Nella nostra nuova Lettera al Cliente, che abbiamo spedito questa mattina, illustriamo con dettaglio le numerose, significative novità apparse sui mercati finanziari globali nel mese di maggio 2021, un mese nel quale con grande evidenza si è interrotta una tendenza che dominava dal novembre 2020 (elezione di Joe Biden alla Presidenza) e che si è poi raffozata con “il vaccino “ (novembre 2020) e con il Piano Biden (febbraio 2020).
Quella fase è finita, il boom economcio per ora non c’è, il tema “reflazione + riaperture” è stato messo decisamente in sordina, se non in soffitta, dalle Reti di promotori finanziari che si fanno chiamare private banker o persino (per i più tecnologici) robot.
Nella nostra Lettera al Cliente elenchiamo le numerose confereme arrivate in maggio, a proposito dei rpesupposti sui quali si fonda la nostra strategia di investimento 2021, che è profondamente diversa da quella delle Reti di promotori finanziari e delle grandi banche di investimento come JP Morgan (immagine qui sotto).
Radicalmente diversa prima di tutto nella protezione del patrimonio dai rischi che ci sono e sono grandissimi nonostante gli sforzi di tutte le Bnache Centrali e dei Governi del Mondo: proprio quelli che a voi oggi raccontano che l’inflazione “è transitoria”. Solo due mesi fa, invece, “l’inflazione non avrebbe superato in modo significativo il 2%. Due mesi dopo siamo al 3%, e fra tre mesi?
In questo Post, oltre alle previsioni di JP Morgan (immagine sopra) noi vogliamo mettervi a disposizione anche una ricerca con le parole di un’altra grande banca di investimento internazionale, che è Morgan Stanley: la ragione per la quale vi suggeriamo di fare lo sforzo di leggere, in inglese, questo intero articolo è perché può essere utile ad orientare le vostre scelte di investimento.
In particolare, vi suggeriamo di leggere con la massima attenzione le quattro domande che Morgan Stanley si pone in questo articolo. E rispondere, oppure fare rispondere il vostro promotore finanziario.
Le risposte di recceìd? Stanno appunto nella nostra Lettera al Cliente di oggi.
Le immagini che accompagnano questo articolo sono scelte da Recce’d, e sono state commentate tutte nel nostro quotidiano The Morning Brief.
By Andrew Sheets, Chief Cross-Asset Strategist for Morgan Stanley
All Gas, No Brakes
The weather in London this week has been rainy while sunny, which feels like a fair description of current sentiment, as we’ve been discussing our mid-year outlook with investors this week. There’s a wide range of views out there at the moment, with the noisiness of the data giving everyone something to hang their hat on. In short, it’s the perfect time to step back and debate the longer-term outlook.
The most notable aspect of our forecasts, and one of the most contentious areas of debate, is just how much our expectations differ from the prior decade. The post-GFC period was defined by fiscal austerity, low investment, a deleveraging consumer and central banks acting pre-emptively to choke off inflationary risk. Indeed, for all that we associate ‘easy policy’ with the last cycle, the PBOC tightening in 2010, the ECB hiking in 2011 and the Fed hiking in 2015 were all aggressive early moves to nip inflation in the bud.
Our expectations this time around couldn’t be more different. Fiscal policy is historically expansionary. The consumer in the US, Europe and China is in outstanding shape, with record levels of savings. We see a ‘red-hot capex cycle’ and public and private sector investment increasing. Global real rates are still near all-time lows. As my colleague Chetan Ahya noted in last week’s Sunday Start, fiscal easing, cheap money, a strong consumer and more investment are four powerful cylinders in the proverbial economic engine.
But just as notable is the expected policy response. In the face of strong growth, we think that central banks remain unusually standoffish. For the Fed, it’s a focus on still-elevated unemployment, coupled with a recent commitment to average inflation targeting. For the ECB, it’s awareness of a long-running inflation undershoot and memories of the 2011 hikes. For China, it’s taking a more gradual approach to tightening than after the last downturn.
In short, it’s a global economy with a lot of gas and few brakes: And if that is so, it means the risk case is different. After a decade where risk often skewed to the downside and the question was what new form of easing would central banks conjure up to fight weakness, the issue now is that growth is good. Hence:
Will the recovery create inflation?
Will it alter central bank policy?
Will that lead to margin and tax pressures?
And is good growth already in the price?
If these are the ‘worries’ that will dominate the next 6-12 months, they won’t apply evenly. For US equities and credit, as well as segments of EM, these concerns will be front and center. But for Europe (and Japan), the questions of excessive valuations, high inflation, a hawkish policy shift or new corporate taxes seem much more distant. Maybe this distinction is obvious, but we think that it still works to Europe’s advantage.
