25 enero 2018

han hecho ya lo que tenían que haber hecho en todo 2018

Aquí os presento el “parabólico” Dow Jones. Sin tregua alguna, sin descanso alguno, sin nada de volatilidad, sin importar que ya hay inversiones alternativas en renta fija…, siguiendo el comportamiento ridículo del bitcoin, en un mercado completamente impulsado por unas prisas que NUNCA han sido nada buenas:
En el gráfico del Dow Jones de arriba puedes ver que las caídas de 2008, que fueron muy fuertes (-50%) en muy pocos tiempo como recordarás, con múltiples quiebras bancarias, con una ayuda masiva de los bancos centrales, fueron peanuts: se pasó de los 14.000 puntos a los 7.000, a la mitad en pocos meses. Desde entonces subidas y subidas, y el despiporre último que no presagia nada bueno, ¿cómo las memeces de los bitcoins?
Y el SP500 llegó ayer, en los primeros días del año de bolsa, al objetivo de final de año según Goldman Sachs, llega en solo unos días a los 2850 puntos el SP500…, que es como tenía que estar a final de 2018. ¿Qué hacemos en los 11 meses y medio que nos faltan ¿?
Lo de la exuberancia irracional que se decía antes, ¿no vale ahora????
On this 16th day of trading in 2018, the S&P 500 has topped Goldman Sachs' estimate for where the index ends the year.
As a reminder, the S&P has never been more overbought...
And the 2Y Treasury is now yield almost 30bps more than the S&P 500 Divi...
Y todos buscan lo que puede hacer explotar esto:
Over the past 18-months or so, I have written several articles on the potential for a “market melt-up,” which I updated in last week’s post “Market Bulls Target S&P 3000.” 
“With investors now betting on a sharp rise in earnings to reduce the current levels of overvaluation, there seems to be little in the way of the next major milestones for 30,000 on the Dow and 3000 on the S&P 500.”
Note: For more on earnings and expectations read this past weekend’s newsletter.
I made the point specifically that “bull-runs” are a one-way trip. 
Throughout history, overbought, excessively extended, overly optimistic bull markets have NEVER ended by going “sideways.”
Not surprisingly that article elicited quite a few emails and comments asking “what would be the ‘pin’ that pricks the current bubble.”
The true answer is I don’t know exactly what the catalyst will be.
However, while much of the media is currently suggesting that interest rates are about to surge higher due to economic growth and inflationary pressure, I disagree.
Economic growth is “governed” by the level of debt and deficits as I discussed this past weekend. Tax cuts only make that problem worse in the long-term. But as shown above, it isn’t JUST the government that is heavily leveraged – it is every single facet of the economy.
Debt has exploded.
(The chart below shows the combined totals of Government, Corporate, Household,  Margin and Bank debt – in BILLIONS.)
Which leads us to our chart of the day.

Chart Of The Day (COTD)

Each time rates have “spiked” in the past it has generally preceded a mild to severe market correction.
However, when the economy is as heavily leveraged as it is today, higher borrowing costs rapidly slow economic growth as rising interest burdens divert capital from consumption. As I laid out previously, interest rates impact everything.
1) The Federal Reserve has been buying bonds for the last 9- years in an attempt to push interest rates lower to support the economy. The recovery in economic growth is still dependent on massive levels of domestic and global interventions. Sharply rising rates will immediately curtail that growth as rising borrowing costs slows consumption.
2) The Federal Reserve currently runs the world’s largest hedge fund with over $4 Trillion in assets. Long Term Capital Mgmt. which managed only $100 billion at the time nearly brought the economy to its knees when rising interest rates caused it to collapse. The Fed is 45x that size.
3) Rising interest rates will immediately kill the housing market, not to mention the loss of the mortgage interest deduction if the GOP tax bill passes, taking that small contribution to the economy away. People buy payments, not houses, and rising rates mean higher payments.
4) An increase in interest rates means higher borrowing costs which lead to lower profit margins for corporations. This will negatively impact the stock market given that a bulk of the “share buybacks” have been completed through the issuance of debt.
5) One of the main arguments of stock bulls over the last 9-years has been the stocks are cheap based on low interest rates. When rates rise the market becomes overvalued very quickly.
