The word recession has begun to resonate more in recent months in trading rooms, and even investors’ fear of a negative economic scenario has already been reflected in major global indices at times, especially in the past. Black Monday of August. But since then, investors’ perception has improved. From Bankinter, they believe that, even if the context “is not perfect, it never is”, and that “The market shows that it is able to coexist with problems without any problems”.
This is reflected in its latest analysis report for the fourth quarter of 2024, Investment strategy. Looking ahead to the last period of this year, the banking entity states that the global economy is in “an expansive economic cycle”, but in which the United States stands out in particular. Very different from the pre-pandemic phase that was “characterized by a risk of deflation, zero rates and anemic economic growth”. However, analysts do not rule out risks along the way, such as war conflicts in Ukraine and Israel and “US elections as close as they are controversial”, in conjunction with “global politics hijacked by polarization and populism”. as Bankinter stated.
In this delivery of the strategic approach, you see a clear commitment by the entity to invest in the United States rather than in Europe. And the latest valuation revision stands out, in which the US potential increases further, but it continues to double the European potential. Bankinter has increased its valuation of the United States by 5% and currently expects that The world’s largest economy is down 25% more on the ground until December 2025. While for Europe, the potential increases slightly until 10.7% for the same period. Separately, Spain and Portugal will travel more than the continent in general, since the analysis house estimates that the parquet Spanish has a potential of 12% and Portuguese exceeds 16%.
The report shows that the main factors in the development of the American economy are the decrease in inflation, the drop in the price of oil and unemployment in the region. But it also highlights the “double-digit” increase in the profits of American companies, estimated between 10 and 14%, compared to the simple amount that the entity foresees for the European continent. In addition, the United States is also favored by the “beginning of a phase of lower interest rates, which we believe will last until 2026,” which was confirmed this month with the double rate cuts by the US Federal Reserve.
However, when it comes to market expectations about the pace of the Fed and other central banks to cut rates, they are less optimistic. Bankinter believes that it “will be, in general, less dynamic than what the market is expecting”, despite the fact that the Fed has launched this aggressively”This doesn’t seem very relevantbeyond the somewhat confusing impact it had in the sessions that followed, with a slight initial decline that turned into a strong subsequent rebound.
On the other hand, they defend that the high prices of technology companies, which from their point of view “do not represent any weak point for the market, nor are they overvalued, simply because we do not identify any inconsistency given the rapid and sustainable pace of the market’s evolution.” expansion of their profits, while the rotation of investments does not yet reach the small caps in the bags.
