Luca Paolini, chief strategist at Pictet AM, this Thursday outlined a moderately positive outlook for the markets in 2025, although, with stock markets already at highs, it is unlikely that we will see increases of 20% as in recent years. Companies are already trading at very expensive prices in the United States, and Paolini You wouldn’t be surprised if we see a significant correction, despite which they could rise 7% or 8% during the year.. “Compared to a year ago, there is now less room for positive surprises over the next 12 months,” he explained. Regarding the fixed income market, it has potential, but limited. Paolini sees an ideal entry point in the ‘T-Note’ at 5%, but finds it difficult to reach it. Regarding Trump, it may be good or bad for the market, depending on how many of the announced measures he actually implements as the new president of the United States. Eléonore Bunel (Lazard): “The 10-year US bond offers a good entry point at 4.5%.”
With portfolios that are flush with liquidity, what assets offer opportunities to the European investor at the moment? “I, personally, would buy corporate credit, perhaps short term, high yield…because default rates are very low. And perhaps next year I would start buying the European stock market,” Paolini explained. “But I still would not undo positions in bonds to buy the stock market, but rather I would allocate part of what I now have in liquidity to equities,” he warned. The potential in Europe “is limited,” but the fundamentals are relatively positive, “and the cash it remains high because people are worried about the future; If you are afraid, you don’t have children, and you save,” he adds. García (Diaphanum): “2025 will be good for the stock market and for bonds, but it may not be as good as 2024.”
In the United States, the chief strategist of Pictet AM detects a certain fatigue: companies beat expectations with their results, but even so their price barely celebrates it. For their part, eurozone equities are cheap, as is the single currency, although they lack a growth catalyst. The manager prefers the US stock market.
Gonzalo Rengifo, head of Pictet AM in Iberia and Latin America, added some attractive areas for the coming months. “Without a doubt, it is necessary to look towards the energy transition. For the first time in decades, electricity consumption in developed markets is growing. In the United States, the entire electricity transmission network is obsolete, it needs to be renewed. All this linked issues to energy, electricity, data centers, artificial intelligence… When looking at global markets it is interesting to identify these types of major trends, they are value segments within equities.” With them, together with the real estate listed, it is possible to achieve returns of 4% or 4.5% assuming little risk, Rengifo explained.
The Trumponomics are inflationary, deregulation and tax cuts can boost confidence and growth. To make impact estimates we can assume that 50% of what Trump proposed will be implemented in four key areas: international trade, taxation, immigration and deregulation. But so far, the market has only discounted the Trump goodthat is, deregulation and tax cuts. However, there are two major undervalued tail risks: a global trade war breaking out and bond yields rising with concerns about the US deficit. In 2025, US GDP growth may slow to 1.9%.
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