Ha arrancado el año con muchas dudas y fuertes bajadas de los mercados. Los datos de PMI e ISM fueron malos y la guerra de divisas, empezada en 2015, sigue en todo su esplendor. Todos los países quieren crecer como sea y usan la debilidad de sus divisas como otra fuente más…
Hoy te cuento las previsiones de los grandes bancos de inversión estadounidenses (Goldman Sachs, Bank of America, Morgan Stanley y JP Morgan:
Las previsiones de Goldman Sachs:
When it comes to 2016, Goldman says that it is "deja vu all over again", and that the S&P 500 index will tread water for a second consecutive year. Specifically Goldman says that its "year-end 2016 target of 2100 represents a 1% price gain from the current index level (2089), which itself is just 1% above the year-end 2014 level of 2059."
Hardly the double-digit annual growth everyone has gotten used to over the past 7 years, that was so easy anyone could do it.
Here are the reasons why Goldman expects all the main themes from 2015 to be repeated in the coming year, and why the one can just sell on December 31, 2015 and go away for the next year:
+ In many ways our 2016 forecast is “déjà vu all over again.” The US stock market has mostly traded sideways during 2015 with the index hovering in a narrow band except for a brief late summer correction. Return dispersion across the market and within sectors has been low. Market breadth is currently at one of the lowest levels in 30 years. About 75% of large-cap core mutual funds is lagging the benchmark. The equity long/short hedge fund index has returned -2% YTD, trailing S&P 500 for the seventh consecutive year. About 75% of large-cap core mutual funds is lagging the benchmark. The equity long/shorthedge fund index has returned -2% YTD, trailing S&P 500 for the seventh consecutive year.
+ In terms of fundamentals, Goldman Sachs US Economics Research expects tepid GDP growth of 2.2% in both 2016 and 2017. We forecast S&P 500 earnings will rise by 10% to $120 per share in 2016 and by 7% to $129 in 2017 (see Exhibit 1). However, the headline EPS growth rate is misleading because it reflects a partial recovery in Energy sector profits after they collapsed by 80% this year in concert with the plunge in crude oil. EPS growth outside Energy will equal 8%. We expect flat net profit margins of 9.1% in 2016 and 2017.
+ In terms of valuation, both the aggregate S&P 500 index and the median stock trade at the high end of a range of fair value based on most metrics. Our year-end 2016 index target of 2100 implies a P/E multiple compression of 8% to 16.2x our top-down 2017 EPS estimate, or 12% based on the bottom-up consensus earnings forecast. S&P 500 P/E multiple fell by an average of 10% in the 12 months following the start of prior tightening cycles. The typical S&P 500 constituent has a forward P/E of 17.2x, an EV/sales of 2.4x, an EV/EBITDA of 10.8x, and a P/B of 3.0x. Only 6% of the time during the last 40 years has the median stock traded at a P/E multiple higher than it does today.
+ In terms of money flow, corporate repurchases will remain the primary source of demand for US equities. Firms that have returned cash to shareholders via buybacks and dividends have outperformed for 25 years. The pattern was repeated this year and the trend will likely continue in 2016 given our muted equity return forecast (see S&P 500 cash spending trends: Investing vs. returning capital, November 6, 2015).
+ In terms of risks, uncertainties include (1) interest rate path different from our baseline assumption of year-end 2016 fed funds at 1.4% and 10-year bond yields of 3.0%; (2) global economic growth below our 3.5% forecast; (3) US presidential election; and (4) geopolitics.
And in charts:
Las previsiones de Bank of America:
A year and a half ago, in May of 2014, when Bank of America's chief economist Ethan Harris decided to try his hand at long term (really long-term) forecasts, he made several predictions: that 2015 GDP would be 3.3%, that the long-term potential growth rate of the economy is 2.2%, and that the long-term unemployment rate is 6%.
One year later, we yet again see just why economists tend to be a source of amusement everywhere they go, because moments ago the same Mr. Harris just admitted that 2015 GDP would actually be 2.5% (at best, and realistically 2.1% if Q4 GDP ends up being 1.8% as the Atlanta Fed forecasts), that the long-term growth rate is now lower at 2.0%, even as the long-term unemployment rate has mysteriously declined to 5%, or in other words, a lower potential growth rate results in lower unemployment.
Go figure.
Here is what Harris predicted for the "long-term" in early 2014:
And here is his same forecast as released earlier today:
We leave it up to readers to spot the amusing, if startling, differences.
And yet one thing that hasn't changed in the past 18 months is that like then, so now, Bank of America refuses to forecast a recession any time in the next 12 years! To wit:
Obviously, there is considerable uncertainty in forecasting many years out, so these should be viewed as rough baseline numbers. For example, if history is our guide, at some point in the next decade the US will experience a recession, but predicting a recession far in advance is almost impossible.
