This is our global strategic vision for investment in the various assets and geographical areas in 2019 based on the economic context we expect.
In the United States, growth moderation to 2.7%, with two interest rate hikes by the Fed. In Europe we have a negative position regarding fixed income and moderately positive for equities. In Spain, after a steep rise in the risk premium, the Ibex 35 offers some bullish potential. The trade war in China remains the main risk and in India we expect a macroecomomic impact in the fintech sector with the shift towards a complete digital payment system.
Business margins are probably close to their cycle peaks. This, which is usually a sign of maturity, does not mean that there can’t be any more profits. The market therefore tends to punish companies that defraud expectations. Our vision for S&P 500 is Neutral-Positive with midpoint in 2,800 points and exit point in 3,080.
Stoxx 600 Europe: POSITIVE, Midpoint: 370; exit: 407. IBEX: POSITIVO: Midpoint: 9,600; exit:10,500. Mercados emergentes: POSITIVO. Our preferred markets are Asia (Japan, India, China) and Brazil.
Our base scenario includes two interest rate hikes in 2019, with the Fed being increasingly vigilant to signs of a growth slowdown and ready to adjust its policy bias. In Europe we anticipate that the interest rate of deposits will begin to return to the level of 0% during 2019, with the first rise around September. The quantitative easing programme expires in December 2018, despite which reinvestments in 2019 could be around €185 billion. The target for the Bund is 0.9%. We remain cautious about the debt of peripheral countries of the euro zone, whose valuation level we consider excessive. After the 2018 correction, we anticipate positive returns for emerging market bonds.
Corporate debt spreads seem excessively squeezed, especially among lower-rated securities with speculative category (B- and CCC), whose risk premium is currently at historic lows. The speculative ratings segment (HY), under strain due to the strong interest of investors in the yields and differentials in the fixed-income markets, seems quite tight compared to the investment category (IG). We maintain the negative attitude towards corporate debt in euros and set our objectives for the IG and HY indices in euros at 92 basis points and 350 bp, respectively. We are more positive regarding IG corporate debt in dollars, setting our target for the CDX IG index at 85. Our position is more neutral-negative on the CDX HY index, with a target of 490.
The G4 reserve currencies (ex-USD) continued with their tendency to extend the short positions, and the recent market volatility did not result in a change in this trend in the non-US reserve currencies. However, the dollar remains the main beneficiary in the accumulation of positioning, mainly against the yen, the Swiss franc and the euro (which are sold). We continue to favour the dollar against the euro, the pound against the dollar and the Swiss franc against the euro.
Energía: Neutral. We estimate for the West Texas crude a justifiable price due to fundamentals of around $50 for the WTI. Some factors could keep oil prices depressed in 2019: the harsh test facing the Russian-Saudi alliance; predictable moderation in demand and a higher than expected supply of Iranian crude oil.