Economy

Highlights The Chinese economy is still slowing, and there is not yet enough evidence from forward-looking economic data to suggest a turnaround is imminent. Deflation has returned to China’s industrial sector. Even though overall price deceleration has been relatively mild, it is further squeezing already deteriorating industrial profit growth. We do not expect deflation to spiral into a 2015/2016-style episode, which removes at least one risk to our growth outlook. At the same time, a mild deceleration in prices will not provide enough incentive for Chinese policymakers to hit the stimulus button.  The People’s Bank of China’s new interest rate-setting regime, the LPR, will not provide much in the way of stimulus over the next few months. But it has the potential to improve China’s monetary policy transmission mechanism over the coming year, increasing the odds that policymakers will succeed in stabilizing economic activity. Short-term downside risks to growth have not abated, and we remain tactically bearish on Chinese stocks. Cyclically, we continue to recommend an overweight stance, on the basis of an eventual reacceleration in economic activity. Feature Chart 1The Chinese Economy Is Still Slowing China’s economy is at a critical juncture: “Half-measured” stimulus so far has been able to keep the domestic economy in better shape than in the 2015-2016 down cycle, but overall economic activity has not bottomed (Chart 1). The Sino-America trade talk has resumed at the moment, but the two sides have yet to make any substantive progress towards a deal. In the meantime, the global economy has also reached a critical point where the degree of economic weakness has the potential to feed on itself, possibly triggering a recession.1  This underscores our tactically bearish stance towards Chinese stocks versus the global equity benchmark. Barring more forceful stimulus or resolution on the trade front, any external shock and/or internal policy missteps could easily tip the Chinese economy into a deeper growth slowdown. Hence, downside risks remain elevated for Chinese stocks over the next 3- to 6-months.    The “D” Word Returns, But Won’t Spur Aggressive Further Easing Chart 2Industrial Price Deflation Returns Economic data over the past two months have provided mixed signals. Readings from both China’s National Bureau of Statistics (NBS) PMI and from the Caixin PMI show an improvement in the manufacturing sector. However, industrial deflation has returned to China: Three years after the country declared victory against a prolonged industrial destocking cycle, producer price inflation (PPI) relapsed into negative territory in July and declined further in August (Chart 2).   While prices are typically lagging indicators and reflect lingering effects from past economic conditions, there is not enough evidence in forward-looking economic data right now to suggest a turnaround in the economy is imminent.2  A deflationary PPI is not a trivial source of concern for Chinese policymakers. Last time growth in China’s PPI turned negative, it took policymakers four and a half years and an annualized 28% of GDP worth of credit expansion to pull the industrial sector out of its deflationary cycle. Chart 3Deflation Threatens Recovery In Industrial Profit Growth For investors, deflation has pernicious effects on profits, and we have received several client inquiries concerning the topic since PPI growth turned negative. The historical relationship suggests profit growth for both the A-share and investable markets is highly linked to fluctuations in producer prices (Chart 3), and China’s industrial sector profit growth has already been rapidly deteriorating over the past 12 months. The good news is that we do not expect the current episode of PPI deflation to become as protracted as it did in 2012-2016, or as severe as in 2015-2016. Two reasons underpin our view: Since early-2018, monetary policy has been much easier than during past deflationary episodes. Monetary policy in the past year and half has been much more accommodative than in the three years leading to the deep industrial deflationary cycle in 2015, particularly on the exchange rate front. The RMB was soft-pegged to a rising U.S. dollar before it was decoupled by the PBoC in August 2015, and was appreciating against its trading partners throughout most of 2012-2015. Bank lending rates were also kept at historically high levels during this period (Chart 4). This time, even though money and credit growth has not returned to the same pace as in 2015-2016, current ultra-loose monetary conditions should spur enough credit growth to keep prices from deflating aggressively. Chart 4Monetary Conditions Easier Than Last Cycle Inventory levels are low, and capacity levels do not appear to be overly excessive. After years of industrial consolidation, China’s industrial capacity does not appear to be particularly excessive compared to the past cycle. This is distinctively different from the prolonged contraction in PPI between 2012 and 2016, when China’s industrial inventories were coming off a five-year-long destocking cycle, and capacity utilization fell markedly (Chart 5). This is not the case today. Moreover, even though final demand has been weak, production has retrenched even more, drawing down inventories to the point where the pace of inventory destocking may have reached a cyclical bottom (Chart 6). A re-stocking of industrial goods should boost producers’ pricing power. Chart 5Capacity Is Not Excessively Underutilized Chart 6Inventory Destocking May Be Bottoming Out But the bad news (for investors), is that contained, or mild producer price deflation will not be reason alone to spur aggressive further easing from policymakers. This means that the re-emergence of price deflation, even