Il tetto va sistemato d'estate quando c'è il sole
Non è nelle nostre capacità di scrivere una più concisa, più chiara e più utile descrizione dello stato dei mercati finanziari globali nel febbraio 2022 di quella pubblicata sul Financial Times da Mohamed El Erian, che vi riproponiamo in lettura qui di seguito, senza aggiungere commenti che non sono necessari.
Più in basso, riprendiamo il nostro discorso con altri argomenti.
The writer is president of Queens’ College, Cambridge, and an adviser to Allianz and Gramercy
It is tempting to pin the recent volatility in markets only on the fluidity of the Russia-Ukraine situation. After all, every day we seem to get competing indications of a stand-off that confronts Europe with the highest possibility of an armed conflict with Russia since the collapse of the Soviet Union.
After an initial flurry of activity, markets settled into mostly trading the conflict within a range bounded by the hope of an eventual diplomatic resolution and the more protracted period of “no peace and no war”. This has accounted for most of the daily volatility in the main US stock indices in the past few weeks when we have seen swings of 0 to 1.5 per cent.
The stronger moves occurred when markets sensed the possibility of a decisive move towards one of these bookends. After all, depending on which scenario is in play, the global economy would either benefit from a sharp reduction in commodity prices or, at the other end, deal with a major stagflationary shock.
But this should not blind us to two important structural issues that will be with us for a while, almost regardless of how the conflict plays out.
First, markets are losing the anchor of abundant and predictable liquidity provided by central banks. This unifying theme proved an extremely powerful driver to repress volatility, insulating markets from a wide range of worries while driving asset values higher. With a US Federal Reserve belatedly seeking to tackle high and persistent inflation, markets must now navigate a fundamental shift in their liquidity regime. This involves not only higher interest rates but also a contraction in the Fed’s $9tn balance sheet. Equity valuations may be more attractive than they were a few weeks ago but have not reached the level needed to constitute an obvious standalone and generalised investment case to buy stocks.
This is not to say that markets are without anchors. Solid corporate earnings and behavioural conditioning of investors tempted to ‘buy the dip’ are still in play.
But these are inherently less strong and highly sensitive to the Fed being able to deliver an economic soft-landing. The likelihood of this has been significantly undermined by the extent to which the Fed first mischaracterised inflation and then dithered in adjusting policies. Even today with 7.5 per cent consumer price inflation, the Fed is still injecting liquidity into the economy.
I would estimate the probability of a comfortable soft landing for the economy and markets over the next 12 months at 10 per cent, well below three other macroeconomic scenarios.
One is that economic growth is severely damaged by a late Fed that is forced into slamming on the policy brakes in response to persistently high inflation (40 per cent probability).
Another is a Fed that gives up for now on its inflation objective in the hope that exogenous favourable developments will emerge such as a productivity surge or fast-healing supply chains, helping to accommodate rising labour costs (30 per cent).
A third scenario is stagflation (20 per cent), the most worrisome outcome for livelihoods, financial stability and policy effectiveness.
The second structural factor overhanging markets is the structural erosion of market liquidity. The past decade has seen a significant reduction in the risk absorption capacity of markets as intermediaries have been both less able and less willing to expose their balance sheets. This has coincided with an enormous expansion in the size of asset holders who deal through those intermediaries. As such, this mismatch in supply and demand can lead to big market moves. or ‘price gapping’, whenever there is a change in conventional wisdom, a phenomenon that has been visible not only for individual stocks but also for other market segments. Now lacking a strong unifying theme and navigating a wide range of potential macro scenarios without a first best Fed policy option, stocks will remain sensitive not just to the vagaries of the news on Russia-Ukraine, but also other factors such as competing remarks by central bankers and data releases that are significantly different from the median forecast.
This requires investors to anticipate more unsettling volatility and have a strong stomach for dealing with it (remember, many of the major investment mistakes occur at such times). It also warrants favouring individual name selection over indices, and subjecting holdings to granular quality reviews on a much higher frequency basis than has been warranted in recent years.
Tutto spiegato in modo semplice, chiaro, ed efficace. Nulla da aggiungere, a questo proposito: per noi investitori, c’è ben altro a cui guardare OLTRE gli eventi in Ucraina, nel 2022.
