Le ragioni per mentirvi e il soft landing
Ad un mese dall’invasione dell’Ucraina, se guardiamo ai mercati finanziari internazionali i dati forti che richiedono attenzione sono due:
il generale rialzo dei rendimenti obbligazionari, ancora più ampio sulle scadenze a breve termine (2 anni) rispetto a quello che ha interessato le scadenze lunghe (10 anni e 30 anni)
il rafforzamento del dollaro USA, che ha rotto la soglia psicologica di 1,1000 contro euro
Nella nostra strategia di portafoglio, e quindi nei nostri portafogli modello, queste due posizioni sono ben rappresentate, sia per varietà sia per percentuale.
Nel mese di guerra in Ucraina, invece, per quello che riguarda le Borse c’è ben poco di rilevante da segnalare: elevata volatilità, fortissimo aumento dei rischi, ma alla fine i livelli sono solo di poco più bassi di quelli di un mese fa. Ma ci sarà tempo, ovviamente.
Come abbiamo spiegato in settimana, nel nostro The Morning Brief, oggi le Borse hanno perso ogni importanza, nel quadro dei mercati finanziari internazionali: non possono più muovere in modo autonomo, e devono semplicemente riflettere quello che accade in altri comparti del mercato internazionale. E quindi, almeno in questa fase, non perdiamoci altro tempo.
Ritornando ai tassi ed alle valute, è inevitabile scrivere di Banche Centrali: anche le Banche Centrali, come le Borse, hanno perso ogni autonomia di movimento. Non possono più decidere nulla.
Possono soltanto parlare: ed infatti parlano, e parlano moltissimo. Parlano per persuadere, convincere, fare vedere quello che non esiste. Esattamente come fecero, fino a sei mesi fa, con la “inflazione transitoria”.
Oggi che cosa ha preso il posto della “inflazione transitoria”? Il tema di oggi si chiama “soft landing”, ed è quindi un “atterraggio morbido”, da intendersi come atterraggio morbido di una economia che (lo dice l’espressione medesima) soffre di un grave guasto.
L’economia che ancora nell’autunno scorso volava, quella che tutti (o quasi) descrivevano come “in grande salute”, e “protetta da ogni rischio” grazie alle “manovre di stimolo delle Banche Centrali”, oggi è costretta (ce lo dicono i banchieri centrali) ad atterrare. Un atterraggio forzato: la sola cosa che i banchieri centrali possono augurarsi, è che sia “soft”, ovvero “il meno doloroso possibile”.
Anche questa volta, finirà come per l’inflazione “transitoria”. Anche questa volta, i banchieri centrali stanno mentendo al pubblico?
Il Wall Street Journal, questa settimana, con i grafici che seguono e con il testo che leggete qui sotto, ha illustrato le grandi incertezze che pesano sullo scenario di “soft landing” che le Banche Centrali oggi promettono.
Soft Landings, Past and Future: The Fed points to historical episodes when it raised interest rates without causing a recession. Today inflation is higher and the job market tighter.
Federal Reserve Chairman Jerome Powell explained this week what he and his colleagues hoped to accomplish with the interest-rate increases they initiated last week. “The economy achieves a soft landing, with inflation coming down and unemployment holding steady,” he told a conference of economists.
In 1965, 1984 and 1994, the Fed raised interest rates enough to cool an overheating economy without precipitating recession, he noted, adding it may have done the same in 2019 but for the Covid-19 pandemic.
Unfortunately, history isn’t on his side. Inflation is much further from the Fed’s objective and the labor market, by many measures, tighter than in previous soft landings, yet the Fed starts with real interest rates—nominal rates adjusted for inflation—much lower, in fact deeply negative. In other words, not only is the economy already traveling above the speed limit, the Fed has the gas pedal pressed to the floor. The odds are that getting inflation back to the Fed’s 2% target will require much higher interest rates and greater risk of recession than the Fed or markets now anticipate.
The biggest contrast with prior soft landings was that in the past, the Fed sought only to keep inflation from going up—not to actually push it down. Today, though, it starts with core inflation, which excludes food and energy, above 5% using the Fed’s preferred price index, more than 3 percentage points above target.
History and the Fed’s own models are pretty clear: When inflation is too high, pushing it down requires damping demand and pushing up unemployment so that workers and firms must settle for lower pay and prices. Yet the median projections released by Fed officials show no such thing: They anticipate core inflation falling to 4.1% at the end of this year, 2.6% next year, and 2.3% in 2024 while unemployment stays near a 50-year low of 3.5% to 3.6% for the entire period.
Questo nostro Post ha lo scopo di mettervi in guardia dal credere alla storia del “soft landing”: già oggi è possibile leggere, nei dati e nelle notizie, quale sarà lo sviluppo degli eventi nelle prossime settimane e mesi.
