“We like Amadeus, ACS, Ferrovial, Rovi, Coca-Cola, BBVA and Repsol”

– There seems to be no sign of inflation disappearing at the moment, can we see a slowdown in the economy sooner or later?

We believe that the rate of inflation in general has peaked. It is more clearly seen that what is normal rate, not so much in core rate, but still if we consider that in general, in coming months, we will not see high inflation and it will gradually come down. Will start happening If it’s true that it’s costing and paying the price as a result, well, that would mean that central banks will keep rates high for a relatively long period of time, although they may soon be lowering interest rates. Reserves have probably already reached their cycle high and the ECB will do so within two more hikes. We do not expect a rate cut during this year. What this means for the economy is that this whole process of raising interest rates and the risk of a recession in the United States in the second half of the year is really strong pressure, we don’t expect that in Europe, but the United States In, it’s high. It’s our central scenario, that there could be some sort of recession in the second half of the year or at least a period of very weak growth or stagnation in the United States economy as a result of the process we’re in. Increase in interest rates. This is the risk we see in the markets in the second half of the year.

– Second half of the year in which they expect recession, can this recession lead to economic crisis? Are investors worried about this? Has investors’ outlook on market volatility changed?

Investors are actually quite cautious. If we analyze all the surveys that exist on the position of investors in recent months, we find a very defensive position, both due to maintaining the level of liquidity, the relatively low risk to the stock market, even That even in fixed income they focus too much on short time frame. All this means that investors are not really expecting a definite downturn in the economy, which, on the other hand, may be more delayed than before. Another issue is how the market is behaving, sometimes these contradictions rarely occur, and in terms of investor pessimism we find that the stock market is starting to rise, somewhat post-Oct. has happened in recent months. The markets rebounded, more so in Europe than in the United States, but a general rebound despite this context of pessimism. Well, that’s a feature of the market, sometimes you anticipate things and they just don’t turn up. Perhaps it would also be a factor to think that the stock market would have a hard time going down, which is to say that unless it is believed that the economy is actually entering a recession, if it does, it is possible. That the stock market will hold because ultimately, it’s not certain that we’re going to see this downturn in the economy.

— until they see this downturn in the economy and what we’re seeing, what you say, that the stock markets are rising, especially in Europe, they haven’t seen that downturn in business results, at least if we look at those Focusing on the results of the Ibex 35 listed companies that are coming to an end, how does Cingular Bank assess the figures that the companies have given and in particular the forecasts that they have given for the rest of the year?

In general, the profits that have been published in the first quarter, both in Spain and in Europe or the United States, have exceeded forecasts. It does not mean that, if we compare the results of a year ago, which is Q1 2022, it shows that we are now in the phase of some adjustment in the results. In year-to-date rates, well, what they’re talking about is stagnation, zero or slightly negative growth, and well, there’s normally a process behind it, you see some downward revision in these months The process is seen in profit forecasts that have been even clearer and more intense in the United States and not so much in Europe. In this sense, we believe that over the next two quarters we are going to continue in a context in which profits will continue to trend slightly downward, even if these forecasts are exceeded and it may also be concluded that It can be seen that the outlook on the profit side is not cloudless either. Basically, something similar will happen to what we see in the macroeconomic part. There is a resilience to falling profits, but nevertheless over the next two, three quarters we believe this definite adjustment will continue despite the fact that, particularly in some parts of the market, we’ve seen pretty solid results.

— Despite all the results you said were solid, Cingular Bank is underweight in equity. Do you recommend leaving the stock market 100% and what percentage do you think should be in the portfolio? What kind of sectors and companies do you have?

We are underweight equities, but that certainly doesn’t mean we recommend leaving the stock market. For us, being underweight means, for example, in a portfolio with a moderate client profile that would have a typical position of 50% in equity, 50% in fixed income, being underweight, as we are now, in stocks There is about 40% in the market and 60% in fixed income or liquidity. In other words, this is the minimum risk we would recommend for a medium-profile client to have in the stock market. If you are a client with a riskier profile where it is normal to have 80% in equity, we would now be better at 70% or around 65%. That is, it is about fluctuating slightly up or down what is the average exposure that each customer should have as per their profile. With respect to sector-wise positioning, we recommend a diversified structure logically and not aggressively exiting a sector or concentrating everything in a specific sector. But to give a little bit of how we would look at the regional outlook, we believe we should be in three big groups. On the one hand, we believe that everything that has to do with the recovery of tourism, especially in the Spanish stock market, remains an attractive part and where you should see not only tourist companies in a broad sense but also those that are related to the recovery of international mobility. benefits little. Another group will be infrastructure, here we will have construction companies, infrastructure managers and electricity. Finally, let’s not forget two sectors that have been heavily penalized recently, but they are two sectors that are very cheap and we believe continue to have good prospects for the coming months, such as the financial sector. and energy sector. Those are the two cheapest sectors of the stock market and we believe they are still very attractive, especially in Europe, where we will see a recession.

– We’re going to delimit the regions a little further. For the high risk appetite investor who wants to have more of the portfolio in equities. What names, what values ​​do you recommend?

We always recommend a global portfolio to begin with, a portfolio that includes the United States and Europe or Asia, depending on the profile of the client. For someone, for a Spanish stock market investor, what they know the most and the name sounds more familiar to them, to link it a little bit to the areas that we’ve commented on before, what values ​​do we focus on in this Can do way now. Well within the infrastructure and tourism portion, we would include Amadeus in this reduced portfolio, maybe within the tourism related companies this is one that we believe is a little more focused on global tourism, it’s really Takes advantage of the recovery of nearby tourism. The world and you don’t have the risk of Spain getting a little better or a little worse. In infrastructure, Amadeus would be an obvious start, as both ACS and Ferrovial are two companies benefiting from the reopening of the airports they manage, increased traffic on both highways and airports, and their from the development model. Inside, then what would be a little more defensive part, the portfolio should always be a little bit of everything in basic consumption or health areas to compensate, we would recommend to be in Coca-Cola European Pacific Partners, it’s a very stable company, With Rovi Laboratories continuing growth and a strategy to continue growing around the world and within the pharmaceutical sector, we believe it currently has a very attractive valuation. Finally, in that part, let’s say more penalized and cheaper, energy or oil banks. In this case, we’ll stick with BBVA. Within the banking sector, we believe that its positions in Mexico and Spain work very well. is doing, it’s got very attractive valuations and probably that we like it better with these current prices and Repsol because we believe that given current oil prices and what we expect for the coming months, its very Has attractive valuations and very high returns for investors.