With unstinting focus on client objectives and capital preservation, Avems Investments provide high-touch investment expertise that centres on diversified solutions and a service-led approach to portfolio management. Our investment process is as disciplined as it is creative – ensuring tailored solutions with robust results.
Weekly Investor TV - 2017-10-09 - Catalonia, Tory Pressure, US Employment & Korea, Google Pixel | Avem Capital
Key headlines this week, Catalonia looks to gain independence from Spain, the UK’s Prime Minister Theresa May is under increasing pressures from within her own party, the US Employment report sends mixed signals, tensions between the United States and North Korea continue and Google Pixel joins the tech competition.
Catalonia Supports Independence
On the first day of October 2017, the Spanish people of Catalonia took to a poll. Viewed as illegal by the Spanish government, approximately 90% of the voters turned out to support independence in the contentious referendum; support that equated to less than half of the region’s population.
The contentious poll, dubbed by the Spanish King as illegal, took the side of the central government in Madrid, whilst the Catalonian President sought to declare independence following the result this week.
The impact on the markets of this unsettling activity and continued uncertainty has been one of a marked dislike. Evidence in the fact that on Wednesday the Spanish equity index, the IBEX, tumbled nearly 3% - a decrease that put more downside pressure on the Euro.
At Avem Capital we continue to watch developments in the region to see what the impact is when the Catalan parliament are planned to meet and what further potential impact this has on currency and equity markets.
Theresa May Under Increasing Pressure
Closer to home, in the UK, politics continue to be at the fore as the political parties moved into conference season.
A key speech by Prime Minister Theresa May, marred by a coughing fit, drew comparisons of her increasingly fragile position as some senior Conservative party members called for her to step down as party leader. The embattled Prime Minister however, continues to defend her position within her Cabinet and Government.
This setback in Sterling is however potentially eliminating one of the obstacles of raising rates for the Bank of England’s Governor, Mark Carney.
The Bank of England’s Monetary Policy Committee indicated in their September meeting a potential for a rate rise as their Consumer Price Inflation was significantly above the Bank’s medium-term target of 2%. The growing risk is for an interest rate increase before the end of the year, potentially at the next meeting at the beginning of November.
Mixed Signals from the US Employment Report
Turning our focus to across the pond, the start of Q4 looks at the continually monitored US Employment report.
Forecasts were already showing a lower figure for the Non-Farm Payroll number, given the impact of Hurricanes Henry and Irma. Despite these forces of nature, the expectation was for a decrease of only 80-90 thousand. The number however came in at negative 33,000.
Normally bearish for equity markets and for the US Dollar, the markets reacted differently. This was likely due to both the data being an outlier, given the Hurricanes and that the average hourly earnings data was significantly above consensus at 2.9% year-on-year and 0.5% month-on-month.
This more positive outlook for earnings allowed for a further rise in the equity markets.
Other Global News
Elsewhere however, the week did end on a slightly negative note with two Russian legislators who had been visiting North Korea indicating that the rogue state is planning to test an even longer-range missile soon. This news produced a pullback in equity markets from their peaks on Friday. The world awaits further developments as they unfold from the secretive country.
Considering the week ahead, the key macroeconomic focus will be on the Wednesday’s FOMC Minutes alongside further speeches from Fed members throughout the week, as well as from ECB president Draghi on Thursday.
In addition, this coming week sees company earnings season start to pick up with releases from key firms from the United States in the financial sector. These include BlackRock, JP Morgan, Citigroup, Bank of America and Wells Fargo.
Following the Apple iPhone X and Samsung Note 8 announcements, Google had entered the fray with their Pixel 2 and Pixel 2 XL. Their second smartphone aims to step ahead of the competition through better use of artificial intelligence.
The best example of this comes from the Google Pixel Buds. Like something out of a sci fi movie, the in ear buds when connected to a Pixel Phone can provide instant translation from speech.
Sticking with technology, there has been a buzz about electric cars for some time now but have you heard of electric planes?
Aviation industry heavyweights Boeing and Airbus have been working on their designs for some time, but Zunum Aero have beaten them to it. Announcing this week, Zunum Aero stated that they expect to launch the first hybrid electric plane in 2022.
A finally, in the Pharmaceuticals industry a badly needed shake up to the generic drugs market was announced this week by the Federal Drug Administration. Regulation is designed to ensure that when a drugs company loses its time limited exclusivity over a new drug, competitors can manufacture competing drugs known as generics and at a reduced price. Complex drugs however can be difficult to replicate and therefore prices remain artificially high. New regulation aims to increase competition by reducing the hurdles for new drug approvals.
This document is not investment advice or intended as a recommendation to buy or sell any instrument covered with it. Although the statements within this document are believed to be correct they have not been verified by the author, or Avem Capital Limited and should not be relied upon when considering the merits of any particular investment. A recipient should consider its own financial situation, investment objectives and seek independent advice, where appropriate, before making any investment. All presented data may be subject to slight variations. Your Capital is at Risk.
Avem Capital Limited is a company registered in England and Wales under number 10683565.
The company's registered office is 3 London Wall Buildings, London EC2M 5PD.