Osservatorio | July 2024
Moderate growth and decreasing rates: the fundamentals support equities, which already rallied well
At a glance:
The nervousness of the markets, manifested by sharp swings in bond prices and swings in share prices, reflects uncertainty about the outcome of monetary tightening
Will it end in a US recession? In reality, the ongoing slowdown in the US is deliberate and necessary to lower the temperature of prices
The US real wage bill is rising at a steady pace due to less erosion of purchasing power from inflation. Even in Europe there are employment records and unemployment is at its lowest level
The Eurozone is slowing down, weighed down by manufacturing, and remains at the tail end of the global convoy, while in Asia, India is hot on the heels of China
Wage dynamics diverge: it remains higher in Europe while falling in the US. Margins suffer from higher cost increases for inputs that outputs
The value of equities on Wall Street has risen much more than nominal GDP: one of many signs of rich valuations of listed companies. However, the indices are dominated by the Magnificent 7, which continue to deliver stratospheric profits
The debate on US stock market valuations continues and European stocks should not be trading at such a historical discount to the US