So predicting a recession at some point in the next 12 years impossible, but predicting next year's GDP is "possible"... assuming one has a 25% error rate tolerance.
But if you think that is amusing read the following from another BofA prognosticator, its "Equity & Quant Strategist" Savita Subramanian. This is presented without comment.
S&P 500 targets: 2200 in 2016 and 3500 by 2025
We expect modest gains for US large cap stocks in 2016: the likelihood of a recession in the next 12 months is low in our view, but valuations have normalized from previously low levels and narrowing returns are to be expected. Our forecast represents a 5% rise from current levels, roughly equivalent to earnings growth, where we forecast 2016 EPS of $125.
10-year S&P 500 forecast: 3500 (+67%)
Our work suggests that valuation is a poor short-term timing indicator, but the single most important determinant of long-term returns. Valuations have historically explained 60-90% of subsequent returns over a 10-year time horizon – see Table 2. Normalized P/E – our preferred valuation metric – has explained 80-90% of returns over the subsequent 10-11 years.
Based on current valuations, a regression analysis suggests compounded annual returns of 8% over the next 10 years with a 90% confidence interval of 4-12% (Table 2). While this is below the average returns of 10% over the last 50 years, asset allocation is a zero-sum game. Against a backdrop of slow growth and shrinking liquidity, 8% is compelling in our view. With a 2% dividend yield, we think the S&P 500 will reach 3500 over the next 10 years, implying annual price returns of 6% per year.
So... no recession until 2027, if ever, and S&P at 3500 by 2025.
Great, just one thing we would like to know: does Bank of America anticipate another bailout of Bank of America during this upcoming golden age a la 2008, or is that also impossible to predict.
Las previsiones de Morgan Stanley:
In late 2014 we repeatedly explained why the so-called "gas tax savings" would not materialize and boost the economy via discretionary spending, as so many bullish economists were certain would happen, for one simple reason: soaring Obamacare premiums were soaking up all, and then some, of the savings. The result has been a steep drop in retail sales and consumer spending in 2015, one which even abovementioned economists have been forced to admit they never expected would happen, and as a result have been forced to cut their overly rosy outlook on the economy.
One such permabull is none other than Morgan Stanley's Adam Parker, who notoriously flipped from bearish to bullish several years ago, only to finally admit overnight that there are numerous cracks in his upside thesis in a report carrying the amsuing mame "Feeling Worse, But Not Sure We Can Explain It."
This is what Parker says:
Lowering 2015 EPS estimates: We were too optimistic about the magnitude of the benefit of lower oil prices and the impact this would have on 2015 earnings. We knew the sharp strengthening of the dollar a year ago and the drop in oil would have a negative impact on earnings for major sectors like energy, industrials, and materials, and that there would be some time before the areas that benefit showed the corresponding upside. However, we had thought that by Q3, the benefits of lower oil would start to lift earnings in other segments of the market. We over-estimated this. While a high percentage of companies were able to show year-over-year margin expansion, the combination of muted revenue and various negatives in industrials, energy, and materials, and less benefits from lower oil in terms of consumer spend and lower input costs, have caused us to reduce our 2015 EPS outlook. We still believe there is upside to the bottom-up consensus outlook, something that has limited precedent since forward earnings data began in 1976.
The amusement does not stop there as Parker, admitting he was wrong, decides to slam not only his own predictive "skills" but those of all his peers:
The Big Ten Conference has 14 teams, the Big 12 has 10, Utah's NBA team is the Jazz, LA's is the Lakers. Somehow we can explain these things, but we struggle to explain why people think they can forecast the market multiple, oil, dollar, and rates given so much evidence to the contrary.
Uhm... perhaps because they have clients who pay soft-dollars to hear what they want to hear, and people like Mr. Parker have been instrumental in perpetuating this mutual delusion?
So with all these mea culpa caveats in place, here is why Morgan Stanley joins JPM and Goldman Sachs in admitting there is little if any upside to the market from here.
We are lowering our 2015 S&P500 EPS estimate from $124 to $120.5. This is to both mark-to-market for weaker Q3 results and to reduce our estimates for January earnings. The consensus bottom-up number is roughly $119. This means we anticipate earnings growing just over 1% in 2015 year-over-year, not counting a net buyback of about 2.3%.
Forward earnings outlook also modestly reduced: Due to a lower base and adjusting for Morgan Stanley’s house views across all asset classes (a weaker US economic path, a stronger dollar against the euro, etc.), we are lowering our 2016 EPS from $128.5 to $125.9 and introducing our 2017 EPS at $131.4. These represent 4% growth both in 2016 and 2017, the same growth rate we previously anticipated but from a lower base. Since EPS growth in 2015 appears to be near 6%, excluding energy, and headwinds from the oil decline and the strong dollar will begin to moderate soon, our 4% earnings growth expectations heading into 2016 are potentially conservative.
