The U.S. economy added 850,000 jobs in June, the Labor Department said Friday, the strongest job increase since last August. This is better than expectations of 725,000 extra jobs. However, the unemployment rate increased to 5.9% from 5.8%. It remains to be seen how markets will react. If the data is deemed too positive, it could lead to fears that the U.S. central bank will act more quickly than expected to reduce its support measures or raise rates. If considered low, this would be bad news for the U.S. economy, but rather good news for investors who hope that the Fed will continue to flood the markets with liquidity. Anyhow, U.S. growth is not really a cause for concern, as evidenced by the IMF raising its 2021 and 2022 forecasts last night for what will be "the fastest growth in U.S. GDP in a generation".

American indices have reached new records and the stock market environment remains relatively benign, with global growth now well established and headwinds having difficulty gaining traction, whether they be health-related - with the resurgence of the Delta variant - or economic -  with fears about the consequences of inflation.

OPEC+, the only global price manipulation organization that has a blank check to do so, met yesterday to decide on its production-demand balance policy. No compromise emerged so another meeting will be needed today to find common ground. Apparently, the UAE is looking to produce a little more than the other members of the organization are willing to let them. Experts believe that an agreement will be signed today, however. There should also be a medium-term commitment, which would amount to increasing production by 2 million barrels per day between August and December. That's 400,000 barrels per month on average, which is slightly less than expected, allowing oil prices to regain some strength late yesterday.

Last night, the OECD meeting saw 130 countries signing on to its declaration on overhauling the international tax framework. That means that nine have not "yet" done so, in the organization's words, including Ireland, Hungary, Barbados and Nigeria. The major economies, on the other hand, have all signed the document. The precise mechanism for taxing multinationals at least 15% and for achieving a better distribution of the tax on profits will be discussed by October. The actual implementation will probably take place in 2023. The system seems to be a step in the right direction, but no one seems to have really mastered the tectonics of tax plates, so the outcome is difficult to estimate. If all goes according to plan, overall tax revenues should increase and tax havens should become less attractive, although this is forgetting the ebullient creativity of tax experts. Criticism is mainly directed at a rate that is considered unambitious and a legal framework that favors large countries over weaker economies.

 

Economic highlights of the day

In the United States, the June employment and the May industrial orders are on the agenda.

The dollar rises to EUR 0.8461, while gold rebounds to USD 1784 per ounce. In the oil market, Brent crude is up to USD 75.46, while WTI is at USD 74.78. The US government bond is yielding 1.46% over 10 years. Bitcoin is dipping around the USD 33,000 mark.

 

On markets:

* Johnson & Johnson said Thursday that its COVID-19 vaccine shows great promise against the Delta variant and other emerging strains and offers lasting protection against the disease in general.

* Apple and Intel will be the first groups to use Taiwan Semiconductor Manufacturing's next-generation chip production technology before its possible rollout next year, the Nikkei newspaper reported Friday.

* Tesla announced Friday that it delivered 201,250 vehicles in the second quarter, an unprecedented number that exceeded financial analysts' expectations. In other news, a Model S Plaid from the automaker caught fire on Tuesday while its owner was driving, three days after the delivery of the high-end vehicle launched in June, a lawyer for the driver told Reuters, who is calling for the immobilization of all S Plaid cars already delivered. Tesla had no immediate comment.

* Goldman Sachs' investment arm and private equity group EQT are in advanced discussions to buy biopharmaceutical services provider Parexel International for nearly $9 billion, including debt, the Wall Street Journal reported.

* Raytheon Technologies announced Thursday that it has won a contract worth about $2 billion from the U.S. Air Force to develop and produce a nuclear-armed missile.

* Virgin Galactic Holdings was up 17 percent in after-hours trading Thursday night in reaction to the company's announcement of its first manned space flight, scheduled to begin July 11.

 

Analyst recommendations:

  • Anglo American: Bernstein upgrades from Neutral to Outperform with a target of GBp 3510.
  • Aveva: Jefferies remains Buy with a target price raised from GBp 4500 to 4600.
  • Barclays: Credit Suisse remains Outperform with a price target raised to GBP 218 from GBP 217.
  • BHP: Liberum downgrades from hold to sell, targeting GBp 1900.
  • Chemring: Jefferies starts to follow the stock with a Buy rating, targeting GBp 370.
  • Darktrace: Berenberg remains Buy with a price target raised from 450 to 525 GBp.
  • DoorDash : Arete upgrades to buy from neutral, adjusts pt to $224 from $180
  • Informa: Berenberg upgrades from hold to buy, targeting GBp 640.
  • Lyft : Cowen adjusts to $76 from $72, maintains outperform rating
  • Cloudflare : KGI Securities initiates coverage at outperform rating, price target $135
  • CrowdStrike : KGI Securities starts coverage at outperform, price target $330
  • Pennon: Societe Generale downgrades its Buy rating to Hold with a target of GBp 1,160. 
  • Morgan Stanley : Oppenheimer adjusts pt to $99 from $98, maintains outperform rating
  • Moody's : Oppenheimer adjusts pt to $387 from $357, maintains outperform rating
  • Nucor : Deutsche Bank changes PT to $100 from $75, maintains Hold rating
  • S&P Global : Oppenheimer adjusts pt to $454 from $435, maintains outperform rating
  • Uber Technologies : Cowen changes price target to $80 from $76, keeps outperform rating
  • U.S. Bancorp : Oppenheimer adjusts pt to $70 from $69, maintains outperform rating