Anzo Capital: Weekly Market Review

[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 11 Jan 2020

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Biden To The Rescue?

US markets saw a surge after the release of the stimulus package by incoming president, Joe Biden. A total of $1.9 trillion of support is due to be issued in a bid to kickstart growth and economic recovery after the pandemic. A payment of $1400 will be issued to households on top of the existing $600 checks already provided in the last stimulus package. Approximately $415 billion has been set aside for virus relief and the vaccination programme. Whilst the support was welcomed, many worry about how the package will be funded and concern was expressed about the prospects of higher interest rates and taxes as a result. The announcement came against a backdrop of worsening macroeconomic conditions. Core retail sales contracted in December; a season typically buoyed by festive spending. Sales fell by 1.4% in December, the third month of decline; accelerated by rising job losses resulting from containment measures.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 18 Jan 2021

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Everything You Need To Know About The Markets Right Now

US markets were buoyed last week at Joe Biden’s inauguration as the 46th President of the United States, despite concerns the ceremony would be marred by protests. The week saw stock markets surge on optimism yet the dollar continues to weaken at the prospect of further stimulus. Data coming out of the U.S. looks positive currently, with PMI reports indicating expansion for both the services and manufacturing sectors at 59.1% and 57.5% respectively.

Fourth quarter growth for China’s economy hit 6.5% as markets talk of a ‘v’ shaped recovery. Total expansion for 2020 came in 2.3% despite the economy shrinking by 6.8% in the first quarter. The result indicates that current output is beyond even pre-pandemic levels.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 25 Jan 2021

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U.S. Dollar Is Still Under Pressure

Demand for ‘Made in the U.S.A’ goods appear to be healthy. Core Durable Goods orders rose for the eighth consecutive month to 0.7% in December. A more tempered rate of economic growth was achieved in the fourth quarter of 2020, which saw a 4% rise in output, compared with a 33.5% rebound in the third quarter. Output is now estimated to be only 2.5% off the rate of growth seen before the Covid-19 outbreak. The labour market also looks to be showing improvement with 847,000 jobless claims for the week ending 24th January; 33,000 less than forecast. Unsurprisingly, there were no changes to monetary policy from the Federal Reserve at the January committee meeting.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 1 Feb 2021

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Asia Recovery Is Slowing Down

According to the Caixin manufacturing PMI survey, growth in China’s services sector slowed at the start of the year, with business activity weakening at the fastest pace in 9 months. Fewer exports sales and falling consumer demand have been blamed for the slowing output. Japan’s Au Jibun manufacturing report indicated that the sector has moved into contraction in January. The reduction in production has been a persistent problem however, new ‘state of emergency’ restrictions implemented by trading partners have resulted in the sector’s pullback. An output of 49.8% has been registered for the month.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 15 Feb 2021

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A Change In Fortunes For The U.S. Dollar?

Unemployment claims in the US unexpectedly rose last week with 861,000 applications for jobless support registered. The spike comes after a few weeks of declining claims, underscoring the scale of economic dislocation. Retail sales offered a glimmer of hope for the economy, rising for the first time in three months and representing a 7-month high at 5.3%. However, the spike in sales has been attributed to the issuance of stimulus checks. According to the HIS Markit report, output in the U.S. accelerated at the fastest pace in 6 years in February. The rise has been attributed to climbing domestic demand and rising new orders for the Manufacturing sector.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 22 Feb 2021

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The Pound Is Winning The Vaccine Race

The Pound has established the most sustained rally that the currency has seen in 5 years. Optimism for a faster recovery has buoyed Sterling rates as the vaccine rollout has seen 20 million Britons already receiving the vaccine to date. The UK has also seen a second monthly rise in payrolls, as 83,000 new jobs were filled in January 2021. Fears of inflationary pressures were squashed by Bank of England Governor Bailey at The Monetary Policy Report Hearings last week. Despite a rise in household savings during lockdown and a potential for a spike in demand as restrictions are soon lifted, the committee believes the price stability mandate of 2% will remain intact. The positive sentiment also spanned to Europe. The German Ifo Business Climate index reached a peak not seen since last October, as the industrial output continues to support Europe’s largest economy despite confinement measures.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 1 Mar 2021

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Time To Buy The US Dollar?

Triumph for the U.S labour market came in the form of better-than-expected payroll numbers for February. A total of 379,000 new jobs were added to the economy for the month against a forecast of 197,000. Additionally, the unemployment rate moved lower to 6.2%. Manufacturing and Services sectors showed signs of strengthening, if perhaps, at a slower pace than expected at this stage. Growth cooled slightly for the Manufacturing sector in February at 58.6% however, this represented the second fastest spike in growth since April 2010. The Services sector saw its ninth consecutive month of growth at 55.3% yet the data indicates a significant fall in pace of output due to supply bottlenecks.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 8 Mar 2021

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Everything You Need To Know About The Markets Right Now

The ECB, unsurprisingly, made no material changes to current monetary policy. The bank did commit to ramping up the pace of their Pandemic Emergency Purchase Programme yet overall, the size of bond purchasing will remain the same. The policy stance has always been non-exchange rate targeting and the ECB kept to that commitment, as the latest move is not expected to dampen support for the Eurodollar.

Annualized inflation is moving closer to the Fed’s price stability mandate of 2%. In the 12 months to February, consumer prices climbed 1.7%. A surge in energy prices contributed the most to the rise in the index, however, consumer-related services continue to suffer from a lack of demand. The result marks a steady recovery, highlighting that growth in the world’s third largest economy continues to be asymmetric. The approval of Biden’s $1.9 trillion fiscal stimulus package should stoke consumer demand and that, coupled with a ramp up in the vaccination programme, should result in a more rapid economic recovery.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 15 Mar 2021

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Dollar Falls As Hopes Dashed

The Fed maintained an ultra-dovish tone at its latest monetary policy meeting, indicating that rates are unlikely to rise until 2023. Market participants were preparing for a tightening of policy given signs of a faster than expected economic recovery. Despite this, the Fed removed an emergency support measure provided to the banks during the crisis, called the supplementary leverage ratio, which established lower capital requirements. The move is not expected to impact the Treasury market according to Fed officials. Retail sales plummeted 3% in February after climbing almost 8% in the previous month. The fall was unexpected and driven by unusually bad weather, with sales expected to recover in March as a new round of stimulus checks is released by the government.

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[Anzo Capital]

Weekly Market Review by Anzo Capital
Reflecting on the week of 22 Mar 2021

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Is It A Good Time To Buy The Euro?

A spate of poor macroeconomic data hit the UK last week. CPI data showed that prices rose 0.4% in the 12 months to February 2021, representing a decline from 0.7% in January as consumer products led the decline. Labour market figures indicated that almost 87,000 new claimants filed for unemployment benefits in February, yet, the unemployment rate lowered to 5% during the period. Retail sales made a partial recovery, registering 2.1% growth for February, after contracting 8.2% in January. Recovery in the Eurozone accelerated in March with PMI data indicating multi-month highs for both the Services and Manufacturing sectors.

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