July caused turbulence in the markets mainly due to worries about Delta variant of the Coronavirus. Certain politicians around the globe declared that their countries would not close on a absolute lockdown model, but locally if needed. Hence markets continued their upward trend leaving corrections for September.
In the US, economy is at its strong momentum coupled by extreme liquidity which is directed to stocks. Economic indicators were announced positive with inflation to remain the only threat which was 5.4% (on a monthly basis). Fed declared immediately that it will take all necessary measures to deal with a potential inflationary environment. The rest of the economic data was satisfactory and unemployment was at 5.9%, industrial production increased by 9.8%, retail sales by 17.98% and in the real estate market, new home sales measured 1.64mln new homes versus 1.54mln the previous month. Existing home sales were also up by 1.4% proving that rebound has started strongly.
In Europe, the political and economic situation was similar to the States except for the lower growth rates on a yearly basis, mainly due to the recessionary first four months of the year. Unemployment was announced at 7.9%, retail sales increased by 4.6% in May (June to be announced soon) and industrial production was lower by 1% (MoM ie Month over month) but 20.5% on a yearly basis. Inflation was at 0.3% (MoM) and 1.9% (YoY) proving that ECB sent stimulus package to many countries which was forwarded via the banking sector to loans and then to consumption and investment.
In Greece, low investment interest was shown in the volume which is expected to drop further during August. Bond market shows more interest as new editions of corporate bonds, mainly from the nautical sector, are about to be launched.
The EUR/USD moved towards 1.19 which is expected to continue as inflationary pressures on the dollar are strong due to ample liquidity of the currency.
Our preference remains the american equities versus european stocks. 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 (7-month chart)
Dax-30 (7-month chart)
EUR/USD (7-month chart)
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