upwards. It now expects revenue of €5.8 billion, up from a previous forecast of €5.7 billion, and an operating margin of more than 26%, up slightly from previous estimates. While this review may sound conservative, considering its operating margin of more than 28% in the first half, Ferrari is in a strong position. Another sign of the company’s solidity is the fact that its order book is already full through 2025.
It is clear that the inclusion in the Eurostoxx basket did not need to be formalized yesterday, and a few weeks, if not a month ago, would have been enough to do some simple calculations. So it’s possible that part of the momentum Ferrari stock showed last spring comes from this situation. But it is also true that the shares of Ferrari returned to exactly what they were before, ie in May 2023 and this is a fact that cannot be ignored or in other words as if we say that it has returned to the bottom of the scale.
We as an independent exchange have attempted to buy Ferrari shares when the cap has been exceeded but at this point it is best to try to get to the bottom of the jam in which they are listed. Frankly, such a congestion that has expanded horizontally is unlikely to collapse.
If you want to know how I analyze the markets, read my new book on the Tommasini Method click here.
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