Proseguiamo però in questo Post, e portiamo alla vostra attenzione un secondo, altrettanto recente, articolo del medesimo autore, allo scopo di completare per voi il quadro: il precedente contributo vi è stato utile come perfetta descrizione dello stato attuale dei mercati finanziari e delle economie, mentre qui ci occupiamo delle prospettive.
Noi, delle prospettive così come El Erian le qualifica oggi, ve ne avevamo scritto sei mesi fa nel Blog (ed ovviamente, ai nostri Clienti ne abbiamo illustrato tutte le implicazioni per la gestione ottimale del portafoglio di investimenti finanziari).
Ovviamente il nostro amico El Erian scrive meglio di noi, ed è più autorevole di noi: quindi, per quelli tra i nostri lettori che sei mesi fa non avevano prestato la giusta attenzione al nostro argomento, ecco che la lettura dell’articolo seguente, che è un secondo articolo del medesimo autore, pubblicato la settimana scorsa, sarà sicuramente di una grande utilità pratica.
Vi sarà utile perché mentre il vostro private banker, il vostro family banker, il vostro promotore finanziario, il vostro robo-avisor cercherà di convincervi che “tutto dipende da quello che succede in Ucraina”, voi sarete in grado di spostare il vostro sguardo verso quello che davvero a voi interressa. verso i fattori che possono farvi guadagnare soldi oppure perdere soldi, nel 2022 e nel 2023 e nel 2024.
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22 febbraio 2022, 11:46 CET
“Fix the roof while the sun is shining.” This often-repeated advice from Christine Lagarde, then managing director of the International Monetary Fund, wasn’t heeded by enough policy makers in the years before the current rise in Russia-Ukraine tensions. Now, the global economy has less policy flexibility to deal with a possible stagflationary shock, and central banks have few good options to counter possible financial market malfunction that would amplify economic challenges.
The Federal Reserve, the world’s most powerful central bank, is a leading example of this syndrome of limited policy flexibility. Having missed multiple windows for orderly normalization, it finds itself in the midst of rising geopolitical strains with already very low interest rates and a bloated balance sheet. Making things more challenging, the Fed has eroded its inflation credibility and lost control of the monetary policy narrative.
This is a most unfortunate situation in the face of a possible stagflationary shock that would weaken global growth and give another impetus to inflation should a more significant armed conflict erupt between Russia and Ukraine — one that would likely lead to a spike in prices of energy and some other commodities, a proliferation of economic and financial sanctions, and a decline in both household and business confidence. It would be even worse if the functioning of financial markets were to be stressed — regrettably, a material risk for at least three important reasons:
First, conditioned by massive and predictable injections of liquidity, risk-taking has been significant, with quite a few investors venturing far and wide in search of higher returns.
Second, the last decade has witnessed a growing imbalance between the increasing size and diversity of asset holders and the reduced ability of the system to accommodate a sudden generalized shift in the markets’ conventional wisdom.
Third, the QE-induced shift of “safe assets” from markets to central bank balance sheets has limited investors’ ability to “self-insure” in a timely fashion.
The risk of disruptions to the smooth functioning of financial markets is not accompanied by Fed policy flexibility to act. Rates are still floored at zero and the ever-growing balance sheet is already near $9 trillion. As all this coincides with worrisome inflation numbers, be it 7.5% for CPI or 9.7% for PPI. The Fed must also worry about its damaged inflation-fighting credibility.
Lacking proper guidance from the Fed, Wall Street has sprinted to call for, and price, a growing number of interest rate hikes this year. Some have urged for these to be front-loaded. A few have gone as far as to advocate an emergency intra-meeting interest rate increase.
Regrettably, this unfortunate policy context is of the Fed’s own making, both short- and longer-term. Just within the last 12 months, for example, it mistakenly downplayed the severity and persistence of inflation. When the central bank finally acknowledged the need to “retire” its “transitory” inflation call — a gross mischaracterization — it hardly adjusted its policy stance to counter the risk of a de-anchoring of inflationary expectations.
This has weakened its policy reputation and involved the Fed missing one opportunity after another to rebuild resilience. As such, the central bank’s limited tools to counter market malfunction also involve a heightened risk of collateral damage and unintended circumstances. The alternative, of relying on government measures, is far from reassuring given the extent of policy polarization.