Tra sei mesi sarà tutto come prima. Proprio come nel 2019 (parte 2)

Come abbiamo scritto (documentando) sia ieri, sia anche qualche settimana fa, sia persino un anno fa, il 2 febbraio del 2020, e dunque poco meno di un anno fa, sul COVID operatori finanziari e venditori di Fondi Comuni hanno giocato in modo cinico, rappresentando ai loro Clienti una prospettiva non solo lontana dalla realtà ed artefatta, ma pure non sostenibile.

Gli investitori finali, sovrastati dalla massiccia campagna mediatica e di disinformazione, si sono fatti convincere di qualche cosa che poi, alla prova dei fatti, si è rivelato essere falso.

In apertura di Post, abbiamo detto che Recce’d ne aveva già scritto, e in tempi non sospetti. Non ripeteremo qui cose già scritte: non serve. Abbiamo già dimostrato tutto ciò che c’è da dimostrare, ed è sufficiente.

Ma per chi proprio non volesse farsi convinto, in particolare sul tema della “relazione tra crescita delle economie ed epidemia di COVID-19”, un tema sul quale le grandi Reti di promotori finanziari e le grandi banche di investimento ancora oggi nel gennaio 2021 giocano gran parte delle loro carte (“con la distribuzione del vaccino, tutto tornerà come nel 2019”9 noi siamo certi di fare cosa utile alla grande maggioranza dei nostri lettori riproponendo in lettura ciò che si leggeva sul Financial Times nel mese di agosto del 2019, e quindi sei mesi prima dell’esplosione dell’epidemia. Gli articoli sono riproposti nella loro forma integrale (non abbiamo tagliato nulla).

Quella che leggete di seguito, descritta dal Financial Times, è la situazione alla quale, se le cose andassero come vi stanno vendendo oggi, si ritornerebbe dopo che è scomparsa per sempre l’epidemia.

Ah … e non ci sarebbe neppure più (peccato) l’intrattenimento del “più grande accordo commerciale della Storia” tra Mr. Trump e la Cina.

Se leggete bene, ma bene bene, con tutta la vostra attenzione, e con senso critico, capirete facilmente una cosa: non è ovvio, arrivare alla conclusione di CHI ha subito il COVID-19 come una disgrazia. Non è ovvio capire PER CHI il COVID-19 è stato, nella realtà dei fatti, la via di uscita per un problema altrimenti irrisolvibile.

Altro che “chi avrebbe mai potuto prevedere una cosa simile!”.

Allo scopo di aiutarvi a ricordare (ah, quanta fatica ricordare, anche soltanto la situazione di 18 mesi fa …) abbiamo scelto di riproporvi anche le due immagini del Financial Times che accompagnavano i due articoli che qui riproduciamo.

Per il resto, beh … vedete un po’ voi che cosa fare.

FINANCIAL TIMES 11 AGOSTO 2019

It’s the calm before the storm.

Last week’s market volatility was ostensibly triggered by the US-China trade conflict turning into a full-blown currency war. But at heart, it’s about the inability of the Federal Reserve to convince us that its July rate cut was merely “insurance” to protect against a future downturn.

As any number of indicators now show — from weak purchasing managers' indices in the US, Spain, Italy, France and Germany, to rising corporate bankruptcies and a spike in US lay-offs — the global downturn has already begun. Asset prices will undoubtedly begin to reflect this, and possibly quite soon. China may have temporarily calmed markets by stabilising the renminbi.

But we are in for what Ulf Lindahl, chief executive of AG Bisset Associates currency research, calls “a summer of fear.” He expects the mean-reversion in the Dow that started in January 2018 to turn into a bear market that lasts a decade. It’s an opinion based on data, not on emotion. There have been only 20 months since 1906 when the Dow’s deviation from its trend line has been 130 per cent or more, as it is today. Those periods cluster rather frighteningly around the years 1929, 1999 and 2018. “US equities are at the second most expensive period in 150 years,” says Mr Lindahl. “Prices must fall.” I don’t think it’s a question of whether we’ll see a crash — the question is why we haven’t seen one yet. After all, there are plenty of worried market participants, as best evidenced by the $14tn horde of negative-yielding bonds around the world. When this many are willing to pay for the “security” of losing only a little bit of money as a hedge against losing quite a lot, you know there’s something deeply wrong in the world (full disclosure — most of my own net worth is now in cash, short term fixed-income assets and real estate).

My answer to the question of why we haven’t yet seen a deeper and more lasting correction is that, until last week, the market had been wilfully blind to three things. First, the fact that there will be no trade deal between the US and China. Both sides are desperate for one but China will only do a deal between equals. Donald Trump is psychologically incapable of accepting this — his entire history demonstrates his need to feel that he has crushed the other side. It’s a pathology that will only increase as the market goes down. Is a global recession on the horizon? We’ve all known this for some time. But I think fear of what Mr Trump might do has been masked in part by algorithmic trading programs that buy on every dip that results from his erratic actions.

This has diminished any lasting signal about the unsustainable current market paradigm. Now, by allowing the renminbi to slide briefly after Mr Trump labelled Beijing a currency manipulator, China has shown that if the US president tries to play tough rather than play fair, it will take down the US markets and suffer whatever pain may ensue. It’s a new reality hard for anyone to ignore. In short, the Thucydides Trap is for real. In lieu of some big shift in US foreign policy post 2020 (one that none of the major Democratic candidates has yet articulated) the US and China are now in a multi-decade cold war that will reshape the global economy and politics.

