News and analysis

McDonald's seemingly gets away with its late October's E. coli incident. One person dead and dozens sick from infection linked to Quarter Pounder popular hamburgers. The market value of this huge and most famous fast food chain lost up to 12% after facing a following drop in visitors over the next couple of months. The deepest point of a pullback was at nearly $276.5 on January 16. However, it didn't take long to see the price jumping above $310. Thus, shares of McDonald's closed at $308.42 this Monday's regular session after a 4.8% bullish jump to follow the firm's comparable sales during the last quarter that topped consensus bets. The average estimate of Bloomberg analyst pool was focused around a possible quarterly decline around 0.90%. Global comparable sales of McDonald's expanded by 0.4% in the last three months of 2024, with performance being led reportedly by the Middle East and Japan. Demand pressure was limited after easing due to an informal boycott of Western chains over their pro-Israeli stance in the Gaza conflict. It is probably a thing of the past. And now weakness in the largest market for McDonald's, which is certainly the U.S., has been mostly overcome as well, due to lower-priced options and "exciting menu innovations" like a Chicken Big Mac and bringing back snack wraps to restore consumer confidence, according to the fast-food chain's CEO Chris Kempczinski. Extending its $5 meal deal into December helped much, but the average transaction size reached more than $10 in the U.S. Group-wide, MCD revenue was only 0.3% lower YoY at $6.39 billion, while operating income rose 2.4% to $2.87 billion, despite the shocks, including an additional pre-tax expense of $221 million because of a restructuring process.

I mentioned my target price at $325 to be touched even before the end of winter or at least in the beginning of spring, citing factors of more cost-conscious consumers to choose reasonably priced food, attractive and new limited-time offerings and potentially lower interest rates. The last argument remains an unfulfilled hope, but the stock has travelled most of its supposed path without a proper contribution from central banks. This means the ultimate goal could be shifted even to a higher price area, let's say between $330 and $350. By the way, Citigroup analysts see a Buy rating with a $336 price target. In early November, we discussed a great chance of adding more buy positions for MCD in case of retesting "the levels around $275 or a bit lower" as I didn't believe in larger damage to the stock. This assumption was one hundred percent hitting in terms of the bottoming area. The next question is how accurately the upper target will be achieved. Hope to see it soon.

When pointing at potential post-election gainers, I added a few more U.S. budget chain store names like Target (TGT) and Walmart (WMT), besides McDonald's. If Target shares have so far only seen a partial recovery, then Walmart's price has found a path from $82.5 three months ago to $103 in the first week of February. Gradually, the turn of the remaining forecasts comes.

Major world market indices tend to ignore the impact of U.S. president Donald Trump's trade war actions. The investment community calmly digested his announcement of 25% tariffs on all steel and aluminium imports to the U.S., just a few days after unsurprising 10% on China's goods. The metal tariffs will be added to current levies, which Trump already imposed during his first term, as the measures were partially retained by the Biden administration. As a result, the S&P 500 broad barometer of Wall Street stopped climbing around 6,100 for going backwards last Friday's evening on February 7 and began regular trading on February 10 just one step below the psychologically important figure of 6,000, particularly at 5,992.80. However, it ended the regular session at 6,065.50, which represented a gain of more than a full percentage point. These same types of smoothed-out effects were seen during Trump's first term. Mutual protectionist measures clearly limited global economic growth in 2017-2019, but did not prevent the stock market rally from developing further to new record highs. At that time, the U.S. S&P 500 has grown from nearly 2,250 to almost 3,400 points. In 2025, the capital flight from accumulated inflation seems to be equal to a scorched earth effect under the feet of rich and middle class who previously held conservatively to cash deposits and Treasury notes, and now enhancing their stakes in sustainable businesses and pushing risk-on buttons for the artificial intelligence as well as various big data and cloud tech names.

Investors may be hoping that Trump's tough first steps are more of a bid to open subsequent trade talks with more balanced end-terms. Just new positioning for the new division of our small world. If so, then some relief may be offered at least to Mexico and Canada as immediate neighbours. As an example, Trump already postponed actually imposing 25% tariffs on these two major suppliers for the U.S. industries. Trump's team also granted quotas for exemptions from initial tariffs during his first term, for particular countries, and then struck a "big deal" with China based on concessions from hard-line starting positions. We consider the idea of markets expecting similar scenarios here and now.

It seems, however, that the degradation of the purchasing value of depreciated dollars and euros, as a result of the intense previous activity of the printing press in the COVID times, as well as printing money because of geopolitical tensions and internal problems, is simply a much stronger driver of buying more stocks despite climbing indexes compared to the negative factor of tariff battles. January inflation may push the S&P 500 even more upstairs if signs of cooling price growth will be demonstrated on a MoM or YoY basis. But even sticky inflation pressure scenarios would result in some delay in the bullish race, though reversal patterns on charts could currently be excluded from being considered.

