Global Markets Newsletter – July 2022

July in the US was a month that high inflation, worries about recession, real estate demand and energy prices were the highlights. The question remains crucial. Is this a real recession or a theoretical one?

The president Joe Biden and the US Secretary of the Treasury Janet Yellen stated that this is not a recession or at least not a usual one. However, textbook wise, there are two consecutive quarters of negative GDP. The first quarter of 2022 with -1.6% and the second with -0.9%. The counter argument in the recession term lies that non-farm payrolls were up by 372k and unemployment was at its lowest at 3.6%, increasing interest rates are a brake in the inflationary pressures (9.1%) coupled by consumption, retail sales (up 8%) and generally consumer confidence. These indices show rather prosperity than recession and the major stock in-dices translated these announcements to mini rallies like S&P-500 and Nasdaq-100 which moved +13% and +16% respectively.

In Europe, the Central Bank (ECB), for the first time after almost 11 years, increased interest rates by 0.50% reaching 0.50% at its key rate and 0% from a negative -0.50% at its main depo-rate. This reaction was a good sign of diminishing inflation which is mainly due to higher energy prices, but surely it was not enough. The war in Ukraine still continues, natural gas remains a great dependen-cy for the Old Continent and Nordstream reduced its capacity by 20% showing that Russia is still to be respected energy-wise. In addition to all the above, China moved military forces, opposite Tai-wan, bringing fresh memories of Russian similar tactics before its Ukrainian invasion.

In Greece, the stock exchange reacted from its low levels by more than 10%, and 4 in total companies listed their shares (Dimand, Alpha Trust) and their bonds (CPLP, Lamda Development) in the stock market showing a momentum.

The EUR/USD reached parity (1.00) but due to interest rates rise, euro touched 1.02 but seems difficult to hold. Cryptos also reacted with impres-sive returns like 25% and 63% for Bitcoin and Ethereum respectively.

We buy selective tech stocks in US and hold excess liquidity awaiting proper timing

S&P-500 (12 month graph)

Source: Bloomberg

EuroStoxx-50 (12 month graph)

Source: Bloomberg

EUR/USD  (12 month graph)

Source: Bloomberg

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