Meanwhile, the Fed’s decade-long Plan A — blanket the economy with money, and hope for normalisation — has failed. There is no Plan B. That’s why gold is in demand, some hedge funds are putting up cash-out barriers, traders are shorting some investment grade bonds deep in negative yield territory, and we are poised to see the reversal of the last 10 years of capital inflows into US equities and the dollar. Mr Lindahl believes the US currency is now 25 per cent overvalued against the euro. The Fed will undoubtedly try to paper over all this with more rate cuts. But as another savvy strategist, Dave Rosenberg of Gluskin Sheff, has pointed out, “the private sector in the US is choking on so much debt that lowering the cost of credit . . . won’t cause much of a demand reaction.”

As he wrote recently, the term “pushing on a string” was first coined by Fed chairman Marriner Eccles in March 1935 to describe the bank’s inability to create demand via easier monetary policy. It didn’t work then, and it won’t work now. You cannot solve the problems of debt with more debt. And central bankers, well-meaning and desperate as they might be to offset the damage caused by an erratic US president, can’t create real growth; they can only move money around. At some point, the markets and the real economy must converge. I think that point is now. Capital expenditure plans are being shelved. Existing home sales are dropping, despite lower mortgage rates. And perhaps most tellingly, American consumers are cutting both credit card balances and their usage of motor fuel, as Gluskin Sheff points out — two things that are uncommon at any time, let alone in the middle of the vacation season. A summer of fear indeed.

FINANCIAL TIMES 18 AGOSTO 2019

Paradigm shifts tend to happen slowly, and then all at once.

That’s the lesson I’ve taken away from the recent market turmoil. As I wrote last week, the surprise is only that the upset didn’t come sooner. Pundits may have pegged the worst Dow drop of the year to fresh bond yield curve inversions in the US (a historic predictor of downturns) but the underlying signs of sickness in the global economy have been with us for a long time. The question was when the markets were going to put aside the complacency bred by a decade of low interest rates and central bank money dumps, in the form of quantitative easing, and embrace this new reality.

Consider that since January 2018 every major economy except India’s has seen a deterioration in its purchasing managers’ indices. PMIs are one of the best forward-looking indicators of economic conditions for the manufacturing sector, which is a bellwether for overall economic activity. The slowdown in the eurozone has been dramatic — particularly in places such as Italy and Germany, where the economy is now officially shrinking. As strategist Louis-Vincent Gave of Gavekal pointed out in an investor note, the “fingerprints of many culprits can be detected” in the manufacturing sector’s troubles, from an automobile sector facing structural challenges, to the Boeing 737 Max fiasco and its effect on global supply chains, to the lack of any big new product launches in the technology sector, to lacklustre corporate investment, a weak energy sector and a slowdown in China. All that is required is one big sovereign default or a cascade of corporate bankruptcies and we could see the market in free fall.

Politics, of course, hasn’t helped. But again, none of the recent developments have been very surprising. Take Argentina, which suffered a 48 per cent one-day market drop last week after its presidential primary election saw the Peronist opposition comfortably ahead. The question is why investors were, as the old Casablanca line goes, “shocked, shocked!” to find that a country that has been a serial defaulter would swing back to the left. This raises other questions. What might happen in the UK if a general election, before or after a no-deal Brexit, allows Jeremy Corbyn to take power? What might the future of Italy’s turbulent politics hold? What could be the impact of an Elizabeth Warren or Bernie Sanders victory in the US primaries?

As a recent 13D Global Strategy and Research note put it, such events would “fit perfectly into the cyclefrom wealth accumulation to wealth distribution”, which I believe will be the biggest economic shift of our lifetimes. Is a global recession on the horizon? Why is this new reality taking so long to sink in? Because we have spent decades of living in the old reality — the post-Bretton Woods, neoliberal one. Unfettered economic globalisation and years of easy monetary policy have buoyed asset prices and favoured capital over labour, seemingly indefinitely. Our senses have been numbed by trillions of dollars released by central banks, by algorithmic trading programs that buy on the dip and thus diminish the sense of long-term political risk, and by record passive investing.

All this has combined to dampen the signals that are now, finally, blinking red. Witness the recent downturn in bank, transport, and industrial indices, as well as the fall in small-cap stocks, a historic predictor of trouble in bigger companies. At the end of a recovery cycle, capital tends to crowd into large companies and smaller firms suffer. As the markets finally come to terms with increased political risk, currency risk, credit risk, and the growing likelihood of leftwing governments, it’s clear that the shifts and the shocks are coming fast and furious.

No wonder that everyone is now left asking, “What comes next?” The answer, I believe, is very likely to be a synchronised global recession, punctuated by a step-by-step market downturn — one in which there may be the odd rally, but the general direction is down. This could last for some years. In the next few weeks, I would expect new lows in bond yields, a deepening of the yield curve inversion, higher prices for “safety” assets like the yen and swiss franc, and a continued bull market in gold. I would also expect more tough talk from Donald Trump. The US president’s persistent bashing of China and the Federal Reserve will follow any market downturn. There will probably be more attempts by Mr Trump to wrongfoot the opposition, such as the decision to delay new tariffs on Chinese goods until December so that consumers won’t be hurt during the Christmas shopping season. (None of this makes a real trade deal more likely.) Meanwhile, American consumers are already hurting and that could have big implications for Mr Trump’s 2020 re-election campaign. Momentum in job growth in swing states such as Michigan, Ohio and Pennsylvania is slowing. One recent report conducted by liberal pollster Stan Greenberg showed that a third of working-class white women in some conservative areas are starting to turn against the president, irritated by his frequent boasts about the booming US economy. “Maybe in New York City,” said one woman from Wisconsin. “But not here.” For Mr Trump, and the US public at large, the summer of fear may turn into a winter of political discontent.