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FINANCE | 17.03.2021

Alberto Matellán: “I don’t think central banks will abandon the stimulus scenarios they have been maintaining”

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“The Federal Reserve’s latest forecasts will point to higher growth, with an outlook that is better than expected,” predicted Alberto Matellán.
All actors, including central banks, are revising their expectations upward, particularly in the US. “The important thing for investors is what’s going to happen in the long-term. It’s natural to envisage a recovery now, but in the long run, they need to see how things play out with such high debt and deficit levels. It’s important for decision-making,” he stated.

On a day when all eyes were on the Fed’s meeting, Alberto Matellán, Chief Economist at MAPFRE Inversión, centered his weekly analysis of the markets (on the Radio Intereconomía program A Media Session) on his prediction of an upward revision in US economic growth forecasts along with inflationary pressures.

Regarding European equity markets, where sentiment remains positive, he explained that “there’s optimism, because there’s money!” Agents and analysts are factoring in the improved economic outlook, especially in the US, along with sustained fiscal stimuli and the fact that the pandemic is relinquishing its grasp, with the belief that COVID-19 “won’t do any more damage to the economy,” and that “inflation will be transitory.” For those reasons, he explained, committing to stock markets is a natural response. However, he did clarify that “there may be problems in the longer-term,” but “for now the party continues.”

Waiting on the central banks

In response to a question from journalist Ángeles Lozano, he said that “yes, the Fed will issue warnings or give signals. But measures [interest rate hikes]? No, I don’t think so,” he explained, given that it has already made clear that its intention is to continue with stimulus for a long time. “If we look at the long-term picture, it would be natural for the stimulus scenario to continue,” he argued.

In addition to the Fed, the Bank of England and the Bank of Japan also have meetings this week, both important events for investors, because even though “they are likely to follow in the footsteps of the Fed and the ECB, if they don’t do that and instead take a bullish stance in view of high inflation or the growth outlook, that could trigger a wave of anxiety across the markets. I don’t think that will happen but we need to monitor that.”

A sea of opportunity for the ESG wave

Concerning his recommendation on whether it’s a good time to acquire positions in stocks such as Volkswagen or BMW, he pointed out that the automotive sector is the third best-performing sector within the German indices, behind Leisure & Travel and Luxury — sectors that are benefiting from the post-pandemic tide of optimism. Additionally, in the case of automobiles, they have the benefit of this tidal wave of structural change toward sustainability being led by environmental, social and corporate governance (ESG) approaches and investment in green issues. If this “green” strategy is well executed “it could mean a focus on people,” so it is a good place to go as a private investor.

There are opportunities, he explained, with the caveat that retail investors are seeing a “difficult dichotomy” between market euphoria and the reality of unemployment and a number of other indicators that serve to ground us where were we really are. Because of this, his advice to investors is that “we ought not to be led by either pessimism or euphoria, but rather we should seek guidance” from trusted analysts.