Sigue habiendo muchas dudas…
La temporada de resultados empresariales puede ser un momento eufórico para las acciones. Es un momento en que las empresas tienen la oportunidad de mostrar un crecimiento que coincida con sus valoraciones, y puede alentar la inversión de los traders que quieren entrar en el mercado. Pero esta vez puede que sea distinto advierte Morgan Stanley.
Una gran parte de eso tiene que ver con cómo los inversores se acercan a la temporada de resultados. Cuando los inversores anticipan fuertes resultados, las acciones tienden a subir anticipando las cuentas positivas solo para desinflarse cuando se conocen los resultados, según la firma.
Este escenario se jugó de forma relativamente benigna dos veces este año, con la pérdida máxima siendo solo del 3%. Pero esta vez será diferente, según los pronósticos de Morgan Stanley.
"Si las acciones siguen el patrón que han estado mostrando durante todo el año, la temporada de ganancias actual otorgará una oportunidad de venta cuando se conozcan los resultados y podríamos sufrir una corrección o consolidación decente", escribió un grupo de estrategas de acciones liderados por Michael J. Wilson en una nota a clientes . "A corto plazo, lo más probable es una corrección".
Entonces, ¿qué podría causar este descenso, que según la firma podría extenderse más allá del 5%? Wilson & Co. presenta cinco posibles catalizadores negativos:
1) La reducción del masivo balance general de la Reserva Federal
2) Sacar adelante la ley para reducir impuestos será más difícil que simplemente hacer promesas
3) El anuncio de un nuevo jefe de la Fed podría "perturbar las condiciones financieras"
4) El dólar de EE. UU., que acababa de salir de mínimos de varios años, parece estar revirtiendo las subidas
5) Los principales indicadores económicos están llegando a extremos, sugiriendo que es más probable que se estén formando techos
Con todo lo dicho, Morgan Stanley está lejos de pronosticar el final del mercado alcista de 8 años y medio en Wall Street. El banco simplemente advierte sobre la posibilidad de un retroceso relativamente leve desde valoraciones récord.
De hecho, la empresa es la más alcista de Wall Street, con un objetivo de 2.700 en el S&P 500 para finales del primer trimestre de 2018.
Como tal, Wilson recomienda que los inversores utilicen cualquier debilidad que se derive de una posible corrección como una oportunidad para volver a aumentar la exposición a la renta variable. En otras palabras, compre con la caída: el eslogan no oficial de este mercado alcista que parece imparable.
Abrazos,
PD1: Se torcerá…
Fidelity
El segundo mercado alcista más largo desde la Segunda Guerra Mundial sigue avanzando. Sin embargo, los inversores andan cada día más inquietos y se preguntan cuánto pueden durar los buenos tiempos. Las últimas Perspectivas de inversión de Fidelity International identifican tres grandes tendencias a tener en cuenta durante el próximo trimestre y ofrecen la visión de la compañía sobre la evolución de las grandes clases de activos, basada en una síntesis representativa de las opiniones de sus equipos de inversión. El informe pone de relieve que las valoraciones de algunas áreas se mueven en niveles ciertamente elevados pero, en general, se mantienen alejadas de los máximos de 2000. Desde un punto de vista fundamental, seguimos estando en el entorno “ideal” de crecimiento e inflación bajos que ha creado la positiva coyuntura en que se mueven los mercados desde hace algún tiempo.
Tres tendencias a seguir en el cuarto trimestre:
1. El mercado alcista está en su recta final, pero por ahora solo se puede esperar.
Hemos recorrido una gran distancia a lomos de este mercado alcista y algunos de los factores que lo han sostenido empiezan a agotarse. Sin embargo, la historia sugiere que la situación actual podría prolongarse algún tiempo. Saliendo del mercado antes de tiempo se corre el riesgo de dejar en la mesa una gran cantidad de rentabilidad potencial. El crecimiento mundial todavía es sólido, mientras que el de los beneficios sigue dando apoyo. Las rentabilidades por dividendo del S&P 500 son superiores a los rendimientos de los bonos del Tesoro de EE.UU. a 10 años, por lo que las acciones siguen teniendo cierto apoyo atendiendo a las valoraciones relativas. Por el momento se trata de aguantar y, al mismo tiempo, ir pensando cada vez más en cómo protegerse frente al riesgo de caídas.
