Chief economist at MAPFRE Inversión
Companies are updating their accounts and investors are pleased with the results. According to Alberto Matellán, Chief Economist at MAPFRE Inversión, we need to look beyond the results of the last quarter to the roadmap to the future that they provide, “and this is a relatively positive one.” He added that “Generally speaking, I am pleased with [the results] because they show us that large companies are adapting well to a brand new situation, something that the market is currently putting a price on. In short, the pandemic is expected to have very little impact from now on.”
“This is problematic if there is no basis for future returns behind it”
Concerns about inflation continue in the background. Earlier this week, the chair of the Fed, Jerome Powell, looked to alleviate concerns of rising bond yields. Matellán shares this view. He explained that the consensus of more than 1,000 forecasts, produced by firms such as Bloomberg, did not predict this rise to exceed 2.5 percent this year or 3 percent next year. “This will not lead to any immediate rate hikes. Rather, we are experiencing a process of normalization,” he said.
In the meantime, some analysis firms are talking about oil prices temporarily hitting 100 dollars a barrel. Like all assets, they have been affected by fiscal stimulus, as well as recovery in China. Matellán pointed out that because of these two factors (fiscal stimulus and economic recovery) this asset could continue to rise above current levels, “but do so moderately.” However, it would continue in rational terms because there was no indication that supply would be disrupted.
In this context of increased liquidity, some companies are accelerating their plans to go public. “In the last eight months, ECB and the Fed have given us 1.8 times more money, that’s an 80 percent increase; and going public is a way for companies to capture some of that money,” he explained. He recalled, however, that “This is problematic if there is no basis for future returns behind it.”
The sectors hardest hit by the pandemic are currently the ones performing the best. You need only look at the Stoxx 600 Travel & Leisure sector. “The market has deduced that the pandemic is of little importance now and that, in that case, those sectors that were hardest hit by the pandemic are the ones most likely to bounce back and the ones to invest in. As long as the market context does not change, it’s a good option,” Matellán concluded.