Longform’d. Siccità e calura: scherzare col fuoco è reato
Ha danneggiato la vita di miliardi di persone, la scelta irresponsabile di puntare sulla retorica della “inflazione transitoria” nel 2021.
Ha danneggiato il portafoglio titoli di milioni e milioni di investitori.
Purtroppo, sembra proprio che nel 2022 la cosa si stia ripetendo: e questa volta, il danno potrebbe essere ancora più grave ed ampio.
Se ne è preoccupato, venerdì 29 luglio 2022, il quotidiano Wall Street Journal.
Markets were elated by Chairman Jerome Powell’s comments at his press conference on Wednesday, but it does make us wonder if it wasn’t too good a thing. Prices soared as if tighter monetary conditions weren’t going to last long, and that’s worrying as an anti-inflationary message.
The four-paragraph statement from the Federal Open Market Committee after its meeting was harsh on inflation. “The Committee is very attentive to inflation risks,” he said.
But Mr. Powell sounded much less aggressive at various points in his hour-long press. It was especially surprising to hear him say that current interest rates are close to “neutral,” meaning they are no longer accommodative. But even after Wednesday’s 75 basis point hike, the fed funds rate is only 2.25% to 2.5%. The inflation rate in June was 9.1%, which means that real rates remain decidedly negative.
Powell also said he thinks rates may not need to rise much higher, citing the Fed’s June median forecast of 3.25%-3.5%. Markets had been signaling before the meeting that they believe the Fed will start cutting rates within a year. And while Powell didn’t bless that sentiment, he didn’t do much to dispel it, either.
Not to be rude, but when the fed funds rate went from 2% to 2.25% in October 2018, Powell said “we’re a long way from neutral” on interest rates. The inflation rate at the time was a mere 2.5%. Times and circumstances change, but the meaning of “neutral” may not have changed that much.
The Fed chief has insisted more than once that he and his colleagues are determined to bring inflation back to its 2% target. We hope so. And annual rate inflation looks likely to ease from 9% in the coming months as oil and other commodity prices have fallen. Therefore, the slowdown in growth will contribute.
But the lesson of the 1970s is that ending the fight against inflation too soon leads to inflation falling from its heights as the economy slows, but still remaining uncomfortably high on a new plateau. It then rises again as the economy recovers and reaches new heights. Then do it all over again, until the tightening medicine has to be much more severe than it would have been had the Fed stayed the course earlier.
It is always a mistake to over-interpret immediate market moves as Wednesday’s. But if they are correct that the Fed is signaling an early end to tightening, then the danger is that we are seeing a false dawn in the fight against inflation.
Scrive, e noi siamo d’accordo, ilWall Street Journal che è sempre sbagliato attribuire troppa importanza alla reazione immediata dei mercati finanziari. ma allo stesso tempo scrive: “Non per essere sgarbato, ma quando il tasso ufficiale di interesse arrivò al 2,25% nel mese di ottobre 2018, Powell disse che si era mol to lontani da un livello neutrale del costo del denaro. Allora, l’inflazione stava al 2,5%. E’ vero che le circostanze sono diverse, ma il significato del termine “neutrale” non può essere cambiato così tanto”.
L’articolo del WSJ è firmato dal Editorial Board, ed è quindi rappresentativo della linea del quotidiano.
Ed è anche rappresentativo del nostro modo di vedere la situazione attuale, per ciò che concerne la Federal Reserve.
Per completezza, vi riportiamo qui di seguito l’opinione di chi (autorevolmente) vede le cose in modo diverso da noi.
Following the rate hike from the Fed, DoubleLine Capital’s CEO Jeffrey Gundlach told CNBC’s “Closing Bell Overtime” he believes the central bank is no longer behind the curve on inflation and Powell has regained credibility.
“This market reaction seems less of a sugar high than the prior two in June and May,” Gundlach said.
The Dow jumped more than 400 points in the previous session, while the S&P 500 and Nasdaq Composite added 2.6% and 4.06%, respectively.
All S&P 500 sectors ended the day higher, with communications services posting its best daily performance since April 2020.
“For the most part, what’s really driving this move is that the economy is still performing okay and it looks like the Fed is probably going to slow the pace of tightening down by the next policy meeting,” said Ed Moya, Oanda’s senior market analyst.
Quindi: da un lato c’è chi dice che con i rialzi di giugno e luglio la Federal Reserve non è più “in ritardo”; all’opposto c’è chi dice che si rischia, con l’atteggiamento che prevale oggi, di essere costretti a rialzi dei tassi ancora più grandi in futuro.
Ed è questo, il rischio a cui abbiamo fatto riferimento in apertura del nostro Post: il rischio che si ripeta la situazione del 2021, quando si volle modificare con le parole la realtà che era sotto gli occhi di tutti.