2. El dilema de los bancos centrales: ¿Cíclico o estructural?
Actualmente, los bancos centrales tienen ante sí la difícil tarea de separar los factores cíclicos de los estructurales. La pregunta clave que hay que responder es la siguiente: ¿Estamos viendo una recuperación sostenible o simplemente un rebote cíclico dentro de un entorno de estancamiento a largo plazo? En nuestra opinión, la recuperación cíclica actual no es suficiente para justificar unos rendimientos significativamente más altos a tenor de problemas estructurales como el exceso de deuda, el envejecimiento de la población y la baja productividad, que dan a los inversores y a los bancos centrales muchas razones para prever que el crecimiento y la inflación seguirán siendo bajos durante algún tiempo.
3. La variable clave a seguir es la inflación
A la vista de las bajas tasas de paro, cabría esperar que hubiera presiones inflacionistas derivadas de las subidas salariales, pero no están dándose. Eso quiere decir que la economía estadounidense no está tan fuerte como parecerían sugerir los datos generales de empleo. La inflación estadounidense ha sido inusualmente baja durante seis meses consecutivos. La presidenta Yellen cree que la debilidad de la inflación será temporal, a pesar de recortar las propias previsiones sobre esta variable de la Fed. Sus proyecciones siguen indicando una subida de tipos en diciembre y tres subidas “dependientes de los datos” en 2018. De continuar la debilidad de la inflación, se plantearían dudas sobre el verdadero estado de la economía estadounidense, por lo que esta variable es el dato a seguir.
PD2:
Interesantes las previsiones de Nouriel Roubini:
The International Monetary Fund, which in recent years had characterized global growth as the “new mediocre,” recently upgraded its World Economic Outlook. But is the IMF right to think that the recent growth spurt will continue over the next few years, or is a temporary cyclical upswing about to be subdued by new tail risks?
NEW YORK – For the last few years, the global economy has been oscillating between periods of acceleration (when growth is positive and strengthening) and periods of deceleration (when growth is positive but weakening). After over a year of acceleration, is the world headed toward another slowdown, or will the recovery persist?
The current upswing in growth and equity markets has been going strong since the summer of 2016. Despite a brief hiccup after the Brexit vote, the acceleration endured not just Donald Trump’s election as US president, but also the heightening policy uncertainty and geopolitical chaos that he has generated. In response to this apparent resilience, the International Monetary Fund, which in recent years had characterized global growth as the “new mediocre,” recently upgraded its World Economic Outlook.
Will the recent growth spurt continue over the next few years? Or is the world experiencing a temporary cyclical upswing that will soon be subdued by new tail risks, like those that have triggered other slowdowns in recent years? It is enough to recall the summer of 2015 and early 2016, when investor fears of a Chinese hard landing, an excessively fast exit from zero policy rates by the US Federal Reserve, a stall in US GDP growth, and low oil prices conspired to undercut growth.
One can envision three possible scenarios for the global economy in the next three years or so.
In the bullish scenario, the world’s four largest, systemically important economies – China, the eurozone, Japan, and the United States – implement structural reforms that boost potential growth and address financial vulnerabilities. By ensuring that the cyclical upswing is associated with stronger potential and actual growth, such efforts would produce robust GDP growth, low but moderately rising inflation, and relative financial stability for many more years. US and global equity markets would reach new heights, justified by stronger fundamentals.
In the bearish scenario, the opposite happens: the world’s major economies fail to implement structural reforms that boost potential growth. Rather than using this month’s National Congress of the Communist Party as a catalyst for reform, China kicks the can down the road, continuing on a path of excessive leverage and overcapacity. The eurozone fails to achieve greater integration, while political constraints limit national policymakers’ ability to implement growth-enhancing structural reforms. And Japan remains stuck on its low-growth trajectory, as supply-side reforms and trade liberalization – the third “arrow” of Prime Minister Shinzo Abe’s economic strategy – fizzle out.
As for the US, the Trump administration, in this scenario, continues to pursue a policy approach – including a tax cut that overwhelmingly favors the rich, trade protectionism, and migration restrictions – that may well reduce potential growth. Excessive fiscal stimulus leads to runaway deficits and debt, which results in higher interest rates and a stronger dollar, further weakening growth. Trigger-happy Trump could even end up in a military conflict with North Korea – and, later, Iran – diminishing America’s economic prospects further.
