The start of the new year was characterised by the invasion in the Capitol by republican fans who denied the electoral result. This image was deceiving for the USA and fears that this would affect the Biden’s inauguration led markets to lower levels. However, the economy tried to continue its growth but the 1st quarter might probably be re-cessionary. Published economic data show both directions.
Retail sales in the US went down by 1.9%, alt-hough PMI Manufacturing was announced well above 50 (57). Real estate industry has improved with new home sales up by 5.8% and building permits by 4.5%. Year 2020 ended with an industrial production strengthened by 1.6%.
In Europe, the first quarter may also be recessionary although vaccination has started. Local lock-downs and spread of the virus and its varriants do not allow relaxing measures and this has effects in the economy, especially in the eurozone where inflation is negative (-0.6%). Last quarter was also negative by 0.7% (in GDP terms). Retail sales dropped by 6.1%, business climate and consumer confidence were also negative -5.9 and -15.5 respectively. Legal and delivery issues concerning Astrazeneca vaccine created turbulence in the EU prestige as countries may not meet their needs in number of vaccines. Markets corrected due to this probability.
In Greece, stocks moved positively with a higher volume. Good news come from the bond market where the new 10-year bond issue was covered more than 10 times exceeding €22bln culminating to a 0.85% yield.
The EUR/USD reacted in favour of the dollar this time and returned to 1.20 levels and this may lead to lower euro levels creating a mid-term trend. However ample liquidity of the dollar may also affect the rate and make return towards 1.25 levels as 1.20 is very attractive for euro buyers.
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 (yearly – 2020)
Dax-30 (yearly – 2020)
EUR/USD (yearly – 2020)
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