6) The massive derivatives market will be negatively impacted leading to another potential credit crisis as interest rate spread derivatives go bust.
7) As rates increase so does the variable rate interest payments on credit cards.  With the consumer are being impacted by stagnant wages, higher credit card payments will lead to a rapid contraction in income and rising defaults. (Which are already happening as we speak)
8) Rising defaults on debt service will negatively impact banks which are still not adequately capitalized and still burdened by large levels of bad debts.
9) Commodities, which are very sensitive to the direction and strength of the global economy, will plunge in price as recession sets in.
10) The deficit/GDP ratio will begin to soar as borrowing costs rise sharply. The many forecasts for lower future deficits will crumble as new forecasts begin to propel higher.
I could go on but you get the idea.”
Since interest rates affect “payments,” increases in rates quickly have negative impacts on consumption, housing, and investment which ultimately deters economic growth.
With “expectations” currently “off the charts,” literally, it will ultimately be the level of interest rates which triggers some “credit event” that starts the “great unwinding.”  
It has happened every time in history.
Given the current demographics, debt, pension and valuation headwinds, ten-year rates much above 2.6% are going to start to trigger an economic decoupling. Defaults and delinquencies are already on the rise and higher rates will only lead to an acceleration.
The problem with most of the forecasts for the end of the bond bubble is the assumption that we are only talking about the isolated case of a shifting of asset classes between stocks and bonds. However, the issue of rising borrowing costs spreads through the entire financial ecosystem like a virus. The rise and fall of stock prices have very little to do with the average American and their participation in the domestic economy.
Interest rates, however, are an entirely different matter.
Could rates go higher from here first? Absolutely.
But bonds will likely once again spend another decade, or so, outperforming stocks.
PD1: Vamos a tener unos mercados mucho menos rentables en el futuro. Todo lo que se ha ganado en los últimos años, es parte de lo que se tenía que haber ganado en el futuro. Están descontando a valor presente los flujos de beneficios que nos esperaban en el futuro…
Back in July, Howard Marks caused a stir in capital markets when his letter "There They Go Again... Again " laid out a bubble checklist which seemed to confirm that the current environment was just that. Since then, Marks has been dogged by an aura of bearishness, as he himself admits in his latest letter in which he writes that readers of his last few letters "perceived my stance as ultra-bearish.  This was epitomized by the TV commentator who reported, “Howard Marks says it’s time to get out.” 
Of course, Marks - always the diplomat - would never be so black and white, and he repeats, again, that "there are two things I would never say (since they require far more certainty than I consider attainable): “get out” and “it’s time.”  It’s rare for the market pendulum to reach such an extreme that views can properly be black-or-white.  Most markets are far too uncertain and nuanced to permit such unequivocal, sweeping statements."
Which brings us to Howard Marks' latest memo - after a surprisingly lengthy delay of 4 since his most recent, September memo - called Latest Thinking, in which we get more of the same, middle-of-the-road lukewarm caution that has, well... marked all of  Marks' recent letters. It is also why Marks' observations on the market this time are only 5 pages, with the rest dedicated to his observations on tax law.
In his discussion of markets, Marks notes that "most people (and certainly the media) want definite answers: in or out?  buy or sell? risk-on or risk-off?  But it’s rare for answers that simple to be correct" which is also why he thinks that most investors are never either "maximum aggressive" (100% invested in high-beta, high-risk assets, or maybe more than 100% through the use of leverage),or maximum defensive (100% cash, or perhaps being net short)... although based on recent surveys one can make the argument that investors have never been more bullish.
In this context, the Oaktree investor says that he wouldn’t want to be on either extreme:
I’d be someplace in between.  That’s easy to say.  But where?  Closer to the bullish end of the spectrum or the bearish end?  Or balancing the two equally?  My answer today, as readers know, is that I would favor the defensive or cautious part of the spectrum.  In my view, the macro uncertainties, high valuations and risky investor behavior rule out aggressiveness and render defensiveness more sensible.
So where "is" he? Confused, because with the S&P at a clearly bubbly 2,850, the "easy money has been made":
For one thing, I’m convinced the easy money has been made.  For example, the S&P 500 has roughly quadrupled, including income, from its low in 2009.  It was certainly easier for the p/e ratio to go from the low teens in 2011-12 to 25 today than it would be for it to double again from here.  Thus the one thing we can say for sure is that the current prospects for making money in U.S. equities aren’t what they were half a dozen years ago.  And if that’s the case, isn’t it appropriate to take less risk in equities than one took six years ago?