E lo sanno anche alla Federal Reserve, ed alla BCE, ovviamente: a differenza di Recce’d, però, la Federal Reserve e la BCE soffrono di un (grave) conflitto di interessi.
In teoria, Federal Reserve e BCE dovrebbero servire “gli interessi del pubblico”, ma nella realtà, come ci dimostrò Mario Draghi alla BCE e come ci dimostrano oggi Lagarde e Powell, le banche centrali sono istituzioni (oggi più che in passato) politiche, che fanno scelte politiche e quindi avvantaggiano e privilegiano alcune parti della società e dell’economia su altre parti.
Questa è la sola spiegazione che vi serve, per capire “come è possibile” che nel 2021 TUTTI i banchieri centrali si siano sbagliati sulla “inflazione transitoria”. Ed allo stesso tempo, per comprendere perché, oggi, vi vogliono “vendere” la storia del soft landing. Una storia che non poggia su alcun elemento concreto: è solo un sogno, una aspirazione.
E noi, investitori consapevoli, dobbiamo sempre ricordare: “hope is not a strategy”.
Il conflitto di interessi, del quale abbiamo fatto cenno solo poche righe qui sopra, è spiegato alla perfezione dall’articolo che vi offriamo qui sotto: nel quale si sottolinea che la Federal Reserve oggi NON FA neppure quello che lei stessa, la Federal Reserve, dice che bisognerebbe fare (e la medesima cosa deve essere detta della BCE). Come è possibile? Mentire sapendo di mentire?
21 marzo 2022, 12:00 CET
Clive Crook is a Bloomberg Opinion columnist and member of the editorial board covering economics, finance and politics. A former chief Washington commentator for the Financial Times, he has been an editor for the Economist and the Atlantic. @clive_crook
The Federal Reserve embarked last week on its long-advertised monetary tightening: a quarter-point increase in interest rates, with the suggestion of six more by the end of the year, and a plan to run down its stock of government debt (details to follow). This was widely expected and essentially a non-event.
Much more interesting was the way Fed Chair Jerome Powell explained what the central bank was doing. This was downright puzzling, and it raises some questions about what comes next.
Inflation stands at a 40-year high and keeps exceeding the Fed’s projections. Its new forecasts show inflation at 4.3% at the end of this year, 1.7 percentage points higher than it projected three months ago. Yet the policy interest rate is projected to be only 1.9% at year’s end — an increase of just one percentage point over the previous projection, and still significantly below what most economists see as the “neutral rate” (neither adding to nor subtracting from demand) of 2.5%.
Powell therefore needed to say why policy was shifting so slowly, bearing in mind that inflation has already risen further and more persistently than the Fed expected and that the Russia sanctions shock will make things worse.
Here’s a good rationale: The interest-rate plan splits the difference between economists who want to keep rates close to zero to avoid tipping a fragile recovery into recession, and those who think the Fed has let inflation run out of control and want more forceful corrective action.
There’s much to be said for this middle course. The outlook is uncertain and the Fed has to contend with upside and downside risks. In addition, if the Russia shock is mostly on the supply side, as seems likely, monetary policy should mostly ignore it, for the same reason it was right to ignore the rise in inflation due to the supply-side part of the Covid shock. Central banks, according to the standard view, should “look through” temporary fluctuations in supply.
So the message might have been: Yes, demand is trending a little high, so tightening shouldn’t wait any longer. But let’s be careful not to overdo it.
Powell didn’t strike this balance. Asked about the downside risk, he said this:
[T]he probability of a recession within the next year is not particularly elevated. And why do I say that? Aggregate demand is currently strong, and most forecasters expect it to remain so. If you look at the labor market, also very strong. Conditions are tight, and payroll job growth is continuing at very high levels. Household and business balance sheets are strong. And so all signs are that this is a strong economy and, indeed, one that will be able to flourish, not to say withstand but certainly flourish, as well, in the face of less accommodative monetary policy.
Does this kind of economy really need another year of (admittedly diminishing) monetary stimulus — or “accommodation,” as Powell calls it? In effect, he is arguing against postponing tightening yet again, as though the view that it’s already been delayed too long isn’t worth mentioning. But this view is both widely held and increasingly plausible.
Powell was directly asked whether he believed the Fed had fallen “behind the curve.” The questioner reminded him that he’d told a Senate committee earlier this month that if the Fed had known earlier what it knows now about the path of the economy, it would have begun to tighten sooner. Powell answered that perfect hindsight isn’t much help in setting forward-looking policy. That’s true, but beside the point. If the Fed, knowing what it now knows, would have tightened sooner, then it has ground to make up, and it should be raising rates by half a percentage point or more, not a quarter of a point.
Economists who think the Fed has a lot of catching up to do are entitled to be puzzled. They heard the central bank say it agrees with their analysis but for some reason isn’t going to do what that analysis demands.
