09 diciembre 2016

Trump Rally

Seguimos con el efecto Trump y su política de desregulación que se ha llevado a los mercados a las nubes…, (bueno, han subido los bancos y las energéticas) ¿Hasta cuándo?
Para que te hagas una idea, desde las elecciones, han subido los bancos y, sin embargo, las FANG no les han seguido:
JPMorgan: +20%
Goldman Sachs: +30%
Morgan Stanley: +25%
Citibank: +18%
Bank of America: +33%
Facebook: -5%
Amazon: -2%
Apple: 0%
Google: -3%
¿Ridículo? ¿Comprarías tú bancos o small caps estadounidenses por el hecho de la nueva desregulación? ¿Tienen que subir en Europa los bancos, al alimón de los bancos yanquis, cuando las rentabilidades negativas les ahogan y nos queda mucho hasta llegar al tapering, y con los problemas de cada país (mora, bail outs en Italia, Deutsche Bank)? Es de coña y demuestra lo manipulado que están los mercados por los propios bancos, que mueven, cuando pueden, sus cotizaciones donde quieren.
When I was on CNBC on Monday afternoon, the discussion was over this stellar stock market performance of the past month, otherwise known as the “Trump Rally.”
Let’s examine it a little closer, if you don’t mind.
No doubt there have been stellar performances among the two sectors that stand to benefit most from the “D” word (deregulation): financials and energy. These were the two sectors that were on the long list for a long time in the event of a Trump victory.
Both have lived up to their billing, having advanced 14.1%, and 7.0%, respectively, since the election. These two sectors, representing just over 20% of the S&P 500 market cap, have accounted for all the gains since then. The other 80% of the stock market is flat as a pancake.
Now, I have no problem with financials and energy, and there likely is more upside too. The former was one of the few sectors heading into the election that was undervalued and the banks will get an added boost as well from expanded net-interest margins; the OPEC deal, if it holds together, is an added plus for the energy group.
But the other sector that has been getting heady has been the industrials – soaring on high hopes of some big infrastructure package.
The deregulation file is something that Donald Trump can do on his own and there is also support in Congress – especially with regards to Dodd-Frank and the Volcker Rule – but there is little appetite actually for a boondoggle spending program.
Besides, there always is infrastructure spending going on – the highway spending bill passed two years ago and the remnants of the American Recovery and Reinvestment Act of 2009. It’s just that infrastructure is a nice motherhood issue and it gets investors excited – but frankly, the up-move in industrials premised on infrastructure looks really overdone to me. And when you look at the stock market excluding financials, energy and industrials, well guess what? It is actually down fractionally since Nov. 8.
Go figure.
It is not a stellar market at all. Just a stellar performance by a couple of sectors.
And this is not a Trump Rally, by the way. The market likely would have rallied on a win by Hillary Clinton, too. Practically every new president back to Truman seven decades ago enjoys what is otherwise known as a Honeymoon Rally – the median stock-market advance the month after an election is nearly 1%.
Okay, so the president-elect is now at 3%, again skewed by two or three sectors. Big deal. Ronald Reagan, who was the original “Make America Great Again” advocate (as opposed to a copycat), saw the equity market soar 6% in his first month in office.
Guess what? The market peaked less than four weeks into his term and for the next two years we had an economic downturn and a 25-per-cent slide in the stock market. The combination of rising bond yields, Fed tightening and a stronger dollar took care of that honeymoon.
After all, we all know what happens when the honeymoon is over. The hard work begins.
That slump we just saw in October export volumes and widening in the trade deficit is surely just an early sign of what is to come.
Before The Donald does anything on his first hundred days, something tells me the lagged impact of the tightening in financial conditions associated with the recent bounce in interest rates and appreciation of the U.S. dollar is going to come back and bite the economy in the tush, as was the case heading into 2016.
As for the Treasury market, I get it. We were massively overbought at the July lows in yield, and the reversal in what was a negative term premium and a pickup in real rates that has accompanied a more loose fiscal policy outlook makes sense.
But there are 30 basis points of the run-up in yields since the election that do not make sense, and that is the increase in inflation expectations. There is no link at all between fiscal policy and inflation – look at Japan as a classic example.
For all the talk of a U.S. unemployment rate of 4.6%, that statistic is missing the nearly 12 million people either working part-time but want a full-time job and those not officially in the labour force but would take a job if offered one.
These folks serve up competition for jobs from the sidelines and help explain why wage growth is still rather modest.
So, the broad unemployment rate that includes marginally attached workers and those employed part-time for economic reasons is still elevated at 9.3% and I don’t believe we get to full employment until we break well below 8%.
Meanwhile, the U.S. dollar is firming and that will cause import deflation and the Fed, let’s face it, is tightening monetary policy.
So with all that in mind, I see 2% on the 10-year U.S. Treasury note yield (the yield is now about 2.4%) before we ever see 3% again. My two cents.
Le queda un poco más de tirón, y se acabó… No sé si no merece la pena el que se lo haya perdido.
Y en Europa, Draghi reduce el QE de 80.000 a 60.000 millones al mes, y lo alarga hasta finales 2017. Es decir, imprimimos 540.000 millones + que van a la caldera. Abrazos,
PD1: Es bastante insano:

