IEF&BFS Market Forecast, 12th edition
Inflation and geopolitics: IEF&BFS Market Forecast experts analyze the effects of monetary policies, US elections, macroeconomics, and company valuations on the global economy and investments
In the 12th edition of the IEF&BFS Market Forecast, organized by the Barcelona Finance School and held on September 19 at the Barcelona Stock Exchange, leading finance specialists discussed how key geopolitical events will affect the global economy, international relations, and markets during the last quarter of 2024
Thursday, September 19, at the Barcelona Stock Exchange, the 12th edition of the IEF&BFS Market Forecast, organized by the Barcelona Finance School, was held, where the impact of upcoming geopolitical events, including the US presidential elections, on the global economy, international relations, and markets during the last quarter of 2024 was analyzed. In addition, the evolution of inflation, central bank monetary policies, and investment opportunities in a context of geopolitical and economic uncertainty was addressed.
Inflation under control, but not at target
Marc Ciria, founding partner and executive president of Diagonal Asset Management, highlighted the importance of making an accurate diagnosis of the current situation. Although it was indicated that inflation seems to be under control, Ciria warned that the 2% target will not be reached this year: “More measures will be needed to achieve it, and they should not be expected quickly.”
While the US continues to grow at rates of 2%/3%, Europe has an anemic growth that barely reaches 1%, with the German engine “stalled” and China growing below its cruising speed at just 4.7%. Despite this, it was highlighted that consumption remains strong compared to other indicators that show signs of weakness, both in the US and Europe. Regarding the situation in China, it was warned that investing in this country presents difficulties: “Losses are being recorded, although talking about recession would be premature.”
Regarding monetary policy, the Federal Reserve’s strategy to balance inflation and the labor market was praised, but warnings were given about the risks of a rapid drop in interest rates: “The fixed income market offers opportunities, especially in corporate bonds, but we should not expect rapid or numerous rate cuts.”
Moderation in growth and long-term improvement
Dídac Pérez, investment director at Caixa Enginyers, emphasized the moderation of global economic growth after the pandemic, especially in Europe. However, a more positive future was projected: “Inflation is gradually decreasing thanks to central bank policies, bringing us closer to the 2% target.”
It was highlighted that, despite the reduction in business margins in Europe, an improvement in profits is expected towards 2024-2025. The good financial health of companies, which are adopting greater discipline in capital allocation, was also highlighted, and opportunities were seen in sectors such as renewables: “Although markets have overheated, global valuations remain attractive, especially in emerging sectors such as renewables and luxury consumption.”
Protecting wealth in times of change
Juan Carlos Canudo, general director and partner at Solventis, offered a perspective on how investors can protect their wealth in changing monetary environments. The importance of maintaining exposure to equities to outperform inflation in the long term was highlighted: “Historically, equities have been the asset that has best withstood monetary changes.”
However, it was noted that equity valuations are currently demanding and it was suggested to balance portfolios with more fixed income to obtain sustainable returns: “Stock market return expectations are more modest, but bonds offer attractive opportunities that can outperform inflation in the medium term.”
In conclusion, after an agile, fun, and excellently directed event by moderator Josep Ramon Aixelà, head of macroeconomics and financial markets at the Barcelona Finance School and independent investment manager/analyst, the IEF&BFS Market Forecast experts emphasized the need for prudent investment management in the face of current macroeconomic challenges: mainly inflation, economic growth, monetary policies, and geopolitical risks. The focus was set on emerging sectors, such as renewables, and on financial assets such as quality corporate fixed income, which have been identified as crucial factors and objectives for investment decisions in the coming months.
