Ni en EEUU:
Ni en Europa:
PD1: Es que todo ha cambiado y se parece muy poco la situación actual a la previa…
Draghi y su equipo de “magos” deberían recorrer Europa en coche. No tendrían dudas sobre la necesidad de subir tipos
La mayor parte de los bancos centrales actúan tarde y mal en los diferente escenarios económicos. Por eso, las burbujas explotan, porque son incapaces de evitar su formación y, en sentido contrario, se suceden las depresiones y el caos económico. La utilización de herramientas del pasado, su uso y abuso, aceleran ambos movimientos. Los bancos centrales se muestran incapaces de seguir la evolución del día a a día, atrapados, como están, en sus series estadísticas de antaño. Están ahora obcecados, entre otras cosas, en subir los índices de inflación, cuando los mercados ya saben que es misión imposible: los parámetros de ayer no sirven hoy. Un ejemplo ¿cómo medir en la renta de las personas la compra de un Iphone a un precio igual o superior a 1.000 euros? ¿se han dado cuenta del resurgir de la inflación subyacente, la que mide los precios de los servicios, bares, restaurantes, cafeterías, terrazas? ¿qué hay de la lucha a brazo partido por buscar alojamientos en alquiler sin que ello suponga un serio quebranto a los ingresos mensuales de individuos, familias o empresas? ¿y de la presión impositiva en los precios de los carburantes y el aumento obligado el consumo? Hay más ejemplos de la que ya algunos denominan como nueva inflación.
La irrupción violenta de la tecnología en el entramado económico, social y financiero ha sido de tal calibre, que ha arrinconado en términos de PIB a sectores antes tan relevantes como los bancos, la construcción o las telecomunicaciones. En términos de Bolsa, los grandes gurús han fracasado con sus políticas de inversión tradicionales basadas en el los PER y otros fundamentos de nuevo cuño. Pocos, muy pocos han sido capaces de proyectar las valoraciones piramidales de compañías como Tesla, Amazon, Apple, Facebook...
Draghi y su equipo de deben abandonar sus despachos por unas semanas y recorrer Europa en coche. Las autopistas de Francia e Italia están al borde del colapso. Entrar o salir de las grandes ciudades supone esfuerzos hasta hace poco impensables. Se pierde tiempo, dinero, paciencia y salud. Lo mismo sucede con las visitas a las ciudades con mayores registros de turismo. En España, la proyección es muy similar.
Lo que sucede en este mes de septiembre en Europa confirma un crecimiento mayor del que auguran algunos y el mantenimiento de altas tasas de inflación subyacente. Hay, en este encuadre, formaciones de burbujas en el sector inmobiliario, principalmente en las mejores zonas de las principales ciudades. El consumo es, ademas, muy alto respecto a unos salarios débiles. Se explica, así, que la Nueva Economía, que ha emanado de la anterior Gran Crisis refleje sus propias referencias: los coches son utilitarios en su mayoría por toda Europa. Ya no hay BMW, ni Mercedes, ni coches de gran cilindrada a mansalva, pero las autopistas están abarrotadas. Los ciudadanos comen pasta, bocadillos, y evitan restaurantes, aún notando en sus bolsillos que los bocatas y la pasta de hoy ya no tienen los precios del pasado.
Un largo paseo por Europa, convencería a Draghi y a su equipo de de que los tipos de interés negativos o 0 deben salir ya de esa zona, porque los peligros de burbujas y otros no recogidos en las estadísticas previas son muy elevados. Volvemos a estar en el mundo de Los mercados, no obstante, ya apuestan por alzas claras en los tipos de interés:
PD2: La inflación deteriora el nivel de vida de los inversores
Dos mensajes muy directos de Fidelity para evitar un deterioro en el nivel de vida de los inversores
David Buckle es el responsable del área de diseño de soluciones de inversión de Fidelity. Posee más de 22 años de experiencia como gestor de fondos y analista en las áreas de renta fija, tipos de cambio e inversión multiactivos. Después de doctorarse en Matemáticas (centrándose en la construcción de carteras), Buckle trabajó para varias gestoras de activos, como J.P.Morgan AM, Putnam, Merrill Lynch/BlackRock y UBS, además de gestionar una boutique de inversiones. Actualmente, es vicepresidente del Institute of Quantitative Investment Research. Toda esta experiencia profesional acumulada le da un bagaje muy importante en lo que respecta al conocimiento de la industria, de los mercados y del propio comportamiento de los inversores. Hoy este experto se muestra muy preocupado por la situación que vivimos, lo cual le ha empujado a lanzar dos mensajes clave.
