The reality is that, fundamentally, this should be interpreted positively. For example, considering the normalization of interest rates should be positive for the financial sector’s valuation. Furthermore, if this is based on the perception that the economy does not require such low interest rates (I am thinking of the Fed), there are even more reasons for confidence to spread to equity markets. Thus, the debt sales we have observed in recent days would be easy to understand. However, the reality is that investors have reduced exposure across all markets, including equities and commodities. The latest known statistics indicate that international investors are once again diversifying positions into equity markets. But these might be outdated as they do not reflect behavior during this past week.
Lack of confidence? Undoubtedly, there is much uncertainty about the future. And I am not referring to economic uncertainty itself
(regulatory, in the case of banking). There is also the uncertainty derived from economic policy management. A clear strategy for monetary normalization, passing the baton to fiscal policy; a clear plan of economic reforms that offer medium-term economic certainty. This, without a doubt, would give investors more confidence. And it would allow correcting the price distortion in financial markets.
Read the full article by the spokesperson in La Vanguardia