Given our experts' view on the Fed’s path for the front end, and muted economic growth, we are forecasting only modest multiple expansion to 16.6x, yielding our new price target of 2175 for the S&P500 for yearend 2016. This is based on paying 16.6x our 2017 earnings estimate of $131.4 at the end of 2016, and offers low-to-mid single digit return from today’s levels on a 12-month forward basis.
Parker explains the "couple of items" that worry him:
Firstly, we think our forecast for the market is probably close to the consensus view.We think that we are likely headed for a choppy year of low returns, and suspect many others think the same – as opposed to romanticizing we are independent thinkers and then thinking the exact same thing as everyone else. Secondly, this is a less optimistic forecast than our prior views. On the one hand, as we have written in the past, we think that this will end up being a very long expansion, perhaps lasting even until 2020, as we don’t see excesses in the US consumer or corporate spending that make us particularly worried. On the other hand, our credit colleagues in particular are influencing our view that the credit metrics are starting to ring later cycle. Virtually none of my colleagues in any asset class in any region of the world feel more optimistic about their asset class heading into this planning season than they did 3-4 months ago. Everyone would probably say that now is the time, almost by definition, to be a contrarian, but we just don’t think that is the highest probability event.
Bull-bear cases: While our base case is for low-to-mid-single digit returns, we do think it is prudent to modify our bear outcome, given it was last set during the throws of the August sell-off. We are raising our bear case from 1500 to 1600, though we still feel the bear case embeds a mild recession in the US. In our bear case, earnings are down 2% this year, and 5% per year for 2016 and 2017. At the end of 2016, investors would pay just above 15x earnings for a view that earnings will be $105.2, yielding a bear case target of 1600. This is roughly 23% down from today’s levels. In our bull case, one that could materialize if fiscal stimuli are positive, positioning and sentiment are low and begin to rise, the oil and dollar headwinds turn into tailwinds, and our original estimates of these benefits turn out to be accurate but just pushed out by a couple of quarters. In this bull scenario, earnings strongly surprise in Q4 and grow 6% per year to $137.1 in 2017. If investors pay a bit less than 18x these earnings, feeling relatively better about US equities and the duration of the cycle, this yields a bull case target of 2425, unchanged from our prior forecast and offering 16% upside from today’s levels.
Which is more likely? As MS admits, "Our Bear Cases Have More Downside Than Our Bull Cases Have Upside"...
... and cites multiple expansion concerns as the catalyst for the bearish tilt:
Which sectors does Morgan Stanley, a financial firm, think will outperform? "Surprisingly" financials.
Parker's summary:
"we see low-to-mid-single digit returns as likely for 2016, with modestly more downside in the bear case than upside in the bull case. We are viewing this more as a mid-expansion period where equity returns are not strong (much like 2015 so far), and not the end of the expansion. Should investors regain confidence that the US economy and US corporate behaviors are not likely to lead to a substantial earnings correction, we think the market could begin another more meaningful acceleration path in this expansion."
And after all these latest Morgan Stanley forecasts, it's time to go back to "struggling to explain why people think they can forecast the market multiple, oil, dollar, and rates given so much evidence to the contrary."
Las previsiones de JP Morgan:
Y estas para el euro dólar:
Para las bolsas:
Las valoraciones de las bolsas globales están ya bastante ajustadas, y en el ratio de Price/Sales la bolsa global esta incluso por encima del pico del 2007, y no porque las ventas estén deprimidas, porque también están en máximos históricos. A nivel de P/E y de P/B, la bolsa global también cotiza con una prima respecto a la media histórica. Donde siguen saliendo las bolsas baratas es en relativo a los bonos (Equity dividend yields vs Bond yields).
Poco que ganar en un año que se antoja difícil… ¿Acertarán? Abrazos
PD1: Desde la gestora de fondos BlackRock, buscan valor, lo que está barato:
PD2: No es una cuestión de coincidencia, es que va a ser muy complicado… 2016 = 3³+4³+5³+6³+7³+8³+9³
PD3: No hagas de tu día algo cuadriculado. Se rompen los horarios, los propósitos, lo que se pensaba hacer. No hay que tener miedo; hay que vivir con la certeza de que el Señor hoy va actuar por medio de ese hijo que te pide ayuda, de esa amigo que te da un consejo, de esa intuición que te brota del corazón y que te hace visitar, escuchar con calma o llamar a alguien… Puede que no hagas lo que habías pensado al levantarte, pero prueba a dejar que el día, en lugar de hacerlo tú cuadriculado, lo haga el Señor como quiera. Hay que fiarse de Dios y de lo que nos manda.