Additionally, current meltup aside - and it may well end in a crash - future returns will be far lower, if not negative.
Prospective returns are well below normal for virtually every asset class.  Thus I don’t see a reason to be aggressive.  Some investors may adopt an aggressive stance to be in the riskiest (and thus hopefully the highest-returning) assets; to squeeze out the last drop of return as the markets continue to rise (under the assumption they’ll be able to get out at the top, something that’s present in every strongly rising market); or to achieve a high return in this low-return world.  I don’t view any of those as good ideas.
And while Marks' repeats not to get out, he is rather close to urging just that. In his own words:
So I didn’t say, “Get out now,” and I still wouldn’t.  But I think this continues to be a time to incorporate a good helping of defensiveness in portfolio management.  Being fully invested in a cautious portfolio has been an appropriate stance over the last few years.  It gave Oaktree performance that in general was respectable or better.  Aggressiveness would have produced higher returns, of course, but I don’t think it could have been justified a priori.  (Is an incorrect decision one that didn’t work out well, or one that was wrong at the time it was made?  I insist it’s the latter, as you know.)
And today?  What has changed? 
To the four descriptors of the investment environment listed above, I would add three more:
+the economy is strengthening, not slowing, and Washington is supporting its progress,
+prices are even higher and valuation metrics have moved up,
+and, as I said, the easy money has been made.
Thus the current environment is still mixed – better fundamentally and worse price-wise.  The positive near-term economic outlook, lowness of interest rates, need of most investors for return and moderate psychology all seem to suggest it would be a mistake to get out.  On the other hand, the extremely high asset prices, macro-fragility and risky behavior going on all around us argue for considerable caution.
How does the current market melt-up figure in Marks' thoughts:
Today there’s beginning to be talk of a possible late-bull-market melt-up, making investors more money but perhaps fulfilling the requirements for a full-fledged bubble.  (This may be part of the usual pattern of capitulation that occurs when those who haven’t fully participated lose the will to keep abstaining after years of market gains.) 
The basic themes supporting the “melt-up” theory include (a) the existence of the fundamental positives listed above and (b) the arrival of euphoric psychology, which has been absent to date.
For me the key points regarding the general market outlook are as follows:
+The absence of widespread euphoria certainly is an important flaw in any near-term bearish view.
+Thus there’s no reason for confidence in the existence of a soon-to-burst bubble.
+Investor psychology continues to grow more confident, however.
+Asset prices are already unusually high.
+Future events remain unpredictable, but today’s high prices mean the odds are against a significant long-term upward move from here.
+No one can say what’s going to happen in the short term.
Asset prices and valuation metrics are certainly worrisome, but psychology and its implications – as well as timing – are unpredictable.  I think that’s about all we can know.
Thus Oaktree will continue to invest on the basis of value and its relationship to price, and to refrain from trying to time markets based on predictions regarding economies, markets or psychology.  The “melt-up” school says securities that already are highly priced may become more so.  We’d never bet on whether they will or won’t.
He concludes as he started: unsure what happens next, yet invested... warning of a potential move lower, yet long: 
"It’s impossible to say the negatives will win the tug-of-war anytime soon, but that doesn’t mean caution should be discarded . . . especially now."
PD2: Más de lo mismo…
Peter Schiff isn’t known for mincing words or sugarcoating the evidence.  The financial broker and economist said in an interview “the economy is going to blow up like a bomb,” and when that happens, Donald Trump will take all of the blame.
Not even a full minute into an interview with Alex Jones of Info Wars, Schiff says “it’s not a good thing” that the economy is going to crash and burn. “Unfortunately, that’s what Trump has inherited from Obama. But it’s not even really just Obama, it’s the federal reserve. It’s the monetary policy that has been passed like a baton from Clinton to Bush to Obama and now to Trump. And we’re near the end of the game and unfortunately, Trump’s gonna be the fall guy.  This thing is all gonna collapse while he’s president.
The tax cuts will give Democrats a reason to blame the collapse all on the Republicans, says Schiff.And we are getting close to this collapse.