One wonders whether the Fed might have acted differently last week if it hadn’t spent so much time coaching markets to expect the gentlest possible start. That seems quite likely. And the possibility draws attention to a persistent problem with the Fed’s communications.
Its commentary and projections set policy expectations too firmly — expectations that the Fed then seems reluctant to disappoint. Reading the Fed’s so-called dot-plot of future interest rates, investors penciled in six more quarter-point rises by year’s end before Powell had stopped talking. What the dot-plot projections actually say is that the Fed’s policy makers are all over the place on what should happen to interest rates. The spread of estimates for the fourth-quarter policy rate ranges from 1.4% to 3.1%, and none of these numbers, I’m willing to bet, was offered with much conviction. It’s a huge mistake to let the median estimate — 1.9%, implying six more increases of 25 basis points — guide expectations as much as it does.
When the future is uncertain — and it’s rarely been as uncertain as now — why invite investors to make false assumptions, especially when that might limit the flexibility you’re likely to need? The Fed should take a good hard look at how it talks to the markets.
Durante la settimana, nel nostro The Morning Brief che è riservato ai Clienti, abbiamo in dettaglio esaminato le ricadute sulla strategia di investimento di questo stato di cose, molto complesso, ed estremamente incerto: in estrema sintesi, si tratta di sapere distinguere tra la verità e le menzogne. Non c’è qui lo spazio per una analisi di dettaglio, sulle singole posizioni dei nostri portafogli modello oppure sui singoli mercati finanziari. E tuttavia, abbiamo selezionato per voi un ottimo articolo, che segue qui sotto, nel quale si mettono in evidenza le principali implicazioni per i mercati finanziari, e per noi investitori. Più in basso, vi regaliamo alcune delle nostre conclusioni.
In Congressional testimony on March 2, Federal Reserve Chair Jerome Powell said that “it is more likely than not” that the central bank “can achieve what we call a soft landing” in the economy. In other words, he believes that the Fed can raise interest rates enough to get raging inflation under control without forcing the economy into a recession. The odds that Powell can pull that off are getting longer by the day.
History shows that when the central bank increases rates, a recession is almost assured. The Fed’s 12 rate-raising campaigns since the early 1950s resulted in 11 recessions, with the only exception coming in the early 1990s. What makes the Fed’s job extra hard now is that the inflation rate is so high. “To the extent that inflation comes in higher or is more persistently high than that, we would be prepared to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings,” Powell told lawmakers.
Increasing the odds of a recession this time is the Fed’s plan to reduce the almost $9 trillion of assets on its balance sheet after it stops buying U.S. Treasury and mortgage-backed securities this month. Those assets have risen $4.8 trillion since the pandemic commenced in early 2020. Powell said the reduction will be conducted “in a predictable manner,” largely through letting obligations it owns mature rather than outright sales. Nevertheless, this is a big reversal from the $140 billion in asset purchases it had been making each month to support the economy through the pandemic.
Another sure sign of a recession is an inversion of the so-called yield curve, which happens when the interest rate on the 2-year Treasury note rises above that on the 10-year note. An inversion makes it unprofitable for banks and other financial institutions that borrow through deposits and other short-term markets while lending at longer maturities. That restrains lending and thereby depresses business activity. At present, the 2-year yield is 1.53%, still lower than 1.84% 10-year note yield, but the spread has narrowed from 1.07 percentage points on Dec. 31 to just spx0.27 point.
The Fed is between a rock and a hard place. If it backs off tightening monetary policy, it risks persistent inflation, spurring buyers of goods to expect more of the same, so they buy ahead of need. The result is pressure on inventories and production capacity, leading to further price hikes. That confirms expectations and induces more pre-buying, generating a self-feeding inflationary spiral. Such was the case in the late 1960s and 1970s.
Major stock indexes are down anywhere from 8% to 15% this year. In recessions following significant credit restraint and yield curve inversions, the average drop in the S&P 500 Index has been 36% in recent decades. A similar plunge or greater is likely, given the extremely high level of equity prices as well as rampant speculation. It would take a 55% drop in the S&P 500 from here to bring the cyclically-adjusted price-to-earnings ratio back to 17, which is its average over the very long term. And bear markets usually overshoot on the downside just as bull markets tend to exceed rational extremes. That’s especially true when the previous bull market was saturated with speculation – just like the latest one.
Robinhood Markets Inc., the darling of aggressive but green investors, plunged in the last half of 2021, and another 12% in January after reporting a $423 million loss in the fourth quarter. Bitcoin continues to be very volatile along with the overall stock market, typical of the opening stages of major bear markets. SPACs, with no sales or earnings and only the hope of merging with viable companies, are reminiscent of the dot-com companies of the late 1990s, which was followed by a Nasdaq plunge of 78%. Almost half of all startups with less than $10 million in annual revenue that went public last year through SPACs have failed or are expected to fall short of the 2021 revenue and earnings targets they provided to investors, according to a survey by The Wall Street Journal.
