Regime Shift oppure Paradigm Shift?

Le ultime settimane dei mercati finanziari sono state del massimo interesse. Ali investitori è arrivato un ampio numero di segnali forti. Per ciò che riguarda i portafogli modello gestiti da Recce’d, abbiamo ricevuto, sia dai mercati finanziari sia dalle economie reali, un ampio numero di conferme. I rendimenti che ci attendiamo dal 2022 sono a due cifre.

Dal 20 luglio (data della riunione BCE) ad oggi 21 agosto, non c’è stato un solo giorno di pausa: neppure il giorno 15 agosto (che gli italiani per abitudine identificano con le vacanze estive), perché proprio il giorno 15 scorso la Cina ha pubblicato una serie di dati che daranno la direzione (insieme con altri) nelle prossime settimane).

Ogni mattina, Recce’d ha seguito, e commentato, sia l’evoluzione dei mercati sia la successione dei dati, sia macroeconomici sia microeconomici, che sono stati pubblicati. Brevissimo commenti sono stati pubblicati da Recce’d sia nella pagina MERCATI sia nella pagina TWIT-TWOO. Chi ci ha seguiti ha molto chiara la situazione, e non è sorpreso dal cambio tra euro e dollaro USA e neppure dal rendimento del Treasury a 10 anni di venerdì 21 agosto 2022.

Quale è il tratto unificante? Quale è la caratteristica dominante di questa ultima, concitata ai limiti dell’isterico, fase di mercato? Come abbiamo scritto anche lo scorso venerdì, tutti siamo stati costretti a rimarcare, un’altra volta, una situazione di “sconnessione”.

Quello che si vuole intendere, con il termine “sconnessione” è un andamento dei mercati finanziari sconnesso con la realtà dei fatti. Ed, al tempo stesso, l’andamento di una parte del mercato finanziario in direzione opposta all’andamento di altre parti del medesimo mercato. Una schizofrenia a tutti evidente, e non sostenibile.

Recce’d ha già analizzato, anche per i suoi lettori, ed anche qui nel Blog, fasi di mercato di questo tipo: in più di una occasione, negli ultimi dieci anni. Nulla di nuovo, dunque. Queste situazioni sono il prodotto di politiche economiche prive di senso e fuori dalla realtà, condotte da politici irresponsabili per oltre un decennio.

In questo specifico caso del 2020-2022, va poi aggiunto che il mercato finanziario internazionale è entrato in un nuovo periodo che non è eccessivo definire “storico”, sta attraversando una svolta epocale.

Ne abbiamo già scritto, anche qui nel Blog, ma oggi richiamiamo nuovamente l’attenzione dei nostri lettori proprio su questa svolta: è decisivo, per la gestione del proprio portafoglio e dei propri investimenti, non perdere di vista lo scenario nel suo complesso, proprio perché nel breve termine si possono determinare brevi fasi di panico e confusione, come è stata la fase delle ultime quattro settimane.

Per la gestione di portafoglio, oggi, ciò che è necessario è avere in mente uno scenario ben definito, e da questo scenario ricavare poi il rendimento potenziale, o atteso, di ogni singolo asset finanziario che viene preso in considerazione, oppure che è già presente nel proprio portafoglio. A questo lavoro ne va poi aggiunto un secondo: stimare, per ognuno degli asset finanziari, quale è il rischio finanziario OGGI, partendo dai prezzi di OGGI e dalle valutazioni di OGGI. Ovvero il “downside”.

Dicevamo dello scenario: ed allora, è inevitabile ripartire dal “paradigm shift”, il cambiamento di paradigma del quale parlava già un po’ di tempo fa Morgan Stanley.

Con il brano che segue, vi aiutiamo a ricordare che cosa si intende, sui mercati finanziari, per cambiamento di paradigma. Chi segue con attenzione ciò che Recce’d pubblica nel suo Blog ci si ritroverà senza la minima difficoltà. Recce’d anticipava queste cose già nel 2020.

Global markets are in the beginning of a fundamental shift after a nearly 15-year period defined by low interest rates and cheap corporate debt, according to Morgan Stanley co-President Ted Pick.

The transition from the economic conditions that followed the 2008 financial crisis and whatever comes next will take “12, 18, 24 months” to unfold, according to Pick, who spoke this week at a New York financial conference.