A hotter cycle could also mean a shorter cycle, and an unusually fast normalization of conditions. Such a scenario disadvantages credit. The asset class sees outstanding early-cycle, post-recession performance as growth recovers and companies focus on survival. But as things heat up, extra growth doesn’t mean any extra income from a corporate bond. On a cross-asset basis, credit underperforms on our new 12-month forecasts, and credit risk premiums look rich relative to other assets. With a change in view from Srikanth Sankaran and our credit strategy team, we’ve downgraded credit to equal-weight.
Finally, these forecasts invite an even more important structural question. Again, our expectations for strong fiscal, monetary and capital spending and consumer trends are very different from what prevailed over the last decade. Will this mean an exit from the secular stagnation of the post-GFC mindset? If we are right, this should be an increasingly important debate.
As we’ve told this story over the last week, opinions, like the weather, have been mixed. We’ve talked to plenty of investors who think it’s finally Europe’s time to shine, and plenty of others who worry it will remain a serial disappointment. One investor described our expectation that the Fed doesn’t hike until 3Q23 as ‘what the Fed wants to do, not what it will do’, while another thought the Fed wouldn’t be able to complete tapering, given market sensitivity to real rates.
Opinion on the big picture is similarly divided. Indeed, the current debate reminds me quite a bit of 2010, when there was a sharp division between those who expected a rapid return of pre-crisis conditions (higher rates, EM leadership), and those who thought otherwise. As growth and inflation pick up, we expect a trickier summer, but also an ongoing debate around these larger issues. Rain during sunshine could be something we need to get used to.
Confirming that "selling in May" is there for a reason, virtually every bank has turned cautious if not outright downbeat on the market following a blockbuster earnings season when despite record earnings beats, the S&P is down compared to where it was a month ago. So now that Wall Street is back to its favorite activity of "explaining" events after the fact, here is Goldman strategist Chris Hussey listing the three key "grey rhino" events the market is grappling with.
As Hussey writes in the "end of week" market intel note, "gray rhino" risks have proliferated around markets this week, helping to sustain the tepid return range that the S&P 500 has been stuck in all of May (now down 0.2% mtd). Incidentally, for those unaware, Gray rhinos - not to be confused with black swans - refer to black swan type of events (bad things) but ones that we know about but still don’t do anything about (similar, perhaps to the 800 lb gorilla in the room). Some have referred, for example, to the COVID-19 pandemic as a Gray Rhino event (especially now that the lab escape hypothesis is once again all the rage).
In any case, according to Goldman, among the gray rhino events markets are grappling with this week include:
The run-up in commodity prices, including cryptocurrencies. Copper is downn3%+ for the week, iron ore down 1%, and front month oil futures are down~3%. Additionally, some cryptocurrencies are down as much as 50% for the week.
Inflation. Last week’s CPI and PPI releases continue to garner attention. And at Goldman's Global Staples Forum this week, participating CPG companies called out inflation headwinds that are likely to only grow stronger
S&P 500 valuations. The S&P 500 continues to trade near a P/E of 22X — very high by historical standards and a valuation level that is unlikely to expand from here even as earnings climb higher writes chief strategist David Kostin.
When one thinks about what can be done to cut these gray rhino’s off at the pass, Goldman notes that there are some developments. China has already started to introduce regulations aimed at curbing excessive speculation and asset prices as Hui Shan addresses in “China’s digital economy.” And the Fed, of course, is positioned to step in with tighter monetary policy to curb a sustained increase in inflation expectations should it develop — although Goldman's David Mericle does not believe that the current "temporary" spike in inflation is likely to cause the Fed to act. Here is Goldman's chart of the week for an illustration of when the bank sees inflation peaking.
As for the market’s ‘high’ valuation, Goldman's strategist suggests that perhaps this week’s trading action is a sign that investors are willing to address this gray rhino by being a bit more selective even on the back of extremely strong earnings growth.
Interestingly, investors do not appear to be as shaken by the market concentration we have been experiencing for quite some time. The FAAMG complex is performing in-line with the broader S&P 5000 index on average this week — in other words, the market remains as concentrated as it was to start the week, something we noted on Friday when we highlighted how 4 of the 5 FAAMG stocks are also among the 5 most widely owned hedge fund stocks.
The one non-FAAMG stock in the HF top-5? BABA.The one FAAMG stock that is not in the HF top-5? AAPL.
