Fernando González Urbaneja | Santander presented its first quarter results this week. Good in general terms. More business, better margins, growth and the best results without extraordinary items or gimmicks. However, the stock market’s immediate reaction was quite bad, with no explanation beyond a feeling of future problems. And so much because of the bank’s management as because of the general business environment.
The feeling, even perception, of a recovery underway at the beginning of the year has faded with the passing weeks and the addition of bad news. Inflation that lasts and will not go away; a war that is consolidating with an uncertain future and affects energy and cereal supplies; a pandemic that will not die down and that is even worsening in China, causing the closure of major cities and their ports. In short, a panoply of bad news that is pushing towards structural changes in trade flows and calling into question the virtues of globalisation.
The results presentations of the major listed companies for the first quarter of the year are, in general, favourable; they point to a recovery in business and profits; but they refer to the past, close in time, but affected by unfavourable changes in the background. What happened in the first quarter (tomorrow we will have the Spanish employment and GDP data for the first quarter, which will be good) cannot be extrapolated to the rest of the year.
The rebound effect after the pandemic has been clearly felt in recent months in the form of higher household spending after months of savings. It has been felt in tourism with an excellent start to the spring season. But these are past data that will not be repeated mechanically.
What is feared for the immediate future is more persistent inflation; rising interest rates that will hold back investment and spending; a growing sense of uncertainty that will mean difficulties for weak companies that have been hurt by previous crises. In short, existential pessimism that coexists with weak political leadership, and the risk of social tensions due to the dissatisfaction and disappointment of a large part of the population.
In the case of Spain, it is clear that over the last year employment has grown in quantitative terms (not so much in terms of hours worked) and tax revenue is growing as in the good old days. But to conclude from these data, which are more of a rebound than a consolidable expansion, that we are heading towards a period of prosperity may be wishful optimism with little regard for reality. When good results are greeted with disappointment, it is because there is fear for the future.