“It’s an extraordinary moment; we have our first pandemic in 100 years. We have our first invasion in Europe in 75 years. And we have our first inflation around the world in 40 years,” Pick said. “When you look at the combination, the intersection of the pandemic, of the war, of the inflation, it signals paradigm shift, the end of 15 years of financial repression and the next era to come.”

Wall Street’s top executives making the rounds at financial conferences this week delivered dire warnings about the economy, led by JPMorgan Chase CEO Jamie Dimon, who said that a “hurricane is right out there, down the road, coming our way.” That sentiment was echoed by Goldman Sachs President John Waldron, who called the overlapping “shocks to the system” unprecedented. Even regional bank CEO Bill Demchak said he thought a recession was unavoidable.

Instead of just raising alarms, Pick — a three-decade Morgan Stanley veteran who leads the firm’s trading and banking division — gave some historical context as well as his impression of what the tumultuous period ahead will look and feel like.

Fire and Ice

Markets will be dominated by two forces – concern over inflation, or “fire,” and recession, or “ice,” said Pick, who is considered a front-runner to eventually succeed CEO James Gorman.

“We’ll have these periods where it feels awfully fiery, and other periods where it feels icy, and clients need to navigate around that,” Pick said.

For Wall Street banks, certain businesses will boom, while others may idle. For years after the financial crisis, fixed income traders dealt with artificially becalmed markets, giving them less to do. Now, as central banks around the world begin to grapple with inflation, government bond and currency traders will be more active, according to Pick.

The uncertainty of the period has, at least for the moment, reduced merger activity, as companies navigate the unknowns. JPMorgan said last month that second-quarter investment banking fees have plunged 45% so far, while trading revenues rose as much as 20%.

“The banking calendar has quieted down a bit because people are trying to figure out whether we’re going to have this paradigm shift clarified sooner or later,” Pick said.

In the short term, if economic growth holds up and inflation calms down in the second half of the year, the “Goldilocks” narrative will take hold, bolstering markets, he said. (For what its worth, Dimon, citing the Ukraine war’s impact on food and fuel prices and the Federal Reserve’s move to shrink its balance sheet, seemed pessimistic that this scenario will play out.)

But the push and pull between inflation and recession concerns won’t be resolved overnight. Pick at several times referred to the post-2008 era as a period of “financial repression” — a theory in which policymakers keep interest rates low to provide cheap debt funding to countries and companies.

“The 15 years of financial repression do not just go to what’s next in three or six months… we’ll be having this conversation for the next 12, 18, 24 months,” Pick said.

Less than zero

Low or even negative interest rates have been the hallmark of the previous era, as well as measures to inject money into the system including bond-buying programs collectively known as quantitative easing. The moves have penalized savers and encouraged rampant borrowing.

By draining risk from the global financial system for years, central banks forced investors to take more risk to earn yield. Unprofitable corporations have been kept afloat by ready access to cheap debt. Thousands of start-ups have bloomed in recent years with a money burning, growth-at-any-cost mandate.

That is over as central banks prioritize the battle against runaway inflation.

The impact of their efforts will touch everyone from credit-card borrowers to employees of struggling corporations to the aspiring billionaires running Silicon Valley start-ups. Venture capital investors have been instructing start-ups to preserve cash and aim for actual profitability. Interest rates on many online savings accounts have edged closer to 1%.

Remember 2018?

But such shifts could be bumpy. The last time the Fed attempted quantitative tightening, back in 2018, odd things happened in stock, foreign exchange and oil markets. Less than a year after their campaign began, the world’s major central banks lost their nerve and halted QT programs amid slowing growth.

Some observers are worried about Black Swan-type events happening in the plumbing of the financial system, including the bursting of what one hedge fund manager called “the greatest credit bubble of human history.” Dimon sees “at a minimum, huge volatility” as the major purchasers of government bonds may not have the ability or appetite to step in.

Out of the ashes of this transition period, a new business cycle will emerge, Pick said.

“This paradigm shift at some point will bring in a new cycle,” he said. “It’s been so long since we’ve had to consider what a world is like with real interest rates and real cost of capital that will distinguish winning companies from losing companies, winning stocks from losing stocks.”