PD3: Y la Presidenta de la FED, Janet Yellen, anda por las nubes sin enterarse de por qué no sube la inflación…, con pleno empleo:
Borio vs Yellen. Last Wednesday, Fed Chair Yellen, in her press conference following the latest FOMC meeting, reminded me of Alice in Wonderland. She wondered why inflation remained so curiously low. In the world that she knows, ultra-easy monetary policy should stimulate demand for goods and services, lower the unemployment rate, and boost wage inflation, which would then drive up price inflation.
Since the time Yellen became Fed chair on February 3, 2014 through today, the unemployment rate has dropped from 6.7% to 4.4% (from February 2014 through August 2017). Yet over that same period, wage inflation has remained around 2.5% and price inflation has remained below 2.0%. Yellen expected that by now wages would be rising 3%-4%, and prices would be rising around 2% based on the inverse correlation between these inflation rates and the unemployment rate as posited by the Phillips Curve Model (PCM)—which apparently doesn’t work on the other side of the looking glass.
Last Friday, Claudio Borio, the head of the Bank for International Settlements’ (BIS) Monetary and Economic Department, presented a speech explaining to Janet in Wonderland that the real world no longer works the way she believes. The speech was titled “Through the looking glass.” The BIS chief economist started with the following quote:
“‘In another moment Alice was through the glass … Then she began looking about, and noticed that … all the rest was as different as possible’ – Through the Looking Glass, and What Alice Found There, by Lewis Carroll.” He might as well have replaced Alice’s name with Janet’s.
I agree with Borio’s underlying thesis that powerful structural forces have disrupted the traditional PCM, which logically posits that there should be a strong inverse relationship between the unemployment rate and both wage and price inflation. I have been making the case for structural disinflation for almost all 40 years that I’ve been in the forecasting business. I’ve discussed how globalization, technological innovation, demographic changes, and Amazon have subdued inflation and continue to do so.
The central bankers have been late to understand all this. Most still don’t, including Yellen. So it’s nice to see at least one of their kind showing up at the structural disinflation party, which has been in full swing for a very long time.
Yellen’s Mystery. Meanwhile, Fed Chair Janet Yellen is still trying to come up with the answer to the following question: “What determines inflation?” She first asked that in a public forum on October 14, 2016. She did so at a conference sponsored by the Federal Reserve Bank of Boston titled “Macroeconomic Research After the Crisis” that should have been titled “Macroeconomic Research in Crisis.” She still doesn’t have the answer, as evidenced by a review of what Janet in Wonderland said at her press conference last Wednesday about inflation:
(1) Transitory. “However, we believe this year’s shortfall in inflation primarily reflects developments that are largely unrelated to broader economic conditions. …. The Committee continues to expect inflation to move up and stabilize around 2 percent over the next couple of years, in line with our longer-run objective.”
(2) Imperfect. “Nonetheless, our understanding of the forces driving inflation is imperfect, and in light of the unexpected lower inflation readings this year, the Committee is monitoring inflation developments closely.”
(3) Mysterious. “For a number of years there were very understandable reasons for that [inflation] shortfall and they included quite a lot of slack in the labor market, which [in] my judgment [has] largely disappeared, very large reductions in energy prices and a large appreciation of the dollar that lowered import prices starting in mid-2014. This year, the shortfall of inflation from 2 percent, when none of those factors is operative is more of a mystery, and I will not say that the committee clearly understands what the causes are of that.”
