Corporate earnings season kicks off, what impact will tariffs have?
Redacción Mapfre
At this time of year, the corporate earnings season begins around the world. Publicly traded companies take stock of how the first half of the year has gone, so it will be a good time to see the effect of the economic environment, which in this period has been marked by trade tensions and US tariffs, and all the collateral effects derived from them.
For Alberto Matellán, CEO of La Financière Responsable, there is little doubt that these obstacles to trade will be reflected in the accounts of many companies, although, except in specific cases, the real impact will be difficult to measure. There is a direct effect of the tariffs, which is still minor, but there is also an indirect effect due to expectations, which has led companies - especially in Europe - to change or postpone their decisions.
‘Precise measurement is practically impossible, but the effect is there,’ Matellán summarised in statements made on Wednesday. The executive maintains that now will be the time for active managers and investors to analyse each company individually, and how they are adapting to this environment.
Rising inflation in the US
Where the pressures arising from the tariff disputes are also being felt is in inflation, which in the United States rose in June to 2.7%, higher than expected. For Matellán, inflation in the US ‘is a long-standing problem’, as since Trump's term in office began, consensus forecasts have risen sharply, and tariffs are exerting pressure. But they are not the only factor, he warns, as prices are also being driven by the ‘monetary flood’ of 3-4 years ago, which has still ‘not been digested’.
In this context, the CEO of La Financière Responsable is emphatic in stating that ‘the current macro circumstances do not justify’ rate cuts in the United States. This debate stems from political issues, such as Trump's pressures or the possible replacement of Federal Reserve chairman Jerome Powell, but central banks' decisions must be based on macroeconomic variables, which in the US do not invite a relaxation of monetary policy.
In this context, the CEO of La Financière Responsable is emphatic in stating that ‘the current macroeconomic circumstances do not justify’ rate cuts in the United States. This debate stems from political issues, such as Trump's pressures or the possible replacement of Federal Reserve chairman Jerome Powell, but central banks' decisions must be based on macroeconomic variables, which in the US do not invite a relaxation of monetary policy.
The European Central Bank meets next week and the consensus of analysts does not expect any rate cuts. Along the same lines, Alberto Matellán believes that not even changes can be expected in the speech by the president of the European Central Bank, Christine Lagarde, because there are no economic changes that could sustain it. Europe and the euro zone have less inflationary pressures, ‘but the risk is there’, and rates in the Old Continent are already lower than in the US. Comparing the situation with that of the US, Matellán pointed out that, as far as the ECB is concerned, both its managers and the public debate are more focused on the European macroeconomy, and not on political issues.
Problems in the automotive sector
One of the news of the week on the stock markets has been the cut in profit expectations, or profit warning, made public by the Renault group. Although it is a sector exposed to tariffs, which undoubtedly do not benefit its business, Matellán said that its situation is due to a greater extent to the profound changes that the automotive industry is undergoing. In this environment, he believes that there may be more profit warnings from other companies, but also investment opportunities in those companies that know how to adapt to the new times.
Finally, it was announced that China grew by 5.2% in the second quarter, higher than expected. Despite the weakness of domestic demand in China, Matellán sees a positive evolution in the last year, thanks to the strength of its exports, which will continue to sustain its economy at least in the coming months, and the implementation of government measures that seem to be working.