mild and short-lived, will weigh on earnings and investor sentiment. Bottom Line: This episode of producer price deflation is unlikely to become as pernicious as occurred in the past, but policymakers are thus unlikely to act aggressively to counter it. While this removes some of the downside risks for Chinese stocks, even mild deflation will weigh on earnings growth (and thus sentiment) which underscores our tactically bearish stance on Chinese stocks. Demystifying China’s New Loan Prime Rate: Not The Stimulus You Are Looking For On August 20th, the PBoC launched a new loan prime rate (LPR) system, a revamped reference regime for setting bank loan interest rates3 (Chart 7). In September, the new LPR rate for one-year bank loans was lowered by five basis points. Since then, the market has been fixated on predicting whether the PBoC will cut the Medium-Lending Facility (MLF) rate next, which would be perceived as a change in China’s monetary stance. Chart 7China's New LPR: A Shadow 'Tax Cut' PBoC will increase its control of the pricing of credit, while tight financial regulations will restrict the size and speed of credit growth. The new LPR reform, in our view, is designed to force state-owned (and better-capitalized) commercial banks to hand out a “tax cut” to struggling small- and medium-sized enterprises (SMEs) by lowering bank lending rates. At the same time, it allows the PBoC to take back control of the pricing of credit from commercial banks, “killing two birds with one stone.” There are three main market implications from this approach: The new LPR is likely to gradually narrow the gap between corporate bond yields (i.e. “market rates”) and bank lending rates; A cut in the MLF rate in the near term should be interpreted as a “reward” to commercial banks rather than a stimulus for the economy; Most importantly, the new LPR system does not mean rapid credit expansion is in the cards. Quite the opposite, in the near term, banks may tighten their lending. The wide spread between the 3-month interbank repo rate and average bank lending rate illustrates the reason why the PBoC has introduced the LPR.4 This gap is also evident when comparing the yield of AAA-rated corporate bonds and the average bank lending rate (Chart 8). These gaps exist because Chinese commercial banks have largely manipulated the 1-year bank lending rate set by the PBoC when lending to their “preferred customers,” usually state-owned enterprises and real estate developers, by offering significantly discounted loan rates. Banks then charge substantial “risk premiums” on loans to the private sector, mostly SMEs, to make up for the narrower profit margins on loans to SOEs (Chart 9). Chart 8An Impaired Monetary Policy Transmission Mechanism Chart 9Evidence Of Asymmetrical Lending Practices The new LPR system is designed to minimize this discrepancy, since the new LPRs are more market based and are quoted based on the price of loans banks charge their prime clients. By design, the new LPR system should force the average bank lending rate closer to the rate companies borrow in the bond market. This means bank lending rates will be guided lower, including lending rates for SMEs. However, the new system will be implemented in phases, and the PBoC is likely to gradually guide LPRs lower to allow banks to readjust their pricing models.  The LPR rate is essentially the MLF rate plus bank profit margins (the added basis points above the MLF rate). The market will guide the top line lending rate, while the PBoC will have control over the floor rate (MLF) through open market operations. The fact that the PBoC is keeping the MLF rate unchanged while allowing the LPR to drop (albeit slightly) sends an explicit message: The PBoC is forcing banks to lower lending rates first before boosting their now-narrowed profit margins by lowering the MLF rate. In contrast to expectations of market participants that the LPR system will ease credit conditions, banks may actually tighten their lending in the coming months. While the PBoC will increase its control of the pricing of bank loans by the rate reform plan, the strengthening in financial regulations that has occurred over the past year will restrict the size and speed of credit growth. This combination has created more room for monetary easing without unleashing “animal spirits.” Borrowing costs to risky institutions have been higher since the Baoshang Bank takeover and are likely to remain elevated even if interest rates are lower (Chart 10). More importantly, mortgage and real estate developer loans together account for nearly 30% of total bank credit. Unless policymakers ease the brakes on lending restrictions to the property sector, bank lending growth is unlikely to pick up meaningfully (Chart 11). In fact, the PBoC has explicitly excluded mortgage and property-related lending from benefitting from the LPR rate cut.5 Barring a significant worsening in economic data, we do not expect the PBoC to lower mortgage lending and real estate-related loan rates in the coming months. Chart 10Tightened Financial Regulations Will Keep Cost Of Risky Lending High Chart 11Mortgage Rate Unlikely To Return To Its 2016 Low Finally, in the next two- to three-quarter mandatory implementation period, banks will be readjusting their pricing and credit risk-assessing models. During the transition, we expect more cautious sentiment among both lenders and borrowers. Hence, in the short term, bank loan growth may actually moderate. Bottom Line: The new LPR system may lower China’s banking sector profits in the short term. But in the next 6- to 12-months, we expect the PBoC to compensate commercial banks by keeping ample liquidity in the interbank system and by eventually lowering the MLF rate. The new LPR system may slow bank credit growth in the next few