In this scenario, the lack of reform in major economies will leave the cyclical upswing constrained by low trend growth. If potential growth remains low, easy monetary and credit policies could eventually lead to goods and/or asset inflation, eventually causing an economic slowdown – and possibly an outright recession and financial crisis – when asset bubbles burst or inflation rises.
The third – and, in my view, most likely – scenario lies somewhere between the first two. The cyclical upswing, in both growth and equity markets, continues for a while, driven by the remaining tailwinds. Yet, while major economies pursue some structural reforms to improve potential growth, the pace of change is much slower, and its scope more modest, than is needed to maximize potential.
In China, this muddle-through scenario means doing just enough to avoid a hard landing, but not enough to achieve a truly soft one; with financial vulnerabilities left unaddressed, distress becomes all but inevitable over time. In the eurozone, this scenario would entail only nominal progress toward greater integration, with Germany’s continued rejection of true risk-sharing or fiscal union weakening incentives for struggling member countries to undertake tough reforms. In Japan, an increasingly ineffective Abe administration would implement minimal reforms, leaving potential growth stuck below 1%.
In the US, Trump’s presidency would remain volatile and ineffective, with a growing number of Americans realizing that, despite his populist pretense, Trump is merely a plutocrat protecting the interests of the rich. Inequality rises; the middle class stagnates; wages barely grow; and consumption and growth remain anemic, at barely close to 2%.
But the risks of muddling through extend far beyond mediocre economic performance. This scenario represents not a stable equilibrium, but an unstable disequilibrium, vulnerable to economic, financial, and geopolitical shocks. When such shocks eventually emerge, the economy will be tipped into a slowdown or, if the shock is large enough, even recession and financial crisis.
In other words, if the world does simply muddle through, as seems likely, it could, within three or four years, face a more bearish outlook. The lesson is clear: either political leaders and policymakers demonstrate the leadership needed to secure a better medium-term outlook, or downside risks will materialize before long – and do serious damage to the global economy.
PD3: ¿Qué se descuenta: los beneficios empresariales, o la rebaja impositiva? ¿Qué pasará si no consiguen sacar la ley como las otras de Trump?
This past weekend, I discussed how the current rally since the election has been based on “hopes” for tax cuts and tax reforms as there was little evidence currently to suggest it was based on fundamental underpinnings. To wit:
“Do not be mistaken, this ‘rally’ IS all about tax cuts. Despite many who are suggesting this has been a ‘rational rise’ due to strong earnings growth, that is simply not the case as shown below. (I only use ‘reported earnings’ which includes all the ‘bad stuff.’ Any analysis using ‘operating earnings’ is misleading.)”
“Since 2014, the stock market has risen (capital appreciation only) by 35% while reported earnings growth has risen by a whopping 2%. A 2% growth in earnings over the last 3-years hardly justifies a 33% premium over earnings.”
The chart below expands that analysis to include four measures combined: Economic growth, Top-line Sales Growth, Reported Earnings, and Corporate Profits After Tax. While quarterly data is not yet available for the 3rd quarter, officially, what is shown is the market has grown substantially faster than all other measures. Since 2014, the economy has only grown by a little less than 9%, top-line revenues by just 3% along with corporate profits after tax, and reported earnings by just 2%. All of that while asset prices have grown by 29% through Q2.
But despite the data, many on Wall Street are suggesting the recent string of “record highs”is all about improving fundamentals and not about the “Trump agenda.” To wit:
“Charles Schwab executive Jeffrey Kleintop has a message for supporters of President Donald J. Trump who believe his election is behind recent stock market gains: The rally is not about him.
The president’s advocates attribute the upturn to anticipation of Mr. Trump’s efforts to cut taxes, decrease regulation and increase infrastructure spending. Mr. Kleintop doubts that the president’s anticipated policies have been decisive.
‘The Trump rally doesn’t exist, it’s rooted in the fundamentals.’“
What’s driving the markets upward are corporate sales growth and first-quarter earnings, both of which have registered their biggest gains in several years.”
Looking at the data above, not so much.
But let’s expand this data even more back to 1955. The chart below is an expansion of the real, inflation-adjusted, profits after-tax versus the cumulative change to the S&P 500. Here is the important point – when markets grow faster than profitability, which it can do for a while, eventually a reversion occurs. This is simply the case that all excesses must eventually be cleared before the next growth cycle can occur. Currently, we are once again trading a fairly substantial premium to corporate profit growth.