Le parole, gli slogan, le campagne mediatiche non possono modificare la realtà.
La realtà prevale: sempre.
I messaggi del tipo “è tutto sotto controllo” possono provocare un breve momento di sollievo, ed anche di entusiasmo, sui mercati finanziari. Di certo, non c’è sollievo, e neppure entusiasmo, al supermeracto oppure alla pompa di benzina.
La volontà di Powell, è chiaro, è quella di compiacere: lo scopo è quello di “non dire nulla di drammatico”, a costo di ignorare la realtà.
Noi in questo Post ve lo facciamo spiegare da Mohamed El Erian, nell’articolo che segue:
By
28 luglio 2022 00:58 CEST
One of Federal Reserve Chair Jerome Powell’s unscripted remarks at his press conference on Wednesday — that interest rates have reached a “neutral level” after the just-announced 75-basis-point interest-rate increase — is sure to prompt much discussion among economists in the weeks and months ahead. Judging from how markets reacted the minute he made this remark, it is clear what conclusions the vast majority of investors want these economists to reach.
Neutral is shorthand for the crucially important notion that the level of interest rates is consistent with monetary policy being neither contractionary nor expansionary. When combined with the Fed’s dual mandate, it signals a monetary policy that is close to being set to deliver maximum employment and price stability.
In today’s world, this is translated by markets into the view that the Fed now believes that it has already done the bulk of what is needed to tighten monetary policy to deal with what Powell himself described as inflation that remains “much too high” and is inflicting “considerable hardship” on Americans.
Given this interpretation, it should come as no surprise that, immediately after Powell uttered the word “neutral,” stocks, bonds and the dollar all moved significantly and exactly as textbooks would suggest: Stocks surged, with the main indexes ending the session 1.4% to 4.1% higher; bond yields fell, with the two-year Treasury dipping below 3% and the curve inversion for the two-year and 10-year Treasuries moderating to 20 basis points; and the dollar weakened, with the DXY index falling to 106.4.
Each of these moves serves to ease financial conditions. No wonder markets set aside other unscripted remarks by Powell that are hard to immediately reconcile with his assertion that rates are at neutral. This included the likelihood of a higher natural rate of unemployment; the considerable amount of economic uncertainty; the need for the Fed to go “meeting by meeting” on its policy decisions; and the difficulty of providing clear forward policy guidance.
Count me among those hoping that Powell is entirely correct that rates are already at neutral. This would improve the chances of the Fed being able to soft-land the economy, thereby reducing inflation with limited damage to livelihoods and without triggering unsettling financial instability.
I have no precise estimate for neutral for the very reasons that Powell mentioned regarding the unusually high level of uncertainty and the changing structural parameters of the economy. As to the general neighborhood for that level, I have a hunch, but am far from certain, that we are still below it.
I hope I am wrong. If not, this will sadly end up amplifying my often-repeated concerns about the collateral damage to the economy and livelihoods, especially those of the more vulnerable segments of society, of a Fed that took way too long to understand and to respond properly to inflation.
Noi di Recce’d intendiamo, per “gestione di portafoglio”, una attività che quotidianamente aggiorna e rivede sia le stime di rendimento, sia le stime di rischio, per ognuno degli asset che sono compresi nel portafoglio modello (ovvero che potrebbero in futuro entrare a farne parte).
Si tratta quindi di un’attività che raccoglie, seleziona, ordina tutte le informazioni, e le inserisce dentro a modelli proprietari di valutazione sia del rischio sia del rendimento potenziale degli asset finanziari compresi nell’universo investibile.
Questo è il nostro modo di fare le scelte per i portafogli modello: non ci affidiamo semplicemente all’intuizione, non andiamo dietro a quello che si legge sui quotidiani, non andiamo dietro alle “imbeccate” di Goldman Sachs, non utilizziamo l’analisi tecnica, non ci affidiamo ai vecchi “detti della saggezza contadina”, del tipo “prima o poi i mercati recuperano sempre”.
In questo specifico caso, dunque, il nostro lavoro consiste nello stimare se ciò che dice la Federal Reserve oggi è credibile, in musura uguale, maggiore oppure minore alla “inflazione transitoria”.
La nostra storia professionale, in decine di episodi, ci ha dimostrato che è un errore affidarsi in modo cieco e non critico alle “promesse” delle Banche Centrali, e delle banche di investimento che agiscono come megafono di ciò che dicono le Banche Centrali.
Chi lo ha fatto, ci ha perso un mucchio di quattrini.
