Fiscal policy was delayed and, with politicians disagreeing, even the structure of the Union was called into question. Confronted with this situation, the European Central Bank (ECB) was compelled to take immediate action. But in recent weeks, the reality has changed somewhat. This weekend will see the reconstruction package being renegotiated, but as Alberto Matellán—Chief Economist at MAPFRE Inversión—explains in an interview with Radio Intereconomía’s A Media Sesión program, besides reaching that agreement, the point is that “the perceived risk regarding Europe has been reduced.” “The market has put a price on a change of attitude in Germany and the Netherlands, as the public has realized that they need Europe’s environment.”

In this climate, the Federal Reserve continues to make smart use of language to ‘trick’ the markets. Matellán believes that “language is in itself an effective tool; it stimulates the market by highlighting the fact that they will continue to be there.” “They still have scope for action,” he adds. Meanwhile on the other side of the Atlantic, the ECB has already, in its view, taken sufficient action for the time being. According to the economist, reacting with new tools could even prove counterproductive; it might discourage politicians in Europe from taking important decisions in the coming days.

The US earnings season has just begun and things are currently worse than expected. As Matellán says, though, it is not quarterly results that are the issue, but the fact that “companies are not giving us guidance on what may happen in the future, so all we can do is wait.”

The Government has started to outline next year’s general budget, with which it will have to face a fiscal year of post-pandemic recovery. Matellán discusses three things that these public accounts should incorporate. First, caution with regard to tax revenue “because it can actually hinder recovery.” Second, it has to be a budget that stimulates employment. Not only the budget but all economic policy actions should do the same. Third, “they have to safeguard companies’ balance sheets and make an effort to ensure that the pandemic causes as few companies as possible to go into receivership or out of business.”

As he does every week, Matellán has a closing message for investors. This month and a half has been a period with little market depth, which is exaggerating movements. “Investors should consider what they stand to gain and lose when entering and exiting the market, and the conclusion is that it is probably best to wait until September.”