Tariffs and latent war, bad combination, despite the fact that the market continues stern wind on either side of the Atlantic. How do you see the situation for investors?
Let’s see, what is the war in Ukraine, because I believe that … Let’s see, I was going to say that it is more or less discounted, I think it is a war that is difficult to find in the end. I think it has little impact on the markets, or at least less impact than what is the commercial war, because if we focus on the tariff war, The funny thing is that investors have already celebrated the end of the commercial war. In fact, when last week there was the ruling of the Trade Court in the United States, it was already like the end of the war.
And you have to remember that the tariffs are still on the table. I believe that there is a certain optimism or too much optimism from investors regarding this issue, because even if we look or if we compare tariffs before the day of liberation and tariffs, which we will probably have, that It must also be said that it is a great unknown, because there Donald Trump can leave at any time with an exorbitant proposalwhat we have and compare the tariffs before the day of liberation and the tariffs that we will probably have, we will have more tariffs than before the day of liberation, some higher tariff rates, and that in principle is not good for the market. But the market, for the moment, seems to discounted the tariff situation, but we must remember that tariffs will have an impact.
I am not so sure about inflation, because there are many debates about whether the tariffs are inflationary or not, but it will have an impact on less economic growth, that is yes or yes, and of course, that lower economic growth that is already noticeable in the beige book of the Fed even in the macro box of the Fed, that lower economic growth can have an impact on the bags, but I repeat, for now it seems that it seems that we can see In New York, and it is true that feeling is very positive.
Then I do not rule out that we are going to see prices superior to the previous maximums in the American stock market, but I repeat, The situation is complicated, and that is enough to look at the long -term interest rates in the United States to realize that the situation is not as buoyant as, maybe, it paints the bag. We have there some interest rates that cost you to lower the current levels and there it could also have a negative impact on the bag.
It seems that technology wins again traction in the market after months down, can it be a second life for this sector that rose so long?
Yes, it is true that it is a creak since the beginning of the year, it has also had a fairly good recovery in recent weeks, but we think that if we look at the great American technology that the segment is correctly valued. There are no great opportunities at the sector level. It is true that, at the level of individual companies, there is there I believe that good opportunities in Alphabet-A-type companies, Microsoft we see it a bit expensive. We are more in favor of investing in Alphabet than in Microsoft, although technically, because Alphabet or Amazon, for example, do not belong exclusively to the technological sector, but I believe that investors understand that a company like Amazon is a technological company.
There are no great opportunities at the sector level, the American market for us is correctly valued as well as technology, perhaps there are more opportunities in other sectors such as energy, but what must also be said is that this differential of valuation between Europe and the United States has closed with the great advance of European markets, because one could also think that there is also a technological segment in Europe, with ASML HLDG or SAP in Germany.
It is also true to go company by company, we are very positive about ASML, even on the semiconductor sector as a whole, although Nvidia that has presented good results, it is also at these levels correctly valued, but ASML Holding has a rating greater than three stars, which means that it is in purchase territory, it is not infravorated in our judgment. Then there could also be opportunities, at the individual level within the technological segment.
The ECB low types, next station La Fed in the middle of the month. But in your opinion, will interest rates continue to go down to the either side of the Atlantic or the movements will not continue in parallel?
I think the ECB has much easier than the fed, First because inflation in Europe is already below the level of 2%, it is above 2%in the United States, it is true that it is around 2.3%, which is not very far from the objective of the Fed, but of course, the Fed there I believe that it will cost it more than the ECB LOWER TYPES BY THE TARANCELARY.
It is true that, there are discussions about whether tariffs can be inflationary or not and we will see it, after July 9, which is a bit of the date that Donald Trump has placed for already, definitely, to say what are the tariffs countries by countries, sectors by sectors, but clearly the ECB has much easier.
It also has it easier because you also have to look at the price of the euro dollar and there, clearly an overrated euro, I do not know if it benefits the euro zone too much, even if we do a simile with what is happening in Switzerland. Switzerland has the same problem, has a problem of overvaluation of the Swiss Franco compared to the dollarwhich is trying to solve by lowering types, and is going down to such an extent that, a large part of the type curve in Switzerland is below zero, it is in negative terrain, which is something that was unthinkable two years ago seeing negative interest rates again.
I do not say that it can happen in the euro zone, but, clearly the trend is down in terms of interest rates. And, who knows, maybe we can see negative interest rates in the euro zone, it is not crazybecause the macro situation is not excessively bright. It is true that the infrastructure spending project of Germany, defense expense, all this helps maintain the growth of the euro zone, but it is not too brilliant growth. So, seeing more interest rates on the part of the European Central Bank, I think it is most likely, seeing negative types is already another song, but it should not be ruled out.