The recovery will continue stably in the United States, but it will be necessary to select well the stocks in which to invest. The positive scenario will also be reflected in Europe, where for various reasons there could be a renewed and high potential to be exploited in the field of investments. This is the view of Cirdan Capital, which recently published a report signed by its Head of Cross Asset Solutions Marco Oprandi.
The restart with the stars and stripes
Despite the pandemic from Covid-19, in all likelihood the recovery will continue in the States United thanks to vaccines. Economic activity will strengthen thanks also to further fiscal stimuli that will act as a reflationary bridge in support of the more cyclical economic sectors. To confirm this, the new president, Joe Biden, has anticipated a $ 1.9 billion stimulus plan for the economy. Following these forecasts, last week there was in fact a significant shift towards the US “Value” sectors, also thanks to the movement of the American yield curve, which began its steepening with the ten-year government firmly now above 1%. The US economy seems well directed on a stable recovery path, supported by the manufacturing and construction sectors, but held back by the sectors most affected by the resurgence of the virus (retail, recreation and leisure).
The expectation is one increase in profits per action that you will see especially on settori “early cycle” dell’S&P 500 and much less on the popular ones FAANG+ (Facebook, Apple, Amazon, Netflix e Google) e sul IT sector which dominated the attention of investors in 2020. Furthermore, the rebound of the economy will bring back a recovery on cash flows giving further room for recovery to the Materials and Industrials sector, on which we remain bullish. We also remain positive on US banks, thanks also to a possible increase in rates, not so much linked to the annual inflation achieved (+ 1.6% yoy), which remains far from the objectives of the FED, but to the inflation expectations extracted from the TIPS; the latter, in fact, have increased significantly since the democratic victory in Georgia overturned control of the Senate and reinforced the prospects for fiscal stimulus.
Indications on investments
“We feel that the point of attention for the evaluations of the actions (and in particular for the level of the evaluations of the Tech which record very high multiples) – suggested Marco Oprandi, Head of Cross Asset Solutions at Cardan Capital – and the level of 1,5% yield of the American ten-year with American real rates returning to zero (given the level of inflation cora at + 1.6%). At this level, some valuations will be tested in the new market environment. We think that financial stocks will finally be able to benefit from the expansionary fiscal policies and the possible movement on rates. It is very difficult for banks, especially American ones, to underperform in this new economic context ”.
“If there is then more selectivity on actions USA, on a geographical level we see instead a new potential onEurope – continued the manager of Cardan – we could see a significant recovery of banks, energy and sectors linked to consumption and tourism that anticipate a normalization of the economic cycle. The same positivity at a geographical level on emerging markets (with bias on Asia), where the revision of expected profits will be particularly significant thanks also to the current persistence of a weak dollar which benefits export economies with the recovery of consumption in developed countries and in part also of China “.