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Technology giants are at risk of collapsing in the 2001 assessment, says SocGen’s color strategist



Albert Edwards, the provocative London strategist at the French bank Société Générale, has been predicting for decades that the United States and Western Europe will follow Japan in an era of deflation and high-yield bonds, which he calls the Ice Age.

He was quite alert to this, even if some of his stock market warnings went wrong. But Edwards agreed that if bond yields were low, growth stocks should do well.

“In the ice age, security in quality, growth and profits will be and should be limited to extreme peaks. But woe to all stocks (or sectors, as in 2001) that warn of profit, making the market realize it has been misled by misjudging it as stock growth, ”he said.

Edwards said that for the US IT sector, its price relative to the market continued to improve, but expectations of earnings per share relative to the market began to deteriorate.

Forget worries about antitrust rules or bond yields – any hint, he said, could lead to a collapse in valuations since 2001. Including Microsoft MSFT,
+ 0.04%
to the traditional FAANG stocks on Facebook FB,
-0.21%,,
Amazon AMZN,
-0.26%,,
Apple AAPL,
-0.95%,,
Netflix NFLX,
-0.78%
and owner of Google Alphabet GOOG,
+ 1.38%,,
he points out that the rest of the S&P 500 is more or less in line with the rest of the world.

“The ice age thesis supports the polarization of the K-style valuation within the stock market. Stocks for growth and quality must be expensive in terms of value and cyclicality. “But if you put on the laurels of Caesar’s assessment of the stock of growth, and then reveal yourself as a cyclical impostor when you sit on those assessments from the nose, expect a Brutus-like outcome,” he said.

The buzzing

The second presidential debate was more of a civil affair than the original, with President Donald Trump and former Vice President Joe Biden discussing the response to the COVID-19 pandemic, immigration and climate change. Biden said he would “switch from the oil industry,” a remark taken by Trump who asked voters in Texas, as well as the state of Pennsylvania, to remember that. After the debate, Biden said he wanted to get rid of subsidies, not fossil fuels.

There appears to be no new development in fiscal stimulus talks on Thursday night.

Gilead Sciences GILD,
+ 0.76%
stated that the Food and Drug Administration has approved Veklury, the treatment for COVID-19, formerly known as remdezivir, for patients who are hospitalized with COVID-19 infections.

Intel INTC giant microchip,
+ 0.74%
reported a drop in profits and a sharper decline in the expectations of its data center business as its sales forecasts for the fourth quarter were disappointing.

Toy manufacturer Mattel MAT,
+ 3.77%
reported third-quarter earnings long ahead of expectations.

Shares of the British bank Barclays BCS,
+ 2.61%
gathered in London after better-than-expected results for the third quarter.

Purchasing managers’ index data for the United States are due after the eurozone readings fell to a four-month low in October.

The market

US futures for ES00 shares,
+ 0.31%

NQ00,
+ 0.20%
blade higher.

The DXY dollar,
-0.16%
slipped while the profitability of the 10-year treasury TMUBMUSD10Y,
0.862%,,
to nearly 13 basis points in the last six days, is 0.86%.

The diagram

Alastair Syme, an analyst at Citi, discussed the potential of how the Biden administration will deal with the oil industry and showed the percentage of cash flow from operations coming from US federal lands by major oil companies – Exxon Mobil XOM
+ 5.12%,,
Chevron CVX,
+ 3.57%,,
ConocoPhillips COP,
+ 4.14%,,
BP BP,
+ 1.70%,,
and Royal Dutch Shell RDSA,
+ 3.19%.

“Tighter permits could slow down a company’s ambitions to grow [Exxon] in Perm, where much of that growth depends heavily on boreholes in the federal states of New Mexico, ”he said.

The other point he emphasized was that a change in attitudes towards carbon could have a very big impact on the way the industry is able to access capital, and that currently integrated US oil companies have the advantage of funding ahead of its European competitors since the recent promotion of alternative energy.

Random readings

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