Even though the leading EU economies are clearly unhappy with the prospect of Trump's nearly promised tariffs for the EU as well, European stock markets continue to grow as if nothing had happened. Although German industrial companies are suffering from expensive energy supplies, the German DAX 40 index of blue chips (GER40) is at new historical highs and only a hundred points away from the 22,000 mark. It was ranging from 19,000 to 19,650 before the end of last autumn, but managed to gain double-digit percentages in a couple of months. This looks as a proof that market growth is not at all identical to economic growth forecasts. A need to avoid risks is a more notable motivator than economic comparison or the AI-driven optimism led by Nvidia. Yet, the recent sell-off in Nvidia, triggered by Chinese startup DeepSeek’s breakthrough, is a buying opportunity again, which is confirmed by a nearly 17% rebound from fresh dips.

The Graph (GRT) is up 8.0% this week to $0.1365, outperforming the broader crypto market, where Bitcoin (BTC) is rising by 2.7% to $97,820. The altcoin is now trading slightly above the level where the Trump-driven rally began last November. After gaining 159%, GRT has since lost most of those gains, bottoming out at $0.1026 on February 3.

GRT's price movements are largely influenced by the overall crypto market trend. If BTC manages to stay above $90,000 by the end of February, GRT could see a strong recovery from the $0.1000–$0.1500 levels.

Eli Lilly (LLY) got another boost to grow stronger. A high-speed racing biopharma monster just confirmed the globally rising need in its weight-loss drugs at the practical level. What we can ascertain is that the price bottoming stage is finally complete after an overlong correction from early September 2024 to mid-January 2025. As we pointed to a chance for Eli Lilly's brief visits to the major technical support area between $700 and $750, before inevitable recovery to the levels above $950, that's how it perfectly goes. A cowardly attempt to retest its November 18 intraday low at $711.40 per share was limited to touching $725 after two months on January 17. Now the price is soaring to nearly $888 on solid quarterly numbers issued in the first week of February. Zepbound treatment to make it easier to fight obesity cases is another brand name for tirzepatide, which was initially developed as Mounjaro for diabetes. This dual action injection drug, approved by the U.S. FDA in May 2022 for type 2 diabetes and then in November 2023 to reduce excess body weight and maintain weight reduction long term. Backed by a celebrity effect from Hollywood stars, this kind of medicare gradually became crazy popular among hundreds of millions of patients. Temporary signs of weakness in sales of the drugs last autumn were rather related to logistical bottlenecks. For this reason, sales of Mounjaro were $3.11 billion, and Zepbound sales amounted to $1.26 billion in Q3, even though analyst polls predicted $4.20 billion for Mounjaro and $1.69 billion for Zepbound. It was too optimistic scenario, and failure to meet it disappointed market bulls, following the stock's doubling in value in the previous two years. This problem appears to be fixed after the most valuable healthcare company in the world reported Q4 sales for its Zepbound and Mounjaro of $1.91 billion and $3.53 billion, respectively. The total increase was almost 25% over the course of one quarterly period. The company's current estimate is that U.S. growth of its diabetes and weight-loss drugs to be consistent with 2024, which apparently satisfied the investing crowd.

Lilly also projected its annual profit well above Wall Street estimates, as it is planning to grab between $22.50 and $24.00 per share in 2025, compared to average bets on $22.86 per share, according to LSEG data, with the midpoint of the announced range being 32% up from the last year. This means it is back on track hopefully after a harsh period with restoring order in supply chains. In addition, Lilly CEOs noted they are building manufacturing capacity for its new experimental oral obesity drug Orforglipron to ease some worries over its advance cycle. Eli Lilly is launching its Mounjaro in new markets like China, India, Brazil and Mexico, for both diabetes and obesity. Analyst polls expect revenues of above $59 billion for 2025. Lilly's rival Novo Nordisk, a Danish producer of Wegovy drug, forecasted slower growth vs its results in 2024. JAMA Internal Medicine reported that patients taking Mounjaro were 76% more likely to lose at least 5% of their body weight, more than twice as likely to lose at least 10%, and more than three times as likely to lose 15% or more of their weight, compared with patients taking the second-place drug by Novo Nordisk.

The entire market for weight-loss treatments is widely estimated at more than $150 billion by the early 2030s. To put it in perspective, Eli Lilly is three times larger in terms of market value than Merck and five times more expensive than Pfizer, the other two giants of the pharmaceutical industry. Eli Lilly's achievements include the U.S. regulatory approval of Kisunla, the brand name of Donanemab, which is a treatment of Alzheimer's disease, and of Jaypirca in Japan to treat lymphoma.