In Beka Finance they were already pessimistic about 2025 before Donald Trump shoots the entire world with his tariffs. In this independent investment firm and financial services, with 20,000 million euros in assets under management, they have already started the year with a probability of recession for the US of 55%. His chief economist, David Azcona, explains that tariffs are the trigger for a cycle change after an exceptional period in which “the world’s first economy was spending everything he wanted and more and was subsidizing growth.” It predicts that the worst of stock market correction is yet to come.
Ask. Its base scenario for 2025 was already a clear risk of recession for tariffs. Is reality even worse than they expected?
Answer. In our base scenario, the risk of recession in the US in 2025 is now 65%. time is gold and if you dilate the situation as the uncertainty of families, companies, governments is dilated and increased … that does a lot of damage. Worldwide. And today another risks is market dysfunction. Many of the strategies were based on the availability of credit, governments and companies quietly, regardless of what happened. And in the last month we have seen that critical point, the fact that the United States saw difficulties in financing, that people escape the dollar. This risk of market dysfunction is also quite important and that is what our prospects has yet worsened. The active market director is almost always credit. If money does not flow in the economy, it is quite difficult to do it well.
P. The 90 -day truce announced by Trump concludes in July. Do you think that at that time the situation may have changed?
R. There is the possibility of a fiscal impulse from the United States superior to that discounted and that Trump says wide is Castilla, despite market fears regarding the sustainability of US debt. The bonds have already sent a signal. And there is also the possibility of a much more friendly agreement than is expected with China, to which we give a probability of between 20% and 30%. But what we say is that this is not just Trump, it is a future strategy. If China tariffs were lowered to 60%, it would be a news, but it is still a great leap, a break in international trade, regardless of the 90 -day truce. In the long term the damage will be severe. We go to a less productive economy, if you close your borders you are staying with producers less efficient than those outside. We go to an economy that has a lower growth potential.
P. Do you see any economic sense to that commercial strategy of Trump?
R. I think that the questions about the US debt would have occurred sooner rather than later. Yes there is a plan, which goes through a progressive climb of tariffs, conversations with the countries, for a continuous communion with the Federal Reserve to try to accompany those inflationary pressures of tariffs with monetary policy … What happens is that the implementation is being in Trump’s manner … Yes there is a plan that I think will be detrimental in the short term, but it will be more beneficial for the United States in the medium term. The consumer supposedly must consume less, but in the long run there should be greater stability within the labor market that allowed this low middle class layer to endure better in the long term. What is ahead is a more volatile status quo, much more closed in which each one looks at their navel and tries to make their nation the most prosperous.
P. That process can last for years, what will happen while with the dollar? Does not disrupt that plan if you lose your condition as an active shelter?
R. At a time when the dollar supposedly should be appreciated, it is not acting as always. But if the central banks buy less dollars they will be shot in the foot. To the extent that they make the dollar fall, they are depreciating all the richness accumulated in reservations in dollars, which is not so obvious that this movement of the exceptionalism of the US is going to continue. It is being seen that they are gradually replacing the dollar with other assets such as gold, but it is finite. And the rest of the economies are not going to let Trump depreciate the dollar as much as he would like. The Yen for example has been appreciated at levels of 141 units per dollar and Japanese companies cannot compete with that.
P. Do you think the market is discounting the recession scenario that you handle?
R. Not at all. Yes there is a correction in the North American market, but this are tickling about what should be happening. At the beginning of the year our objective level for the S&P 500 was 5,100 points and now we have dropped to 4,900. It will be there when the market puts that recession in price. At that level the great opportunities will arrive.
P. And meanwhile, what are they doing with investment portfolios?
R. The opportunity now is to be protected in the shortest part of the bonds of governments and high -quality business companies. We expect declines from types by the central banks, three federal reserve cuts this year. And at the time everyone see that recession scenario, it will be time to be more aggressive in the stock market. Now in April we have re -entered India, because it depends largely on its internal consumption to continue growing, and we have bought Japan, we believe that it is very undervalued in dollars compared to the United States. We also like the health sector and the Central European real estate for the German infrastructure spending plan. Alternative assets such as infrastructure or private credit funds will be much more demanded. They allow to remove volatility from the portfolio despite that cousin of illiquidity. We are supporting wallets with alternative products and multi -school. It is not about buying bag every time it cuts because something has changed in the market and the same wickers of the past do not have to make the basket in the present.
P. What do you think of the Spanish Stock Exchange?
R. The European stock market is doing it frankly well and the Spanish has been favored by the sector composition. But I think that composition is not going to accompany Ibex so much. The utilities have a lot of weight and we will see what happens with them after the blackout. And the banks will lower the types and at some point they have to start discounting that if the economy is not going so well they will have to provide more provisions for delinquency. To the extent that they are not able to contain the descent of margins, they have a problem.
P. Even so, growth forecasts for Spain are good.
R. Until now all of the supranational entities are browning the pill. They tell us that we are going to grow to 2.6% compared to a Europe that will be closer to 0%. But we think that this is not going to be the tendency to the future, because in the end if a German is telling you that the services sector of its country is falling, because you can also question the demand for Spanish services. At some point in this year, investors will assess what capacity each economy of subsist has without the need of others. They will measure depending on that. And when that is the market catalyst, the positive balance of Europe in this first part of the year will be reversed.
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