The Economy
New episode of geopolitical turbulence
- On Saturday, 28 February, the United States and Israel carried out coordinated attacks against Iran, triggering a military escalation in the Middle East following the swift removal of the regime’s political leadership.
- Consensus estimates point to an intense but relatively short military intervention, with its main impact likely to be an increase in oil prices, heightened volatility in equities, and a rotation of investment flows towards safe‑haven assets (gold, the US dollar), as is customary in events of this nature that qualitatively increase uncertainty and affect risk premia across all asset classes.
- This consensus view is supported by the limited capacity of the Iranian regime to confront the overwhelming military superiority of the US–Israel alliance, as well as by the complete absence of support from other countries in the region. Furthermore, a rise in oil prices is not in Washington’s interest either, as the midterm electoral cycle will begin in just a few months.
- At EDM, we maintain our constructive medium‑ and long‑term outlook and reiterate the importance of holding a portfolio focused on high‑quality assets, combined with genuine strategic diversification.
- The central scenario for 2026 continues to be one of moderate global growth, with relevant divergences across regions and an inflation path that continues its normalisation process, albeit unevenly.
- In the United States, economic activity remains solid, still supported by private consumption and corporate investment linked to digitalisation and artificial intelligence. However, early signs of increased caution are emerging in the labour market and in several leading indicators.
- Europe continues to show a more fragile recovery. Germany remains reliant on structural reforms to revitalise its industrial sector, while France faces a demanding fiscal environment. Growth is positive but vulnerable to external shocks.
- Inflation in the United States continues its downward trend, although some persistence remains in service-sector components. The Federal Reserve maintains a prudent stance, balancing the risk of acting too early against the risk of keeping restrictive conditions in place for too long.
- China continues to manage the aftermath of the property-market crisis. The stimulus measures implemented have partially stabilised the sector, but business and consumer confidence have yet to fully recover.
Markets
More dispersion, less euphoria
- The dominant narrative continues to be artificial intelligence, but markets are showing greater selectivity. Following significant movements in previous weeks, dispersion has increased between companies with solid business models and those whose valuations relied primarily on expectations.
- The earnings season confirms the strength of many high‑quality companies, with reasonable organic growth and resilient margins. However, the market is reacting more harshly to any deviation from demanding expectations.
- Sector and geographical rotation is becoming more evident. Returns are beginning to broaden beyond the large US technology companies, supporting greater diversification.
- In fixed income, yield curves remain strained amid uncertainty over the pace of rate cuts. Intermediate maturities continue to offer an attractive combination of yield and risk control.
- Commodities are showing higher volatility. After the sharp increases in January, some safe‑haven assets have consolidated at current levels, reflecting a lower intensity in tactical hedging.
Investment Policy
Discipline and balance in a more selective environment
- The main source of risk remains political: persistent geopolitical tensions, electoral calendars across several major economies, and the transition process in the Fed’s chairmanship in May.
- Portfolios maintain a prudent position in US equities, prioritising quality and avoiding excessive concentration in a small group of large‑capitalisation companies.
- We continue to favour businesses with sustainable competitive advantages, recurring cash generation and robust balance‑sheet structures as the primary tools for risk control.
- In fixed income, we continue to prefer intermediate durations (3–5 years), preserving flexibility to adjust exposure should the market offer opportunities in longer maturities.
- Diversification remains a key element in portfolio construction in an environment where dispersion across assets and styles is increasing.
LEGAL CONSIDERATIONS
1) This information is intended for advertising and informational purposes only. It does not constitute and should not be considered investment advice or legal opinion, nor is it intended to replace the necessary advice in these matters or constitute an offer to sell or a solicitation of an offer to buy.
2) All opinions and estimates provided are based on sources considered reliable. However, EDM Gestión, SAU, SGIIC cannot guarantee their accuracy or completeness and assumes no responsibility for any direct or indirect loss that may result from the use of the information provided in this document.
3) EDM Gestión, SAU, SGIIC warns that past performance is not a reliable indicator of future results.
4) EDM Gestión, SAU SGIIC is a Spanish public limited company registered in the Special Register of Management Companies of Collective Investment Institutions of the CNMV under number 49 and in the Madrid Commercial Registry, volume 36,739, folio 52, sheet M-658.326, with tax ID: A-58.217.175. Its activities include, among others, the representation, management, and administration of Funds and Investment Companies domiciled and regulated in Spain, as well as discretionary portfolio management.