In questo caso specifico, il nostro ruolo professionale è dunque quello di valutare se la storia del “tasso ufficiale di interesse neutrale”, da cui deriva poi l’altra storia, quella del “pivot”, hanno senso o sono semplicemente invenzioni della fantasia di alcuni funzionari pubblici, spalleggiati da chi lavora nelle grandi banche di investimento globali.
I lettori del Blog dovranno (è il nostro consiglio) contattarci per discuterne, oppure fare da soli questo lavoro di analisi.
Per chi intendesse fare da solo, pensando di averne sia i requisiti sia il tempo, sarà utile leggere con massima attenzione l’ultimo contributo esterno di questo Post: nel quale chiaramente vengono spiegate le quattro cose che la Federal Reserve dovrebbe fare, se intende riacquistare la credibilità che è andata persa negli ultimi anni.
La chiusura di questo articolo è chiarissima, e merita tutta la vostra attenzione.
Per questo, ve la proponiamo anche tradotta qui di seguito.
Risale allo scorso 22 luglio, e spiega che “Indipendentemente da ciò che la Fed farà la prossima settimana (il riferimento qui è alla riunione del 27 luglio scorso), senza affrontare queste quattro carenze, la banca centrale continuerà a non avere la credibilità necessaria per evitare di essere ricordata dagli storici dell'economia come colei che ha causato inutilmente una recessione negli Stati Uniti, che ha destabilizzato un'economia globale che sta ancora cercando di riprendersi dalla Covid, che ha peggiorato le disuguaglianze, che ha alimentato una preoccupante instabilità finanziaria e che ha contribuito allo stress del debito nei fragili Paesi in via di sviluppo.
By
22 luglio 2022 11:00 CEST
Global economy watchers and market participants will be paying a lot of attention next week to how the Federal Reserve describes the US economic outlook, to the magnitude of its interest rate increase and whether it changes the pace of its balance-sheet contraction. Yet for the well-being of the US and global economy, the answer to these questions is less important than whether the Fed shows seriousness about fixing four failures that continue to fuel one of the worse policy mistakes in decades: Failures of analysis, forecasts, response and communication.
Let us first dispose with what seems to interest economists and markets the most right now.
On the economic outlook, the Fed will acknowledge that, once again, inflation has proved to be higher and more stubborn than projected and that, despite some signs of weakness, the US economy remains in a “good place.” With that, it is likely to again lift rates by 75 basis points and leave unchanged its previously announced plans for quantitative tightening.
This will come as a relief to those worried that the Fed, playing a desperate game of catch-up, would raise rates by 100 basis points and worsen what is already an uncomfortably high risk of tipping the US economy into recession. Yet such relief will again prove fleeting unless the Fed also regains policy credibility by addressing its four persistent failures.
The first is one of analysis. The Fed has yet to make the comprehensive analytical shift from a world dominated for years by deficient aggregate demand to the current one where deficient aggregate supply plays an important role. Its monetary policy approach is either still formally governed by the “new framework” adopted last year that is no longer suitable and should be publicly discarded or governed by no framework at all, thereby leaving the US and global economy without a much-needed anchor.
The result of this is a central bank that continuously struggles to properly inform and influence economic agents, that consistently lags behind markets rather than leads them, and that could easily fall prey to the even more catastrophic policy mistake of returning to the 1970s trap of “stop-go” policies.
For an illustration of the inadequate Fed policy anchor, consider the recent implied market forecast of what it will announce on Wednesday. In just a few days, the probability of the Fed raising by a highly unusual 100 basis points went from insignificant to even odds and then down again to improbable.
The longer the Fed resists the overdue analytical pivot, the more its inflation and growth forecasts will continue to miss the mark, exacerbating the second failure. For the last few quarters, such projections have been quickly and correctly dismissed as unrealistic by a wide range of economists, market analysts and, even more unusual, former Fed officials. This matters even more now that the US economy is showing signs not just of weakening but also of flirting with a recession.
Third, the Fed must be more agile in its policy responses. It is now widely agreed that, after sticking for way too long to its misguided “transitory” inflation call, it should have responded more forcefully when it finally “retired” this faulty characterization. This was confirmed by former Vice Chair Randal Quarles last week, who also referred to the concern that I and many others hold that the Fed is still co-opted by markets.
Finally, the Fed must be more straightforward in its communication. It seems to remain the central bank in advanced countries that is most prone to, using a phrase from former Chancellor of the Exchequer Rishi Sunak, “fairy tale economics”; and it is the most systemically important of all these central banks.
Regardless of what the Fed does next week, without addressing these four deficiencies, the central bank will continue to lack the credibility needed to avoid being remembered by economic historians as having unnecessarily caused a US recession; having destabilized a global economy still trying to recover from Covid; having worsened inequality; having fueled unsettling financial instability; and having contributed to debt stress in fragile developing countries.