(4) Lagging. “Monetary policy also operates with the lag and experience suggests that tightness in the labor market gradually and with the lag tends to push up wage and price inflation….”
(5) Idiosyncratic. “So, you know, there is a miss this year I can’t say I can easily point to a sufficient set of factors that explain this year why inflation has been this low. I’ve mentioned a few idiosyncratic things, but frankly, the low inflation is more broad-based than just idiosyncratic things. The fact that inflation is unusually low this year does not mean that that’s going to continue.”
(6) Persistent. “Of course, if it, if we determined our view changed, and instead of thinking that the factors holding inflation down were transitory, we came to the view that they would be persistent, it would require an alteration in monetary policy to move inflation back up to 2 percent, and we would be committed to making that adjustment.”
(7) And again, mysterious. “Now, inflation is running below where we want it to be, and we’ve talked about that a lot during this, the last hour. This past year was not clear what the reasons are. I think it’s not been mysterious in the past, but one way or another we have had four or five years in which inflation is running below our 2 percent objective and we are also committed to achieving that.”
(8) Borio’s Solution. The man from the BIS has the answer for Fed Chair Janet Yellen and all the other central bankers who have a fixation with their 2% inflation targets: “Fuggetaboutit!” In his speech, Borio sympathized with their plight: “For those central banks with a numerical objective, the chosen number is their credibility benchmark: if they attain it, they are credible; if they don’t, at least for long enough, they lose that credibility.” His advice to just move past the quandary rests on many of the points I’ve been making on this subject for some time:
(1) Inflation is neither a monetary nor a Phillips curve phenomenon. He starts off by challenging Milton Friedman’s famous saying that “inflation is always and everywhere a monetary phenomenon.” He also acknowledges Yellen’s confusion: “Yet the behaviour of inflation is becoming increasingly difficult to understand. If one is completely honest, it is hard to avoid the question: how much do we really know about the inflation process?” He follows up with two seemingly rhetorical questions: “Could it be that we know less than we think? Might we have overestimated our ability to control inflation, or at least what it would take to do so?” The rest of the speech essentially answers “yes” to both questions.
As Exhibit #1, Borio shows that, for G7 countries, “the response of inflation to a measure of labour market slack has tended to decline and become statistically indistinguishable from zero. In other words, inflation no longer appears to be sufficiently responsive to tightness in labour markets.” If the PCM isn’t dead, it is in a coma.
Borio mentions, but doesn’t endorse, former Fed Chairman Ben Bernanke’s view that central bankers have been so successful in lowering inflationary expectations that even tight labor markets aren’t boosting wages and prices. In a 2007 speech, Bernanke explained: “If people set prices and wages with reference to the rate of inflation they expect in the long run and if inflation expectations respond less than previously to variations in economic activity, then inflation itself will become relatively more insensitive to the level of activity—that is, the conventional Phillips curve will be flatter.”
So according to Bernanke, the PCM isn’t dead, but in a coma because inflationary expectations have been subdued.
(2) Globalization is disinflationary. Borio, who seems to be the master of rhetorical questions, then asks: “Is it reasonable to believe that the inflation process should have remained immune to the entry into the global economy of the former Soviet bloc and China and to the opening-up of other emerging market economies? This added something like 1.6 billion people to the effective labour force, drastically shrinking the share of advanced economies, and cut that share by about half by 2015.” Sure enough, the percentage of the value of world exports for the G7 countries fell from 52.4% at the start of 1994 to 33.1% in April, as the percentage for the rest of the world rose from 47.6% to 66.9%.
I am getting a sense of déjà vu all over again. In my 5/7/97 Topical Study titled “Economic Consequences of the Peace,” I discussed my finding that prices tend to rise rapidly during wars and to fall sharply during peacetimes before stabilizing until the next wartime spike. I wrote: “All wars are trade barriers. They divide the world into camps of allies and enemies. They create geographic obstacles to trade, as well as military ones. They stifle competition. History shows that prices tend to rise rapidly during wartime and then to fall during peacetime. War is inflationary; peace is deflationary.” I called it “Tolstoy’s Model of Inflation”.
