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1. Nasdaq overbought.

2. Is the tariff shock similar to the covid shock?

No.

The FED is not there to inject trillions of dollars into the economy and tariffs are here to stay.

3. Moody’s cuts US Debt Rating to Aa1 from Aaa on government debt increase.

The price of credit default swaps on U.S. Government Debt is rising to its highest level since 2023 and one of the highest levels since 2008. Over the longer term, Moody’s downgrade will likely result in higher interest expense, JPMorgan strategists led by Jay Barry wrote in a note.

4. The CAC 40 and the LVMH problem.

After being a boon to the Paris stock market for years, LVMH is now its biggest drag, and even a recent bounce in luxury shares has failed to change that. France’s benchmark CAC 40 index is lagging the Stoxx 600 by about 9 percentage points over the past year and has also underperformed the latest market rebound.

LVMH has fallen by a third in that time, accounting on its own for more than 70% of the CAC’s relatively poor performance. The luxury giant’s valuation languishes at the bottom of a five-year range, but that’s still not enough of a markdown to lure back investors.

Europe’s top luxury stocks were once viewed as an answer to Wall Street’s “Magnificent Seven” tech megacaps. But LVMH and some of its peers have been battered by a slump in spending by China’s rich, kept from expensive boutiques in Paris, Milan and Hong Kong by the faltering economy. The industry’s outlook has grown even gloomier since US President Donald Trump placed 10% tariffs on imports from the European Union, while pausing plans for a 20% levy for 90 days.

“There is no luxury sector, just stories,” say HSBC consumer analysts led by Erwan Rambourg. “As investors ask whether it’s time to support luxury or not, we think more and more that the sector is characterized by dispersion.” There are weak, dull, and good stories among the the sector, the HSBC team says. A lot of the shine has come off LVMH, the world’s largest luxury group by sales. It’s no longer the most valuable company in Europe — or even in France. Rival Hermes now has a larger market cap and trades on multiples that are 2.5 times higher.

“Lower valuations levels act more as a floor than a ramp for a rebound which would necessitate more visibility on growth,” says Raphael Thuin, head of capital markets strategies at Tikehau Capital.

5. LVMH faces another year of declines.

The market seems to be applying a form of conglomerate discount to the highly diversified group for the first time. “There’s much more prudence regarding the stock, which is underperforming both its index and sector,” according to Ariane Hayate, a fund manager at Edmond de Rothschild Asset Management.

LVMH “needs momentum for key brands like Dior to bounce back and it’s not the case yet.” A tentative rebound has materialized for luxury stocks of late. Progress in trade talks, with the US administration easing its stance on tariffs, as well as fiscal stimulus in China, are tailwinds for the depressed sector. Strategists at Barclays even raised the group to overweight this week. For all that, investors seem more keen to invest in self-help stories such as Burberry, than to restore broader exposure. This morning, Richemont posted a rise in full-year sales. Hermes has also posted strong gains, while in the extended consumer sector, EssilorLuxottica and L’Oreal have flourished.

“We have invested in LVMH in the past, it’s a great company, we’ll most certainly invest in them in the future at some point, but at the moment we’re really focused on the very high end of the industry. We hold Hermes and Ferrari.”

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