Anzo Capital: Weekly Market Review

[Anzo Capital]

Weekly Market Review by Anzo Capital
For the week of 12 Oct 2020

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Who Will Win: Euro Or Pound?

Last week started with some good news for the British economy as labour participation appears to have increased. The unemployment rate rose to 4.5% against a claimant count drop to 28,000 for September, suggesting that more Britons are entering the labour market. Brexit appears to be at the forefront of Euro area currency weakness as Britain’s PM, Boris Johnson, reiterated willingness to implement and some likelihood of a no-deal Brexit. European Union negotiators remain optimistic that some progress can be made, however UK’s chief negotiator, Frost has stated that the door to further talks is open “ajar” and further discussions are pointless without a change in direction from the bloc.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
For the week of 19 Oct 2020

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The Fall Of Donald Trump?

The final presidential debate was certainly calmer and more civil than the first, as Trump’s Republican party perceived his demeanour in the previous debate as too aggressive. A range of topics were discussed and perhaps the greatest divide between the two candidates was their intended approach with regards the pandemic. Trump advocates for reopening where Biden would endorse further restrictions. Trump attempted several personal attacks on Biden’s private life and family dealings which largely fell flat during the debate. Despite accusations that the Democratic party are “all talk no action;” Trump remains behind in the polls and it seems his performance during debate lacked the real punch required to rock the Biden campaign. Turning to the economy, the labour market appears to be improving, with a significant drop in US citizens claiming unemployment benefits. A total of 787,000 jobless claims were made in the week ending 18th October. Similarly, the U.S. private sector registered another month of growth reaching an almost 2-year high.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
For the week of 26 Oct 2020

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All Bets On The US Dollar

US GDP figures regained the second quarter losses with a 33.1% surge in output for the first estimate of third quarter performance. The result indicates that a recovery of the US economy is underway, however, further stimulus will be needed to return to the previous pace of growth before the pandemic hit. The labour market appears to be moving in the right direction with fewer jobless claims being filed. Approximately 750,000 Americans claimed unemployment benefits in the week ending 25th October against an estimate of 773,000. Further, capital goods orders also rose more than expected in September as the pace of business investment appears to be gaining pace. Orders growth far exceeded expectations; climbing 1.9% for the month.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
For the week of 2 Nov 2020

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Biden Claims Victory; Trump Contests

Headlines were swamped with controversy last week, as the Presidential election became a closer run race than anyone was expecting. A number of key states were overturned by both parties, with Presidential candidate Trump calling for a recount of votes and threatening legal action. Despite an agonising wait, Joe Biden was announced as the next President of the United States. Trump is expected to contest the win. The US economy is performing well despite the circumstances; more citizens are returning to the labour market as 638,000 new jobs were added in October. At the same time, the unemployment rate dropped to 6.9%. Both Manufacturing and Services sectors expanded in October. The FOMC meeting offered no surprises in its October committee meeting as current policy remains unchanged.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 9 Nov 2020

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Markets Surge On Positive Vaccine Results

Markets received a boost at the start of the week as Pfizer announced 90% effectiveness of their Covid-19 vaccine. The result comes amid a second wave of cases in Europe and further movement restrictions. Although some of the uncertainty surrounding the path to economic recovery seems to be fading, macroeconomic data suggest that a return to pre-pandemic levels is some way away. Economic growth figures in the UK met expectations with rise of 15.5% for the third quarter. However, economic output is still almost 10% less than the same period in 2019.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 16 Nov 2020

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U.S. Dollar Struggles To Find Support

Consumer spending in the U.S. pulled back to 0.2% in October. Sales missed expectations and represented a considerable drop when compared with September’s data. The slowdown in spending provides warning signs for fourth quarter economic growth. U.S. citizens are seeing their household incomes shrinking with government employment support coming to an end. Furthermore, labour statistics released for the week ending Sunday 15th November showed 742,000 Americans filed jobless claims.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 23 Nov 2020

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Dollar Sell-off Continues

Macroeconomic data coming out of the U.S. is mixed; PMI reports suggest that output has reached a 5-year high as supply chain disruptions have lifted creating a surge in prices. The composite index showed a broad-based expansion of 56.3%. Positive news regarding hiring in the PMI reports was divergent from other labour market statistics. Jobless claims rose against forecasts to 778,000 in the week ending the 22nd November. The FOMC meeting minutes showed some disparity between committee members with regards to applying further stimulus to the economy. Members cited uncertainty in the economic outlook given the backdrop of rising coronavirus cases and the need for qualitative assessments before the implementation of policy changes. Some also raised concerns with regards to a fundamental change in transmission mechanisms of asset purchasing activities, highlighting that a significant rise in such activities could have “unintended consequences.”

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 30 Nov 2020

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Are China Still Inflating Their Growth Numbers?

Factory output in China reached a 36 month high in November, extending to 52.1% for the month, compared with 51.4% in October. Growth was seen across a broad range of sub sectors, yet, domestic demand remains weak and a likely target for stimulus.

The British Manufacturing industry saw both output and growth climb in November to an almost 3 year high at 55.6%. Both domestic demand and exports contributed to the rise. Across the water in Europe, an extension of current stimulus policies is expected at the next meeting of the European Central Bank. Both the Pandemic Emergency Purchase Program and the Targeted Long-Term Refinancing Operations are expected to be extended by 6 months.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 28 Dec 2020

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The Deal Is Done

Despite last week being quiet in terms of macroeconomic data releases, some news resulted in market moves in major currency pairs. The Pound surged on the final agreement on post-Brexit arrangements being signed by government. The rise came despite the reintroduction of movement restrictions as winter season saw Covid-19 and variant cases increasing. Further, the news of the AstraZeneca vaccine being approved for emergency use provided further optimism that the UK may be able to end lockdown strategies by spring.

Facing a similar struggle to control the virus resulted in the U.S. Dollar dropping to a two-year low. Despite a mass vaccination programme being rolled out, President Joe Biden highlighted that it may take years for the vaccine to be distributed, given the current pace. Nonetheless, the prospect of further stimulus and support for households has provided some optimism going into the new year. Employment data was also positive, with almost 20,000 fewer employment claims in the week ending December 27th 2020 taking total claims to 787,000. However, there may be some concern over the spike in first-time applications.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 4 Jan 2020

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Dollar Set To Rise On New Stimulus Hopes

The US Dollar ended the week higher as fresh calls for stimulus followed an abysmal jobs report. A total of 140,000 jobs were lost from the economy in December; a month typically flush with seasonal hiring. The fall was a result of containment measures introduced in light of rising Covid-19 cases that have spiked during a period of colder weather. The unemployment rate remained at 6.7% for the month. The result highlights that growth both in the labour market and the greater economy will continue to falter until movement restrictions are lifted. However, theses measures seem likely to continue until the US can speed up its vaccine programme.

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