Da qui dovete partire, per la gestione dei vostri investimenti: da qui siete e siamo tutti obbligati a partire, per la gestione del portafoglio in titoli: “such shifts could be bumby”, questi cambiamenti possono essere turbolenti.

E’ vero, ed è una turbolenza che a noi pace moltissimo: perché rimette al loro posto sia le cose sia le persone, e perché genera importanti opportunità di guadagno.

Ovviamente, non è soltanto Morgan Stanley ad essersi resa conto di questo fatto (e non siamo soltanto noi di Recce’d): un esempio lo vedete qui sotto, in una immagine dove si scrive di “cambiamento secolare sia nello scenario per l’economia reale sia nel regime di politica monetaria e fiscale”.

Questa è la sostanza: il resto, che leggete ogni mattina sul quotidiano oppure che ascoltate dal promotore finanziario, sono soltanto chiacchiere al vento.

Non c’è alcun dubbio, in merito a questo: la strategia di portafoglio deve essere fondata sullo scenario che si prospetta, ed oggi lo scenario che tutti gli investitori hanno davanti è quello di un “cambiamento di paradigma” oppure “cambiamento di regime”, proprio come era scritto sopra nell’immagine precednte.

Di “regime shift” Recce’d ha scritto con dettaglio, qui nel Blog, offrendo gratuitamente ai suoi lettori le analisi e le indicazioni necessarie, fin dal 2020.

Chi ci ha seguito e chi ha operato nella direzione da noi indicata, ha fatto meglio di tutti gli altri investitori, che negli ultimi due anni sono andati dietro … alle lucciole (dal “boom economico” alla “inflazione transitoria” di recente al “pivot”), e che oggi 21 agosto 2022 si ritrovano a cercare di capire perché il dollaro viene scambiato alla pari contro euro, e perché un Titolo di Stato a 10 anni negli Stati Uniti rende sempre il 3%.

Se tra i lettori ci sono anche quelli che si stanno facendo queste domande, offriamo in questo Post un concreto aiuto: vi invitiamo a leggere il secondo articolo che abbiamo scelto per voi, e che trovate di seguito in questo Post.

L’articolo, se lo leggete con attenzione, vi spiega tutto, ma proprio tutto tutto, di ciò che è appena successo.

Se invece volete capire ciò che sta per succedere, sia a voi, sia ai vostri soldi investitori sui mercati finanziari, noi di Recce’d come sempre sia disponibili: contattarci è semplice, attraverso gli abituali canali offerti dal nostro sito.

In particolare, sul piano della operatività di breve termine, vi facciamo notare che l’articolo viene utilizzato il termine inglese “spike”: un termine sul quale Recce’d da settimane ha richiamato l’attenzione dei lettori.

Termine che (decisamente) viene alla mente di ogni investitori competente ed attento che guarda alle chiusure dei mercati finanziari di venerdì 19 agosto 2022-

NEW YORK (Project Syndicate)—The world economy is undergoing a radical regime shift. The decades-long Great Moderation is over.

Coming after the stagflation (high inflation and severe recessions) of the 1970s and early 1980s, the Great Moderation was characterized by low inflation in advanced economies; relatively stable and robust economic growth, with short and shallow recessions; low and falling bond yields (and thus positive returns on bonds), owing to the secular fall in inflation; and sharply rising values of risky assets such as U.S., and global equities.

This extended period of low inflation is usually explained by central banks’ move to credible inflation-targeting policies after the loose monetary policies of the 1970s, and governments’ adherence to relatively conservative fiscal policies (with meaningful stimulus coming only during recessions). But, more important than demand-side policies were the many positive supply shocks, which increased potential growth and reduced production costs, thus keeping inflation in check.

Reducing the costs of production

During the post-Cold War era of hyper-globalization, China, Russia, and other emerging-market economies became more integrated in the world economy, supplying it with low-cost goods, services, energy, and commodities. Large-scale migration from the Global South to the North kept a lid on wages in advanced economies, technological innovations reduced the costs of producing many goods and services, and relative geopolitical stability allowed for an efficient allocation of production to the least-costly locations without worries about investment security.

But the Great Moderation started to crack during the 2008 global financial crisis and then during the 2020 COVID-19 recession. In both cases, inflation initially remained low given demand shocks, and loose monetary, fiscal, and credit policies prevented deflation from setting in. But now inflation is back, rising sharply, especially over the past year, owing to a mix of both demand and supply factors.

