19 February 2019
Watch as our economists analyse the current state of the economy and markets.
Strong market rally, but we remain cautious
- We anticipate a further growth deceleration in 2019, though it is way too soon to call a recession. Meanwhile, stock markets have started the year on a strong footing on the back of expectations that the Federal Reserve is done tightening and that there will be no escalation in the trade wars.
- However, markets might be a bit optimistic in thinking that no further rate hikes are likely in the US, because we still see the possibility of somewhat higher interest rates in the coming months. In Europe, the ECB will certainly not contemplate monetary tightening, as the economy still needs the support of a loose interest rate policy.
- At the current juncture we don’t want to chase the stock market rally, since the profit outlook doesn’t allow for much higher stock prices. We therefore prefer quality stocks, i.e. those that are less cyclical and volatile.
Watch the analysis of Peter Vanden Houte and Steven Vandepitte.