Sebastian Raedler, head of European equity strategy at Bank of America, believes philosophy can be a valuable tool for understanding financial markets. With a PhD in Kant from the University of Cologne and nearly 20 years of experience in financial analysis, Raedler explains that philosophy teaches the construction of complex thought systems and checks for contradictions, coherence, and inclusion of all available information. Amid high uncertainty, Raedler applies this thinking to his market analysis, concluding that the European stock market is overvalued and reflects overly optimistic economic expectations.\n\nRaedler notes that while the European stock market has risen significantly this year despite volatility and tariff threats, it has likely exhausted its potential. Expectations for earnings and margins remain high, but macroeconomic indicators suggest global growth may slow due to tariffs and uncertainty. Raedler predicts a drop of over 10% in the Stoxx 600 index to 460 points by early Q3 before rebounding to 500 points by year-end.\n\nBank of America remains negative on the European market, citing the need for a risk-reward balance that is currently absent. However, Raedler identifies defensive sectors like pharmaceuticals, utilities, and consumer staples as attractive. He warns that cyclicals like banks, which are sensitive to macroeconomic conditions, could face challenges if central banks ease monetary policy further.\n\nRegarding tariffs, Raedler’s base scenario assumes U.S. tariff rates will reach around 14-15%, reversing fiscal support from recent years. This, he argues, will weigh on global growth, contradicting the current market pricing of accelerated growth.\n— new from Cinco Días