“The important thing, is if you look at what’s happening in the dollar, for example, last year was the first year in five years that the dollar went down and it was the biggest decline in 14 years. We has the biggest drop against the Chinese Yuan in nine years, and in fact, I think this year we’re gonna fall to an all time record low against the Yuan. I think we’re gonna hit record lows against other major currencies like Euro and the Yen maybe by 2019 or 2020.”
Jones then asks Schiff what Trump is supposed to do to stop the crash. Schiff says there’s nothing he can do.  It’s set up to crash so the United States will end up with a left-of-socialist dictator such as Bernie Sanders as the next president.
“He [Trump] campaigned and said it [the stock market] was a bubble. It wasn’t his bubble.  Now it’s his bubble; that’s the problem. But if he would have said ‘it’s a bubble and it’s going down,’ it wouldn’t have been his fault.  Because part of the cure for the economy is deflating these bubbles. It has to be done. Someone has to rip this bandaid off and he was elected to do it.”
Jones then asks Shiff to walk him through what an economic implosion would look like.
“Here’s how it’s gonna go down. So, what’s gonna happen is interest rates are gonna keep rising, commodity prices are gonna keep rising, the dollar’s gonna keep falling, so you’re gonna start to see pick-ups in the official inflation rate. And so, rising consumer prices and rising interest rates are gonna start to be a powerful headwind for the economy because Americans are gonna be spending a lot more money on basic necessities, if they have an adjustable rate mortgage…costs are going up. Credit card debt, auto loans, all this cheap money is gonna be gradually going away and the economy is going to be weakening. And as the economy is weakening, unemployment is gonna start to pick up. Now the Fed is gonna see this. The Fed is gonna see the economy slowing down, and if they continue to raise rates, it will go into recession. Now, that’s better than the alternative.
But, the alternative, if the Federal Reserve decides that they want to prevent a recession or maybe fight off a recession if it happens and they don’t recognize it in time, if they wanna prop up the stock market, then what they have to do is call off the rate hikes.  In fact, I think that they have to go back to zero, they have to launch QE4 in order to keep interest rates from really spiking and to prop up the market, but that will set off a currency crisis. The dollar will plunge, not just make new lows. That will set of an economic crisis that’s far worse than the financial crisis or the recession that we are trying to avoid.”
Schiff then says the problem is also unfunded liabilities such as social security and Medicare.  He says that China doesn’t have any of those.  The Chinese rely on themselves, have disposable income, and save 30% of their income and taxes are almost nothing to keep businesses booming.  While Americans pay a lot of taxes, save only 3%, live paycheck to paycheck, and rely on the deeply indebted government. Becoming self-reliant and preparing yourself for this crash will give you a hand up in during the dollar’s collapse.
Jones then stated that “betting against America,” wasn’t a good idea.  But Schiff fired back.
I’m not betting against America. I’m betting against the socialists and central bankers who have destroyed America. In the long run, maybe America’s gonna come back. But first, we’re gonn have to pay the piper.”
PD3: Y otro más:
Nobel Prize-winning economist Robert Shiller told CNBC Tuesday that a market correction could come at any time and without warning...
"People ask 'well what will trigger [a market correction]?' But it doesn't need a trigger, it's the dynamics of bubbles inherently makes them come to a sudden end eventually..."
Shiller, who won the Nobel Prize for Economics in 2013 for his work on asset prices and inefficient markets, said that markets could "absolutely suddenly turn" and that he believed the bull market was hard to attribute totally to the U.S. political scene.
"The strong bull market in the U.S. is often attributed to the situation in the U.S. but it's not unique to the U.S. anyway, so it's hard to know what the world story is that's driving markets up at this time, I think it's more subtle than we recognize,"
Additionally Shiller writes in Project Syndicate that it is impossible to pin down the full cause of the high price of the US stock market, warning that this fact alone should remind all investors of the importance of diversification, and that the overall US stock market should not be given too much weight in a portfolio.
The level of stock markets differs widely across countries. And right now, the United States is leading the world. What everyone wants to know is why – and whether its stock market’s current level is justified.
We can get a simple intuitive measure of the differences between countries by looking at price-earnings ratios. I have long advocated the cyclically adjusted price-earnings (CAPE) ratio that John Campbell (now at Harvard University) and I developed 30 years ago.