Since corporate profit growth is a function of economic growth longer term, we can also see how “expensive” the market is relative to corporate profit growth as a percentage of economic growth. Once again, we find that when the price to profits ratio is trading ABOVE the long-term linear trend, markets have struggled and ultimately experienced a more severe mean reverting event. With the price to profits ratio once again elevated above the long-term trend, there is little to suggest that markets haven’t already priced in a good bit of future economic and profits growth.
While none of this suggests the market will “crash” tomorrow, it is supportive of the idea that future returns will substantially weaker than in recent years.
No, We Aren’t In A New Secular Bull Market
Are we in a strongly trending “cyclical” bull market currently? Absolutely.
Are we in a long-term “secular” bull market as witnessed in the 80-90’s? Absolutely not.
Jeffrey Saut, the chief investment strategist at Raymond James, currently believes the latter. He suggests there may be nearly a decade left in this “secular bull” market, which is defined as a market that’s driven by forces that could be in place for years.
“I say secular bull markets last 16, 17, 18, 19, 20 years. And even if you start the measuring point in March of ’09, you still ought to have another seven, eight, nine years left in this thing. This is going to be the longest, strongest secular bull market of my career and I’ve been in the business 47 years.”
Personally, I hope he’s right as it would sure make my job of managing money easier for my clients.
However, as noted above, and as shown below, “secular bull markets,” which are long-term growth trends, have never started from 15x valuations and immediately surged to the second highest level on record. Historically, as shown below, secular bull markets are born of excessive pessimism and low valuations that stay in place for years as earnings and profitability grow faster than prices (keeping valuations lower.) Despite Mr. Saut’s hopes, that is simply not the case today as valuations exploded as earnings, economic and profit growth lagged the liquidity induced surge in asset prices.
We can see this more clearly by using a 10-year MEDIAN of Shiller’s CAPE ratio. By smoothing out valuation cycles it becomes substantially easier to see that “secular bull markets” have never been born at these levels, but rather died.
Importantly, the drivers behind the long-term secular bull market of the 80’s and 90’s are trends which simply do not exist currently. In the early 80’s and 90’s:
1.-Inflation and interest rates were high and falling which boosted corporate profitability.
2.-The extreme negative sentiment of the late 70’s was finally undone by the early 90’s. (At the turn of the century roughly 80% of all individual investors in the market began investing after 1990. 80% of that total started after 1995 due to the investing innovations created by the Internet. The majority of these were “boomers.”)
3.-Large foreign net inflows to chase the “tech boom” drove prices to extreme levels.
4.-The mirage of consumer wealth, driven by declining inflation and interest rates and easy access to credit, inflated consumption, corporate profits, and economic growth.
5.-Corporate profits were boosted by deregulation of industries, wage suppression, outsourcing and productivity increases.
6.-Pension funding requirements and accounting standards were eased which increased corporate profits.
7.-Stock-based executive compensation was grossly expanded which led to more “accounting gimmickry” to sustain stock price levels.
The dual panel chart below shows the economic fundamentals versus the S&P 500 and the change that occurred beginning in 1983. (Red dividing line)
Despite much hope that the current breakout of the markets is the beginning of a new secular “bull” market – the economic and fundamental variables suggest otherwise. Valuations and sentiment are at very elevated levels which are the opposite of what has been seen previously. Interest rates, inflation, wages and savings rates are all at historically low levels which are normally seen at the end of secular bull market periods, not the beginning of one.
Lastly, the consumer, the main driver of the economy, will not be able to again become a significantly larger chunk of the economy. With savings low, income growth weak and debt back at record levels, the fundamental capacity to re-leverage to similar extremes is no longer available.
While stock prices have certainly been driven much higher through the Federal Reserve’s ongoing interventions, that support both in the U.S. and Europe is coming to an end. The inability for the economic variables to “replay the tape” of the 80’s and 90’s, increases the potential of a rather nasty mean reversion at some point in the future. It is precisely that reversion that will likely create the “set up” necessary to start the next great secular bull market. However, as was seen at the bottom of the market in 1974, there were few individual investors left to enjoy the beginning of that ride.
Of course, with the virtual entirety of Wall Street being extremely bullish on the markets and economy going into the end of the year, along with bullish sentiment at extremely high levels, it certainly brings to mind Bob Farrell’s Rule #9 which states:
“When all experts agree – something else is bound to happen.”
PD4: "La revolución del amor comienza con una sonrisa. Sonríe a quien no quisieras sonreír." (Santa Teresa de Calcuta)
