In the midst of the ongoing conflicts in the Middle East, Peter Berezin, Chief Global Strategist and Director of Research at BCA Research, presents the views that need to be considered in the current environment because uncertainty is hindering economic growth.
Berezin pointed out that money is the best bet at the moment, advising against it money though stocks are rebounding since the conflict that pitted the US against Israel against Iran began in late February, he said interview by David Lin published on April 2.
He added that while the stock may look attractive, valuations remain high at around 20 times forward earnings, while earnings are close to that figure.
Therefore, this leaves the markets in double jeopardy, where productivity and earnings may decrease, especially in the technology sector.
In this area, having extra cash is a management strategy for Berezin who wants to avoid aggressive exposure at the moment, because the risks remain high, instead of keeping money to take advantage of better opportunities if the markets can be bought.
“I like money right now. There’s a lot of risk out there. Stocks are down from where they were earlier this year. <...> So, there is a risk that the P multiple will not only go down, but there is a risk that the big profits that are being made, especially in the current sector, will start to decrease. <…> I would suggest keeping a little extra cash on hand.
Risks of recession
At the same time, the ongoing conflict has raised economic concerns, with technical warnings that there is a possibility that the war could cause problems. economic decline.
In order to achieve this, this has led to an economic risk of about 40% in the United States and about 50% in Europe and Japan, according to Berezin. However, he noted that even if raised, these levels do not make a decline inevitable.
He said there are several things that could still help the global economy, including a reduction in oil prices if the conflict persists, a boost to income for US households, and a reduction in tariffs.
Central banks may also be more likely to cut rates if inflation slows and energy prices fall, while stimulus in Germany and China could provide further support.
However, Berezin said avoiding the collapse will depend on two factors, including ending the oil shock and continuing to invest heavily in manufacturing technology.
The economic slowdown of the AI-related economy would significantly raise the financial risk, regardless of the size of the energy market.