The CAPE ratio is the real (inflation-adjusted) price of a share divided by a ten-year average of real earnings per share. Barclays Bank in London compiles the CAPE ratios for 26 countries (I consult for Barclays on its products related to the CAPE ratio). As of December 29, the CAPE ratio is highest for the US.
Let’s consider what these ratios mean. Ownership of stock represents a long-term claim on a company’s earnings, which the company can pay to the owners of shares as dividends or reinvest to provide the shareholders more dividends in the future. A share in a company is not just a claim on next year’s earnings, or on earnings the year after that. Successful companies last for decades, even centuries.
So, to arrive at a valuation for a country’s stock market, we need to forecast the growth rate of earnings and dividends for an interval considerably longer than a year. We really want to know what the earnings will do over the next ten or 20 years. But how can one be confident of long-term forecasts of earnings growth across countries?
In pricing stock markets, people don’t seem to be relying on any good forecast of the next ten years’ earnings. They just seem to look at the past ten years, which are already done and gone, but also known and tangible.
But when Campbell and I studied earnings growth in the US with long historical data, we found that it has not been very amenable to extrapolation. Since 1881, the correlation of the past decade’s real earnings growth with the price-earnings ratio is a positive 0.32. But there is zero correlation between the CAPE ratio and the next ten years’ real earnings growth. And real earnings growth per share for the S&P Composite Stock Price Index over the previous ten years was negatively correlated (-17% since 1881) with real earnings growth over the subsequent ten years. That’s the opposite of momentum. It means that good news about earnings growth in the past decade is (slightly) bad news about earnings growth in the future.
Essentially the same sort of thing happens with US inflation and the bond market. One might think that long-term interest rates tend to be high when there is evidence that there will be higher inflation over the life of the bond, to compensate investors for the expected decline in the dollar’s purchasing power. Using data since 1913, when the consumer price index computed by the US Bureau of Labor Statistics starts, we find that the there is almost no correlation between long-term interest rates and ten-year inflation rates over succeeding decades. While positive, the correlation between one decade’s total inflation and the next decade’s total inflation is only 2%.
But bond markets act as if they think inflation can be extrapolated. Long-term interest rates tend to be high when the last decade’s inflation was high. US long-term bond yields, such as the ten-year Treasury yield, are highly positively correlated (70% since 1913) with the previous ten years’ inflation. But the correlation between the Treasury yield and the inflation rate over the next ten years is only 28%.
How can we square investors’ behavior with the famous assertion that it is hard to beat the market? Why haven’t growing reliance on data analytics and aggressive trading meant that, as markets become more efficient over time, all remaining opportunities to secure abnormal profits are competed away?
Economic theory, as exemplified by the work of Andrei Shleifer at Harvard and Robert Vishny of the University of Chicago, offers ample reason to expect that long-term investment opportunities will never be eliminated from markets, even when there are a lot of very smart people trading.
This brings us back to the mystery of what’s driving the US stock market higher than all others. It’s not the “Trump effect,” or the effect of the recent cut in the US corporate tax rate. After all, the US has pretty much had the world’s highest CAPE ratio ever since President Barack Obama’s second term began in 2013. Nor is extrapolation of rapid earnings growth a significant factor, given that the latest real earnings per share for the S&P index are only 6% above their peak about ten years earlier, before the 2008 financial crisis erupted.
Part of the reason for America’s world-beating CAPE ratio may be its higher rate of share repurchases, though share repurchases have become a global phenomenon. Higher CAPE ratios in the US may also reflect a stronger psychology of fear about the replacement of jobs by machines. The flip side of that fear, as I argued in the third edition of my book Irrational Exuberance, is a stronger desire to own capital in a free-market country with an association with computers.
The truth is that it is impossible to pin down the full cause of the high price of the US stock market.
The lack of any clear justification for its high CAPE ratio should remind all investors of the importance of diversification, and that the overall US stock market should not be given too much weight in a portfolio.
PD3: Pregunta indiscreta: ¿Es mi presencia en mi casa indispensable para mi familia, o pueden prescindir de mi?
Si es así, ya pueden quererte macho, porque de otra manera estas jodido… O te has convertido en un mueble, o si te mueres no te echarán de menos… Haz algo, trata de volver a ser el tío importante que antes fuiste.