August was a positive month although there was a sudden turbulence which was due to the Taliban taking power in Afghanistan. The evacuation for many western citizens took place during August but in the end there were some casualties for which president Biden was accountable for.
On the economy field, announcements were positive in majority with a mixed picture in real estate. More specifically, unemployment was announced at 9.2% (from 9.8%), non-farm payrolls were up 943k (vs 938k) and inflation was at 4.3% annualised remaining the main obstacle ahead of the growth. The Federal Reserve bank declares ready to intervene when needed and investors are cautious that this may happen during fall 2021. In that case, growth is expected to remain but with a different cost (interest rates). In the real estate market, situation was mixed as building permits were up 2.6%, whereas housing starts were shrunk by 7%.
In Europe, the economy has improved during the end of summer as inflation is seen in the horizon and ECB states that it will diminish the bond purchase program as it will be no longer needed and it will help shrink its balance sheet. Eurozone GDP for the 2nd quarter was 2.2% (from 1.9%), inflation was 3% in August and unemployment for July 7.6% (from 7.8%). Retail sales were diminished by 2.3% while industrial PMI remains well above 50 (61.4) showing persistent industrial growth.
In Greece, there was no other important summer news but the (negative) high record of national debt which reached 236% of GDP due to high deficit and new bond issues.
The EUR/USD moved towards 1.17 from 1.18 and it is expected to move to 1.16 in short term mainly due to ECB’s policy to shrink its balance sheet that will reduce euro circulation.
Our preference remains the american equities versus european stocks where we hold no position. US equities hold 60% of the total portfolio which the technological sector holding 60%. Cash remains crucial as corrections are buying opportunities often.
S&P-500 (6-month chart)
Dax-30 (6-month chart)
EUR/USD (6-month chart)
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