In this environment, investors should be extremely cautious. Stocks are still overpriced and vulnerable. Bond investors are worried about inflation. We may be entering a time when cash is king.
Dal punto di vista pratico, ed operativo, e quindi con riferimento alla gestione del portafoglio titoli, a nostro giudizio lo spunto più interessante sul tema di questo Post lo ha offerto in settimana l’articolo che segue, e che chiude il nostro Post.
In questo articolo, Mohamed El Erian spiega le ragioni (forti) per le quali le economie ed i mercati finanziari occidentali sono stati precipitati, dopo il 2020, in una situazione che per numerosi aspetti somiglia alla situazione nella quale si trovarono molti Paesi Emergenti nei decenni precedenti.
Vi suggeriamo di rifletterci: noi lo abbiamo già fatto (già nel 2020, e anche nel Blog) ed abbiamo quindi adeguato la nostra strategia di investimento, che appunto è basata sul fatto che il comportamento dei mercati finanziari, in Occidente, avrà sicuramente alcune somiglianze con quello dei Mercati Emergenti nei decenni precedenti.
Per moltissimi, sarà una enorme sorpresa. Non per i Clienti di Recce’d.
22 marzo 2022, 10:30 CET
Judging from price movements on Monday, the Federal Reserve risks slipping further into a no-win interaction with markets that is more familiar to developing countries that lack policy credibility than to a systemically important central bank — let alone the world’s most powerful one. Absent a quick reestablishment of its inflation credential, something that the markets doubted again on Monday, the Fed would face even more of a no-win policy paradigm that would cause what, only a few months ago, was avoidable harm to livelihoods in the U.S. and beyond.
This unfortunate sequence is painfully familiar to some developing countries:
First, through a misdiagnosis of the economic situation or policy inertia or both, the central bank falls behind inflation realities and erodes its inflation-fighting credibility.
Second, swallowing its pride, the central bank acknowledges that inflation is too high, toughens up its policy narrative and embarks on the needed measures.
Third, rather than be reassured by this (albeit late) change, markets run further away from the central bank and signal the need for even more aggressive policy measures.
Fourth, the central bank finds itself in the dilemma of either risking a recession by validating the ever-more hawkish market pricing or seeking to minimize such damage, often unsuccessfully, by enabling high and potentially more destabilizing inflation to persist even longer.
With this sequence in mind, consider what happened on Monday, less than a week after the Fed’s top policy-making committee raised interest rates by 25 basis points and signaled further increases.
In a presentation to the National Association for Business Economics, Chair Jerome Powell tried to restore the Fed’s eroded inflation-fighting credibility by signaling that the central bank is willing to increase interest rates by 50 basis points in May, repeat that at other meetings and continue raising past the neutral level in a bid to meet its inflation objective. Yet nominal market yields, the yield curve and inflation breakevens were far from reassured. Instead, they moved further away from the Fed.
While Russia’s invasion of Ukraine has amplified the Fed’s policy challenges, the hole it is in is of its own making, and that was illustrated by Monday’s developments.
Despite ample evidence to the contrary starting almost a year ago, the Fed stuck to its “transitory” characterization of inflation until the end of November — what I called months earlier one of the worse inflation calls in the history of the Fed. Even after it belatedly “retired” the word from its vocabulary, the Fed kept its foot on the accelerator of policy stimulus. To illustrate the extent to which its policies remained misaligned, it was still injecting liquidity through its asset purchases earlier this month, including the week in which the February reading for U.S. inflation came at 7.9%.
For many months, I have been arguing that the Fed should come clean on why it got the inflation call so wrong, explain how it has improved its understanding and forecasting of the current inflation dynamics, immediately stop its liquidity injections and start its interest rate hiking cycle. The idea was to ease off the accelerator and start tapping the brakes softly instead of having to do what the market is asking for now and Chair Powell acknowledged on Monday: Having to hit the brakes a lot harder.
That was then. What about now? Is there still an optimal policy response for the Fed?
I worry that, being so late and having lost so much credibility, the Fed is far away from the policy world of “first bests.” Rather than having a way to contain inflationary expectations, cause no undue damage to the economy and meet its dual objective, the Fed is increasingly being forced to consider what is the least bad policy mistake it wishes to be remembered for: meeting its inflation target by causing a recession, or allowing high and potentially destabilizing inflation to persist well into 2023.
This awful trade-off is familiar to too many developing countries. And one of their typical reactions may also shed light on what may be tempting for the Fed: simply hope for an immaculate recovery — that is, some mix of consequential productivity gains, quick-healing supply chains, surging labor force participation and continued financial market resilience to pull the central bank out of the deep hole it has dug for itself.