Anchor Markets

Since the news of the good results of the clinical trials in November, cyclical companies are leading the way in the stock market.

Especially during the month of February, we have experienced the typical movements that characterises an early economic cycle: steepening of the curve, price increases in commodities and cyclical sectors outperforming defensive sectors.

                 Fuente: Thomson Reuters. Elaboración propia Anchor Capital Advisors.

At the beginning of the Covid-19 pandemic, fears about a strong impact on defaults on corporate bond issues strongly shook prices and spreads on fixed income. In particular, those of the speculative grade (high-yield) issues of the lower-rated tranches. The yield on the bonds rose sharply, offsetting the risk of default.

The new decade has started with a very clear objective: to reduce emissions of polluting gases.

SPACs - Special Purpose Acquisition Companies - have become a very popular vehicle for investors to access private companies through an IPO. The objective of these entities is to offer an alternative channel to private companies to raise capital as a preliminary step to going public.

Broadly speaking, largest capitalization companies (specially FAANGs), are the ones that have best withstood the severe blow of covid-19.

Their competitive advantages, partly due to their large size, have led these types of companies to gain market share in their respective markets. Their ability to survive in a digital world and the long dependence that many users have on them is a crucial factor of that.

This has caused divergences between the largest and smallest capitalization companies as a result of the crisis, as we see in the graph.

FAANG: Facebook, Apple, Alphabet, Amazon, Microsoft, Netflix. Fuente: Thomson Reuters. Elaboración Propia.