Anchor Insights October 2024

• Slight increases in the stock markets, except Switzerland, the UK and Japan. Healthcare, energy and biotechnology sectors suffer loses, while materials, utilities and consumer cyclicals rose sharply.
• Bonds rise in the heat of expansionary announcements from central banks.
• Gold breaks records, oil approaches USD 70 and copper recovers due to stimuli to the Chinese economy.
• The dollar continues to be on the downward path with the euro, confirming the Fed's rate cut process.

• The chances of recession in the US are increasing, which may accelerate the pace of monetary easing.
• The escalation in the Middle East may have an impact on oil temporarily.
• China approves measures to boost its economy; will they be enough?
• Keep an eye on October's seasonal volatility: earnings, rates, geopolitics, employment and central banks.

Opportunities:

• Information technologies: buy the dip.
• Real estate and energy: undervalued, although there are still many headwinds.
• Healthcare and biotech: higher growth than other sectors and attractive valuations.

• Credit spreads at average levels, both in European and American bonds. 
• Stabilization of IRR in government bonds, both European and American.

• The dollar breaks the 1.11-1.05 range and adjusts between 1.085-1.12. The weakness of the USD due to the evolution of public deficit and debt may be counteracted by geopolitics temporarily.
• Major crypto assets stabilize in the face of the anticipated USD rate cut. 
• The price of industrial commodities and metals may be weakened by lower demand from China and India, while gold could fall if inflation falls.

• Extension of the Israeli-Palestinian war 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. Monetary policy shift towards a less contractionary phase, although concerns are beginning about a deterioration in employment that would be associated with an economic recession. In addition, the rapid implementation of Artificial Intelligence (AI) in production processes exerts deflationary pressure. China's attempt to boost its economy can make or break global growth and influence inflation.
• At the business level, profit growth slows down and the first profit and sales alerts 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 is increasing, with the rise of the far right in the EU and the start of the campaign for the US presidential elections in November, with greater volatility in the markets in the coming months.