Anchor Insights September 2024

• Sharp increase in volatility at the beginning of the month in all stock markets, although positive close in most indices.
• Revaluation of all fixed income, both government and corporate.
• Gold continues to rise above $2,500 while oil falls.
• The dollar weakens again, still maintaining a range against the euro.

• The focus shifts from inflation to employment. The Fed will lower the interest rate and the market expects 4 cuts until the end of the year.
• The fight for the US presidential elections and the conflict in the Middle East will generate more volatility in the remainder of the quarter.
• China is facing problems to get out of economic stagnation. A lost decade?
• The number of companies lowering their forecasts for Q3 is increasing, although profit growth for 2024 remains above 10%.

Opportunities:

• Information technologies: taking advantage of significant corrections to accumulate.
• Real Estate: facing a stabilisation of interest rates and after a readjustment of valuations.
• Healthcare and biotech: higher growth than other sectors and attractive valuations.

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

• The dollar breaks the range of 1.11-1.05 and adjusts between 1.085-1.12. The weakness of the USD due to the evolution of the public deficit and debt may be counteracted by geopolitics temporarily.
• The main crypto-assets stabilise 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 plunges.

• Extension of the war between Israel and Palestine in the Middle East, oil at 200 USD.
• Conflict in Ukraine, escalation of NATO-Russia tension, persistence of sanctions.
• Political incapability to confront inflation, climate crisis and migration causes social tensions and 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 test, greater capital needs and reduced access to financing.

• The improvement in business expectations encourages a cyclical recovery. Change in monetary policy 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.
• At the business level, profit growth slows down and the first profit and sales alerts appear. The sustainability of US debt makes it difficult to lower interest rates without a budget 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 more volatility in the markets in the coming months.