Anchor Insights August 2024

• Slight rebounds in the European stock markets, while the rest of the markets remain flat.
• Revaluation across all fixed income, both government and private.
• Gold holds above 2,400 USD, the rest of the commodities fall due to weakness in China.
• The dollar retreats, although it remains within the range with the euro.

• Reduction of inflation to levels desired by central banks while employment resists. The Fed will announce its first rate cut.
• The markets are beginning to price in a return of Trump and a Congress with a Republican majority: more protectionism. Kamala Harris improves Democratic expectations.
• The expansion of the conflict in the Middle East could send the cost of transport and the price of oil soaring if Iran intervenes.
• Corporate results could point to a slowdown in consumption in the second half of the year and a moderation in corporate margins.

Opportunities:

• Information Technologies: take advantage of significant corrections to accumulate.
• Renewable Energies: the need to decarbonise is driving huge investment plans in renewable energies.
• Real Estate: in the face of a stabilisation of rates and after a readjustment of valuations.

• Credit spreads at average levels, both in European and American bonds. 
• Stabilization of IRR in government bonds, both European and American.
• Improvement in emerging market fixed income in "hard" currency.

• The euro and the dollar are in the 1.11-1.05 range. The weakness of the USD due to the evolution of public deficit and debt may be counteracted by geopolitics temporarily.
• The correction in real estate asset prices is underway in some European countries and American states. 
• The price of raw materials will follow demand from China and India. Gold stabilizes near $2,400.

• Economic slowdown with persistent inflation and restrictive fiscal policy due to deficits and debt.
• Extension of the war between Israel and Palestine to the Middle East, oil at 200 USD.
• Conflict in Ukraine, escalation of NATO-Russia tension, maintenance of sanctions.
• Political incapacity in the face of inflation, climate crisis and migration causes social tensions, populism.
• Financial fragmentation of the public debt market Euro.
• Reduction of liquidity in financial markets, volatility.
• Increase in cybercrime, disruptions in essential infrastructures.
• Bank stress tests, greater capital needs and reduced access to financing.

• Improved business expectations are driving a cyclical recovery. The change in monetary policy towards a less contractionary phase is discounted, although concerns are beginning about a deterioration in employment that would be associated with an economic recession. On the other hand, the rapid implementation of Artificial Intelligence (AI) in production processes exerts deflationary pressure.
• Although most of the companies that have already published Q2 results exceed expectations, economic growth is slowing down ("soft landing?") and the first alerts of profits and sales appear. The sustainability of the US debt makes it difficult to lower rates without budgetary adjustment.
• The war between Israel and Palestine is becoming chronic and spreading in the region, while the conflict between Ukraine and Russia continues. European countries are increasing military spending and the US is seeking a pact between Saudi Arabia and Israel to focus on the Asia-Pacific region in its struggle with China.
• Political uncertainty in France with repercussions in the EU and the start of the campaign for the American presidential elections in November, with greater volatility in the markets in the coming months.