The latest quarterly survey conducted by the auditor Deloitte to the financial directors of multinational companies based in the United States, Canada and Mexico has shown that 77% believe that the Wall Street stock market is overvalued and about to slow down.
This percentage has grown considerably compared to the previous quarter and has gone from 63% to 77% after Wall Street closed the year with new records in its three main indicators in what has been its best exercise in all history, with a notable increase in the value of the shares of its main companies.
Only 40% of financial managers believe that it is a good time to take great risks in the markets, the lowest percentage that the quarterly survey has recorded since 2015, according to the document.
While top executives are optimistic about the economic moment in the United States and almost 70% believe that the economy will continue to grow during 2020, only 23% believe that conditions will be better in a year.
In this sense, two-thirds of financiers believe that economic growth beyond 2020 will be conditioned by the result of the presidential elections in the US. which will take place on November 3.
What most worries managers is the commercial war and the imposition of tariffs, as well as political instability in a year that seems complicated with the future celebration of the political trial of the president of the United States, Donald Trump, for his possible dismissal, and again, the impact that the holding of presidential elections may have.
The financiers are also concerned about the risk of a slowdown in the economy, which most places at the end of 2020, although 97% do not fear any recession.
The geopolitical factors, which have recently played a key role in the markets after the escalation and subsequent de-escalation of tensions between the United States and Iran, are also disturbing.
It has also lowered concern about interest rates, cybersecurity and “brexit”.
At the same time, they point out that it is also likely that consumer and business spending will slow down, so 82% consider it necessary to take more conservative or defensive measures within their companies such as reducing discretionary and personal spending.
What will move Wall Street in 2020?
Professor Menachem Brenner, of the Stern School of Business at the University of New York, predicts that this year will once again be marked by the trade war between China and the United States, tensions in the Middle East and its impact on the price of oil and the presidential elections.
“And, of course, Trump’s unpredictable behaviour,” adds Brenner, who however is not sure if Wall Street is overrated or not.
“My personal vision is that you can never tell if it is overrated or undervalued. Whoever thinks about it has a 50% chance of being right,” the professor reflects.
Finally, Brenner sees a global economic slowdown that could affect the United States, but although the financial directors consulted by Deloitte put it at the end of this year, the professor says that “it is difficult to know when it will really happen.”