Madrid 2,13 EUR -0,01 (-0,37 %)
Madrid 2,13 EUR -0,01 (-0,37 %)

FINANCES | 05.05.2021

“Investors have started to focus more on inflation than on growth”

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Are markets going through a period of consolidation?

Experts seem to be talking about a certain amount of market “exhaustion” after the rises seen over the last few days. Alberto Matellán, Chief Economist at MAPFRE Inversión, considers this to be more a change of narrative. “Until two weeks ago, the main factor was growth, and it seems that the focus has now shifted to inflation.” He pointed out in that indices “aren’t going to rise every day.”

On the US Treasury Secretary Janet Yellen’s warnings of a potential interest rate hike, Matellán stated that what she had done was “articulate what investors were already thinking.” “If there is anticipated growth this year of around 10 percent, it’s normal that rates would have to rise. But these are not normal circumstances, so it makes sense to increase them ahead of time,” he added.

“Consensus forecasts appear to be higher in Spain than in other countries”

This growth in the US economy seems to go hand in hand with upcoming employment figures, which the Fed sees as an accurate bellwether of the macroeconomic situation. The expert from MAPFRE Inversión voiced his certainty that these figures would be good, with everything indicating that unemployment rates would be lower than expected.

Across the Atlantic, PMI figures are strong, although Matellán pointed out one distinctive feature: “We are lagging a little behind the US. Consensus forecasts appear to be higher in Spain than in other countries. Add to this the fact that we are in a recovery process and we can expect several months of positive figures.”

In terms of business, and following the latest trends in renewables, he stressed the profitability of companies. “Renewables have a future, but there are companies that work well and others that don’t. So the important question isn’t whether or not to invest in renewables but rather whether managers are choosing the right investments.”

In this regard, Matellán warned that change was afoot, and that “the economic structure today isn’t the same as it was ten years ago” and noted that cyclical investments could be worthwhile, although there may be doubts about this at a period of growth and inflation such as today.

Ultimately, considering the potential risk of inflation, Matellán recommended that individual investors rethink their goals. “It’s time to talk to advisors and adjust your goals, but not your portfolio.” He also warned that rising prices for raw materials could prove dangerous for small investors.