Markets have priced in a lot of upside potential for the U.S. but not in Europe yet, said vice chairman of BlackRock. According to him, US markets are more richly valued than in Europe and there is a risk about trade policy. There is a great potential in the global reflation and if policy remains centered, the potential for Europe is high.
While acknowledging the threat that European political dynamics could derail his outlook given the upcoming spate of elections in the Netherlands, France and Germany this year, Hildebrand maintained that there was a "good chance" centrist parties would retain the balance of power.
For him, the most critical is the weakness of France as a reliable partner of Germany in all issues related to the euro and European policies. Europe can not function in a long term if there is no really strong relationship between the center of France and Germany, he added.
The biggest issues facing the G20 leaders at this week's summit were the approach of leaders towards finding common language regarding trade and their commitment to support the Basel Committee, which oversees international banking supervision.
"There is upside potential but we have demographics, we have productivity problems, so I suspect we shouldn't get carried away about an extraordinary recovery but instead focus on finally having come out of this deflationary era and seeing some degree of recovery and reflation which should be positive particularly again here in Europe," he asserted.
Source: CNBC
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