The Equation That Explains It All

If you were just woken from some form of suspended animation from let’s say 2010 (ancient economic history in today’s terms) then informed of the current state of global political affairs and upheavals, U.S. employment (95+million not,) global currency gyrations, interest rates at not only 0% but some -0%, threats of escalating wars, threats of major confrontational war, GDP of the major global economies not only contracting, but below statistical stagnant, governments, as well as central banks with balance sheets of debt calculated in $TRILLIONS, some in the 10’s of, all financed at near or below 0%, and the Fed. is only about a week away from raising rates into the teeth of what can only be called “uncertainty,” and much, much more. (There isn’t enough time, or digital ink to list them all.)
Nobody would be surprised if your first reaction based on your prior acumen (the ancient history of 7 years ago whether it be in stocks, business, or both.) Would to become immediately concerned that whatever portfolio, or wealth you may have had in the markets, may be worth far less today than when you were first put to sleep. And probably becoming ever smaller as you thought about what you might need to do next in order to preserve any that may be left.
That is, till someone explained to you the markets you went to sleep knowing of – are no longer – and the reality of the markets today you could never have dreamed up. Even if they let you sleep another decade or longer.
Today, the markets you once knew of are better described as the “markets.”
To clear up any confusion as to how, or why the “markets” can now be at “never before seen in the history of mankind highs” once again after the resounding “NO” vote in Italy, where the entire E.U. experiment is now seriously undermined, and falling apart in real-time (Bexit first, Italy will surely now vote next, etc., etc,) below is the calculation that explains it all.
For under the rules of: If A = B and B = C, then A = C, you now have the magical formula to understand with Einstein like surety today’s ‘markets.”
If you have any doubt to the soundness of this expression, consider the following:
If a financial crisis appears (A) The central banks will intervene (B)
If the central banks intervene (B) The “markets” go up (C)
Thus, we need more financial chaos (A) To make even more all time “market” highs (C)
That is what “the greatest expression of capital formation the world has ever seen” has devolved into.
I’ve now come to the conclusion that even the term “casino” may no long fit. For these “markets” are no longer working on anything based on statistical math or economic expressions. Or, anything else related to understandable business metrics such as: a company’s value is based on net profits or any such thing.
No, there’s only one word for it now as to explain just how beholden it is to adhering, and repeating the above calculus. And it just so has it, Einstein said it best: “Insanity.”
PD2: De nuevo, el Reto
La manera en que saludas a una persona dice mucho de cómo amas a esa persona. Cuando te levantas por la mañana, la manera de dar los buenos días en casa con la persona que te cruzas, la expresión, tu cara, la manera en que hablas… de ese saludo con amor puede girar todo tu día y del que tienes junto a ti. Cuando comunicamos a alguien la felicidad que nos causa el verle, en el otro crece la autoestima.
Jesús nos dice que tratemos con amor y misericordia a nuestros enemigos. Posiblemente hoy te encontrarás con alguien que no te agrada demasiado, pero seguro que, por educación, le saludarás. ¿Y la persona que amas? ¿No se merece que le trates igual o diez veces mejor?
Muchas veces, con los más cercanos tenemos un trato muy duro, de poco amor y misericordia. Recuerda la parábola del hijo pródigo: el padre le saludó con un abrazo. ¿Cómo crees que se sintió al recibir el abrazo de su padre y escuchar su voz llena de profunda alegría? Sin duda que se sintió amado y agradecido.
Hoy el reto del amor es saludar desde el amor con una simple palabra, un gesto de cariño o tu tono de voz. Hoy, en tus saludos, cuida que sean cálidos y con entusiasmo: el Señor te da la oportunidad de tocar el corazón del otro. Recuerda, el amor es una decisión. Así que decide cambiar tu forma de saludar. Elige amar…