Fencing: More Than Just a Sport
December 3, 2024
Topic of the week:
By Sofia Aksenova
Fencing has its roots in Ancient Egypt, dating back to 1190 B.C., where it was initially used as military training. With the passage of time, this discipline began to transform into a sport, and by the 16th century, it spread throughout Europe, consolidating itself as an exclusive sporting activity. Today, fencing is a sport of attack and defense with weapons, whose objective is to hit or touch the opponent to accumulate points.
It is evident that today’s fencing has evolved significantly from previous centuries. In the past, duels were two-handed, with a weapon in one hand and a dagger in the other, while today only one weapon is used. The choice of the color white for the equipment is no coincidence. In ancient times, the tip of the weapon was smeared with charcoal to make the touches more visible on the opponent’s white suit. This color symbolized purity and honesty in competition, reflecting values of chivalry and nobility. Today, white pays homage to those traditions, while electronic markers have replaced charcoal to record the touches more accurately. Nevertheless, today’s fencing preserves a number of traditions that connect it to its rich history. Today, three types of weapons are still used: foil, épée and sabre. Each weapon has a specific blade and is governed by a unique set of rules, which determine the target areas and the types of touches allowed.
But do we really know what is behind fencing? From an athlete’s perspective, fencing is much more than just a sport. It is, first and foremost, a well-planned strategy that requires not only technical skill and quick reactions, but also prediction, planning and agile adaptation to the actions of his opponent. Similarly, an analyst constantly evaluates the environment, anticipates market movements and adapts his decisions based on the information obtained, all with the aim of maximizing returns and minimizing risk.
In other words, fencing is not only a physical combat, it is a form of strategic thinking that is used in various fields, including the financial world. Thus, every move in fencing must be carefully evaluated, which requires a high level of concentration and constant analysis of your opponent’s moves. This predictive ability is equally crucial in the financial market, where analysts make cash flow projections and carry out a detailed study of the factors that may affect their financial strategy in the medium and long term.
Another crucial skill in fencing is the speed with which fencers must adapt to changes in their opponent’s strategy, reacting nimbly to repel the attack and avoid losing points. In a round that lasts only a few minutes, the outcome depends largely on the ability to read the opponent’s signals and make accurate and quick decisions. So does the financial analyst who foresees the fluctuations of the environment and readjusts his strategies and investment portfolios with the same agility according to upward or downward market trends.
Finally, fencing with its three distances – short, medium and long – reflects the investment strategies in the financial market, which can also be classified into short, medium and long term. In the fencing bout, distance plays a crucial role and influences the actions and tactics that can be applied by the athlete. The financial analyst, in turn, determines the duration of his portfolio and chooses the most appropriate financial products in order to maximize returns and minimize risks.
The beacon of the markets:
The last week of November, a semi-holiday in the US, closed with slight rallies in the equity markets as we await the latest important macroeconomic references in the coming days, which will be fundamental in the decision to be taken by both the FED and the ECB in their last meetings of 2024. Thus, the S&P 500 gained 1.06% compared to +0.74% for the Nasdaq 100 and +0.32% for the Euro Stoxx 50. The Ibex 35 experienced a slight correction of -0.13%. Once again, the S&P 500 reached a new all-time high of 6,044.17 points, its 53rd all-time high of the year.
In fixed income, after the strong reaction that took bond yields to multi-month highs in reaction to the US election result, we found a corrective movement with yields falling for the third consecutive week. The 10-year Treasury dropped 23 bps compared to 16 bps for the Bund and 18 bps for the Spanish Bono, which closed the week at 4.18%, 2.09% and 2.79% respectively. In the case of the Spanish Bono, such a low yield level has not been seen since December last year.
There were widespread corrections in the commodities markets. On the one hand, gold fell by 1.61% to close the week at 2,681 USD/Oz, the high prices reached since the beginning of the year seem to be taking their toll at these levels. On the other hand, and supported by a greater calm in the Middle East, we are seeing a reduction in the risk premium on Brent, which fell by almost 3% to 72.94 USD/b. We would like to point out that Chinese manufacturing production expanded for the second consecutive month, the signs of recovery of industry in China could lead to an increase in the price of certain raw materials that have been affected by the low level of economic activity in the world’s second largest economy.
On the macroeconomic front, the last 5 days did not leave us many references, but the ones we did know had an impact. In China, the manufacturing PMI remained for the second consecutive month in the expansion zone and this week we will know the Caixin PMI (the private survey) for which we expect some growth in the month, but with a service sector that may be somewhat more pressured. In Europe, CPI data were in line with expectations, i.e. a rebound from 2% to 2.3% overall, while core CPI remained at 2.7% when a slight rise to 2.8% was expected (this would support a further rate cut by the ECB). Meanwhile, manufacturing activity remains depressed, with the PMI remaining at 45.2 points versus 46 in the previous month, with the political situation in France likely to further aggravate the problem.
In the United States, a good consumer confidence figure was reported, which rose to 111.7 points from 109.6. The GDP figure confirmed growth of 2.8%, with the labor market in line with forecasts, and the PCE figure came in at the levels anticipated by the experts, 2.3% at the general level and 2.8% at the underlying level, which implies a slight increase with respect to the previous month’s data.
This week in China we will see the services PMI, in Europe the most important references will be the employment data, retail sales and GDP for the third quarter. Finally, in the US, the unemployment rate and non-farm payrolls (+202,000) will be released on Friday, which will be key for the Fed’s last meeting of the year. In addition, ISM PMI data will be released, pointing to a recovery in the manufacturing sector.
The phrase:
And we say goodbye with the following quote from Bertrand Russell, British philosopher, mathematician and writer, winner of the Nobel Prize for Literature, “The hardest thing to learn in life is which bridge to cross and which bridge to burn” (knowing when it is time to take a risk, to give yourself a second chance or, on the contrary, to cut your ties and move on).
Summary of the performance of major financial assets (12/2/2024)
This report does not provide personalized financial advice. It has been prepared irrespective of the particular circumstances and financial objectives of the persons receiving it.
This document has been prepared by Portocolom Agencia de Valores S.A. for the purpose of providing general information as of the date of issuance of the report and is subject to change without notice. Portocolom Agencia de Valores S.A. assumes no obligation to communicate such changes or to update the contents of this document. Neither this document nor its contents constitute an offer, invitation or solicitation to purchase or subscribe for securities or other instruments or to make or cancel investments, nor may they form the basis of any contract, commitment or decision of any kind.
The information contained herein has been obtained from public sources believed to be reliable and, although reasonable steps have been taken to ensure that the information contained herein is neither uncertain nor unequivocal at the time of publication, we do not represent that it is accurate and complete and it should not be relied upon as if it were. Portocolom Agencia de Valores S.A. assumes no liability for any loss, direct or indirect, that may result from the use of the information provided in this report. Past performance of variables may not be a good indicator of future performance.