Borio logically concludes that measures of domestic slack are insufficient gauges of inflationary or disinflationary pressures. Furthermore, there must be more global slack given “the entry of lower-cost producers and of cheaper labour into the global economy.” That must “have put persistent downward pressure on inflation, especially in advanced economies and at least until costs converge.” That all makes sense in the world most of us live in, if not to the central bankers among us with the exception of the man from the BIS.
(3) Technological innovation is keeping a lid on pricing. Borio explains that technological innovation might also have rendered the Phillips curve comatose or dead, by reducing “incumbent firms’ pricing power—through cheaper products, as they cut costs; through newer products, as they make older ones obsolete; and through more transparent prices, as they make shopping around easier.”
Wow—déjà vu all over again! In the same 1997 study cited above, I wrote: “The Internet has the potential to provide at virtually no cost a wealth of information about the specifications, price, availability, and deliverability of any good and any service on this planet. Computers are linking producers and consumers directly.” I predicted that alone could kill inflation. Online shopping as a percent of GAFO retail sales rose from 9.1% at the end of 1997 to 30.3% currently.
Borio concludes, “No doubt, globalisation has been the big shock since the 1990s. But technology threatens to take over in future. Indeed, its imprint in the past may well have been underestimated and may sometimes be hard to distinguish from that of globalisation.”
(4) The neutral real rate of interest is a figment of central bankers’ imagination. Borio moves on from arguing that the impact of real factors on inflation has been underestimated to contending that the impact of monetary policy on the real interest rate has been underestimated. In the US, Fed officials including Fed Chair Yellen and Vice Chair Stanley Fischer have contended that the “neutral real interest rate” (or r*) has fallen as a result of real factors such as weak productivity.
Borio rightly observes that r* is an unobservable variable. Ultra-easy monetary policies might have driven down not only the nominal interest rate but also the real interest rate, whatever it is. Last year, in the 10/12 Morning Briefing, I came to the same conclusion, comparing the Fed to my dog Chloe barking at herself in the mirror when she was a puppy:
“In any event, in their opinion, near-zero real bond yields reflect these forces of secular stagnation rather than reflect their near-zero interest-rate policy since the financial crisis of 2008. …. Their ultra-easy policies have depressed interest income, reducing spendable income and also forcing people to save more. Cheap credit enabled zombie companies to stay in business, contributing to global deflationary pressures and eroding the profitability of healthy companies. Corporate managers have had a great incentive to borrow money in the bond market to buy back shares as a quick way to boost earnings per share rather than invest the proceeds in their operations.”
(5) Ultra-easy monetary policies are stimulating too much borrowing. Borio concludes that central banks should consider abandoning their inflation targets and raise interest rates for the sake of financial stability. He is concerned about mounting debts stimulated by ultra-easy money. I am too, and I’m also concerned about a potential for stock market melt-ups around the world.
The risk he sees is a “debt trap … [which] could arise if policy ran out of ammunition, and it became harder to raise interest rates without causing economic damage, owing to the large debts and distortions in the real economy that the financial cycle creates.”
PD4: Impresionante Borrell ayer: https://www.youtube.com/watch?time_continue=&v=4Cr89vNIZ9k Magnífico!!!
PD5: "Tu opinión la acepto, pero la decisión la tomo yo." Nos empeñamos en darle consejos utilísimos a la gente mayor, para que hagan, con los últimos años de su vida, lo que nosotros consideramos mejor para ellos, pero no aceptamos su negativa a que los cumplan. Hacen bien en no hacernos caso. Faltaría más. Ellos saben perfectamente lo que es bueno para ellos, y nuestras opiniones o consejos son solo eso… Las decisiones que tomen, aunque no nos gusten, es lo que han optado hacer…