La Federal Reserve del 4 maggio 2022: la parola chiave è "credito"

Saremo sintetici, in questo Post.

Non possiamo, ed al tempo stesso non intendiamo, fornire troppi dettagli.

Qui Recce’d vi parla dell’elemento chiave per l’evoluzione dei mercati finanziari nel 2022, e quindi inevitabilmente vi parla della nostra strategia di investimento, di come sono costruiti oggi i portafogli dei Clienti di Recce’d, e di quali mosse di portafoglio stiamo per fare, forse già questa settimana.

Alcune di queste cose, è giusto riservarle ai nostri Clienti, alle persone che con le loro commissioni contribuiscono a sostenere i nostri sforzi e fare crescere le nostre attività.

Al tempo stesso, come sempre abbiamo fatto, vogliamo regalare ai nostri lettori utili elementi di informazione, valutazione giudizio.

I lettori, poi ne faranno l’uso migliore per il loro interesse. mentre per i nostri Clienti noi, successivamente, metteremo in pratica quelle mosse di portafoglio che ci consentiranno di beneficiare di ciò che qui viene chiaramente illustrato.

Oggi 2 maggio 2022, la forte convinzione del team di gestione di Recce’d è che la parole chiave sia “credito”: una parola, un termine, che oggi 2 maggio 2022, non è ancora comparso, sulle prime pagine dei quotidiani, al TG Economia, e su CNBC.

La nostra forte convinzione è che con il passare delle settimane l’utilizzo del termine “credito” diventerà via via più frequente, da parte dei media.

In quel momento, sapremo, e saprete anche voi, che la attuale fase di mercato è entrata nella sua fase finale.

Allo scopo di spiegare al lettore perché noi la vediamo in questo modo, abbiamo selezionato un articolo che lo spiega in modo chiaro, che per tutti è leggibile qui di seguito.

La cosa più interessante di questo articolo? Che fu pubblicato il 16 dicembre 2021, ovvero quattro mesi e messo fa.

E noi di Recce’d lo abbiamo, intenzionalmente, riservato per pubblicarlo al momento giusto. Che è questo.

The writer is managing director at Crossborder Capital and author of ‘Capital Wars: The Rise of Global Liquidity’

After nearly two years of solid gains across stock markets, will the feared roller-coaster return? The answer is yes, due to higher debt levels, the tapering of central banks’ liquidity support for markets and the growth of indexation.

Only two things really matter in investment: how much money there is in the system and how it is deployed. Recently surging equity prices once again confirm that both are highly elastic concepts. Some may argue this has always been the case. Fine, but we should ask whether we have reached the point where this elasticity is becoming a far bigger and more institutionalised problem. I think it has.

We calculate that global liquidity — the volume of cash and credit shifting around world financial markets — is testing $172tn. This figure is a stock of all sources of liquidity, including from central banks, traditional commercial banks and the so-called shadow banks that supply short-term debt and currency derivatives.

It echoes the words of Henry Kaufman, Salomon Brothers’ former economist: “Money matters, but credit counts.”

Since the financial crisis, the US and China have been the two dominant liquidity providers, but because China’s international financial footprint is small, America’s actions matter far more for global markets, particularly during crises. Consider the importance of the dollar funding worldwide and the extension of lines of support between central banks to provide access to facilities backed by the US currency during the Covid-19 emergency.

According to our calculations, these actions, together with a near-60 per cent jump in the size of central bank balance sheets to more than $30tn, have fuelled the 30 per cent rise in global liquidity since early 2020. Yet these figures are still overshadowed by a huge debt pile that we now estimate exceeds $300tn — an eye-watering three times GDP — that burdens the world economy. The problem is that debt ultimately has to be repaid or, more likely, rolled over. Taking an average debt maturity of five years implies a $60tn annual refinancing problem that requires balance sheet capacity, or, in other words, liquidity.

This means the modern financial cycle gyrates with the tempo of debt maturities. More liquidity requires more debt as collateral, and more debt needs more liquidity for refinancing. Policymakers seem stuck in this cycle. They keep policy interest rates low and, thereby, encourage still more borrowing, but, often in the same breath, they threaten to withdraw liquidity through so-called quantitative tightening or tapering measures. Several of the world’s key central banks, including the US Federal Reserve, the linchpin of the global monetary system, plan to reduce their quantitative easing programmes next year. Some have already started.

Less liquidity makes it more difficult to roll over existing debts. Meanwhile, capital markets have lately turned into large-scale debt refinancing mechanisms, easily eclipsing their textbook role of funding new capital projects. The result is a dizzying spiral of debt, with central banks forced to respond by quickly restarting their quantitative easing programmes to support markets with asset buying whenever financial instability threatens. Consider the policy responses to the 2008, 2010, 2019 and 2020 market sell-offs, and the support given through the colourfully dubbed “Greenspan, Bernanke and Yellen Puts”, after successive Fed chairs.

A renewed dose of QE, or a “Powell Put”, seems the inevitable remedy for the next stock market sell-off. In short, future growth of global liquidity has seemingly become institutionalised by these debt burdens. The irony is that when the Fed’s cash flows through the system, it often gets forced into a narrow list of often-illiquid securities and has an outsized effect on prices. It drives indices across asset classes substantially higher and compels other investors to chase prices upwards, which magnifies its impact. Many of the largest investment managers now track these indices across both bonds and equities.

About half the assets under management in US equity funds passively track indices such as the S&P 500, according to Bloomberg Intelligence. Traditional valuation metrics play no role in their decisions. Unless the spiral is broken by higher interest rates, global liquidity will ultimately bound higher. At the same time, asset allocation has been put on a potentially self-destructive autopilot that ignores sensible investment criteria, so that money is focused on the largest stocks, driving their valuations and sometimes even their owners towards the moon.