On the supply side, the backlash against hyper-globalization has been gaining momentum, creating opportunities for populist, nativist, and protectionist politicians. Public anger over stark income and wealth inequalities also has been building, leading to more policies to support workers and the “left behind.” However well-intentioned, these policies are now contributing to a dangerous spiral of wage-price inflation.

Political resistance

Making matters worse, renewed protectionism (from both the left and the right) has restricted trade and the movement of capital. Political tensions (both within and between countries) are driving a process of reshoring (and “friend-shoring”). Political resistance to immigration has curtailed the global movement of people, putting additional upward pressure on wages. National-security and strategic considerations have further restricted flows of technology, data, and information. And new labor and environmental standards, important as they may be, are hampering both trade and new construction.

This balkanization of the global economy is deeply stagflationary, and it is coinciding with demographic aging, not just in developed countries, but also in large emerging economies such as China. Because young people tend to produce and save, whereas older people spend down their savings, this trend also is stagflationary.

The same is true of today’s geopolitical turmoil.

Russia’s war in Ukraine, and the West’s response to it, has disrupted the trade of energy, food, fertilizers, industrial metals, and other commodities. The Western decoupling from China is accelerating across all dimensions of trade (goods, services, capital, labor, technology, data, and information).

Other strategic rivals to the West may soon add to the havoc. Iran crossing the nuclear-weapons threshold would likely provoke military strikes by Israel or even the United States, triggering a massive oil shock; and North Korea is still regularly rattling its nuclear saber.

Climate change

Now that the U.S. dollar has been fully weaponized for strategic and national-security purposes, its position as the main global reserve currency may begin to decline, and a weaker dollar would of course add to the inflationary pressures. A frictionless world trading system requires a frictionless financial system. But sweeping primary and secondary sanctions have thrown sand in this well-oiled machine, massively increasing the transaction costs of trade.

On top of it all, climate change, too, is stagflationary. Droughts, heat waves, hurricanes, and other disasters are increasingly disrupting economic activity and threatening harvests (thus driving up food prices). At the same time, demands for decarbonization have led to underinvestment in fossil-fuel capacity before investment in renewables has reached the point where they can make up the difference. Today’s large energy-price spikes were thus inevitable.

Pandemics will also be a persistent threat, lending further momentum to protectionist policies as countries rush to hoard critical supplies of food, medicines, and other essential goods. After two and a half years of COVID-19, we now have monkeypox. And owing to human encroachments on fragile ecosystems and the melting of Siberian permafrost, we may soon be dealing with dangerous viruses and bacteria that have been locked away for millennia.

Finally, cyberwarfare remains an underappreciated threat to economic activity and even public safety. Firms and governments will either face more stagflationary disruptions to production, or they will have to spend a fortune on cybersecurity. Either way, costs will rise.

On the demand side, loose and unconventional monetary, fiscal, and credit policies have become not a bug but rather a feature of the new regime. Between today’s surging stocks of private and public debts (as a share of GDP) and the huge unfunded liabilities of pay-as-you-go social-security and health systems, both the private and public sectors face growing financial risks. Central banks are thus locked in a “debt trap”: any attempt to normalize monetary policy will cause debt-servicing burdens to spike, leading to massive insolvencies, cascading financial crises, and fallout in the real economy.

With governments unable to reduce high debts and deficits by spending less or raising revenues, those that can borrow in their own currency will increasingly resort to the “inflation tax”: relying on unexpected price growth to wipe out long-term nominal liabilities at fixed rates.

Thus, as in the 1970s, persistent and repeated negative supply shocks will combine with loose monetary, fiscal, and credit policies to produce stagflation. Moreover, high debt ratios will create the conditions for stagflationary debt crises. During the Great Stagflation, both components of any traditional asset portfolio—long-term bonds and U.S. and global equities—will suffer, potentially incurring massive losses.

Nouriel Roubini, professor emeritus of economics at New York University’s Stern School of Business, is chief economist at Atlas Capital Team and author of the forthcoming “MegaThreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them” (Little, Brown and Company, October 2022).

This commentary was published with permission of Project Syndicate—From Great Moderation to Great Stagflation