months, but after its full implementation (by the second quarter of 2020), it will have the potential to make PBoC’s policy more effective. Investment Conclusions We expect two phases of Chinese equity relative performance over the coming year: one phase of flat-to-potentially seriously down performance to last from now until sometime in the first quarter of 2020 when the economy bottoms, and then a phase of outperformance. Our expectation that the economy will bottom in Q1 2020 rests on the existing reflationary response by Chinese policymakers and an improved monetary transmission mechanism. Chart 12We Expect The Chinese Economy To Bottom In Q1 2020 Our expectation that the economy will bottom in the first quarter of 2020 continues to rest on the existing reflationary response by Chinese policymakers (Chart 12), and the fact that China’s new LPR system has the potential to improve what is currently a seriously impaired monetary transmission mechanism beyond the next two or three quarters. But the existing response of policymakers has been considerably more measured when compared to past economic cycles, meaning that equity investors are unlikely to be as forward-looking as they otherwise might be. Weak producer price deflation will weigh on investor sentiment, and it is unlikely to be weak enough to spur aggressive further easing. The potential for further escalation of the U.S.-China trade war also compellingly argues against an overweight stance in the near-term, even if we expect economic growth to subsequently improve. Consequently, we remain tactically bearish and cyclically bullish towards Chinese stocks: medium-term investors who are already positioned in favor of China-related assets should stay long, whereas investors who have not yet moved to an overweight stance should wait for a better buying opportunity to emerge over the coming few months.   Jing Sima China Strategist JingS@bcaresearch.com     Footnotes 1      Please see Global Investment Strategy Outlook “Fourth Quarter 2019 Strategy Outlook: A “Show Me” Market”, dated October 4, 2019, available at gis.bcaresearch.com 2      Please see China Investment Strategy Weekly Report “China Macro And Market Review”, dated October 2, 2019, available at cis.bcaresearch.com 3      Announcement of the People’s Bank of China on Improving Loan Prime Rate (LPR) Formation Mechanism, August 19, 2019, available at http://www.pbc.gov.cn/en/3688110/3688172/3877490/index.html 4      PBC Official Answers Press Questions on Improving Loan Prime Rate (LPR) Formation Mechanism, August 20, 2019, available at http://www.pbc.gov.cn/en/3688110/3688172/3877865/index.html 5      Announcement of the People’s Bank of China No.16, August 27, 2019, available at http://www.pbc.gov.cn/en/3688110/3688172/3881177/index.html Cyclical Investment Stance Equity Sector Recommendations

In this week’s Special Report we highlighted the leading properties of NIPA profits with respect to SPX profits. We note that NIPA’s leading property is likely a result of the broader universe of firms included in the number when compared with the S&P 500 (among other differences well documented here1), and currently NIPA profits are warning that economy-wide profits have likely peaked for the cycle (middle & bottom panels). Meanwhile, the SPX has remained immune to the crest in overall economy profits, but looking at the Value Line Geometric (VLG, gauging the median stock) index – which better corresponds to the NIPA profits as the index is more broad based and is not market capitalization weighted – reveals that earnings will likely remain under pressure (middle & bottom panels). Worryingly for the S&P 500, the VLG index is an excellent leading indicator of the SPX. Based on empirical evidence, it has led the SPX tops in the past three cycles, making it a serious contender for our “Chart Of The Year” award (top panel). Bottom Line: Remain cautious on the prospects of the broad equity market on a cyclical time horizon. For more details on the relationship between NIPA and S&P 500 profits, please refer to the most recent Special Report. Footnotes 1    https://apps.bea.gov/scb/pdf/national/niparel/2001/0401cpm.pdf 

Informe especial

Brief Market Overview The S&P 500 convulsed last week, as a slew of weaker-than-expected data shattered investors’ confidence in the longevity of the business and profit cycles. Importantly, both ISM surveys declined month-over-month, arguing that the manufacturing sector’s ails are infecting services industries (second panel, Chart 1). Chart 1The U.S. Dollar Is The Key Indicator To Monitor The “In Fed We Trust” doctrine will get severely tested in upcoming weeks. The Federal Reserve’s reaction function to the poor data took center stage with bond investors pricing a 75% probability of a rate cut in late October. However, our four factor EPS growth model continues to predict that earnings will remain weak for the rest of 2019 (not shown). Thus, next year’s 10% EPS growth is wishful thinking and profit growth will begin to bottom in Q1/2020 at the earliest. Absent profit growth, stocks will have to face reality and continue to drift lower. Importantly, the U.S. dollar – the great reflator – is the key determinant of both profit and global economic growth in coming quarters. The third panel of Chart 1 shows that currently that are no advanced economy central banks that have a policy rate higher than the Fed. Historically, this has been U.S. dollar bullish and has weighed on SPX momentum (trade-weighted U.S. dollar shown inverted, bottom panel, Chart 1). It remains to be seen if aggressive Fed easing can change this relationship, stave off recession and engineer a soft landing. U.S. Equity Strategy’s view remains intact that things will get worse before they get better and therefore a cautious overall U.S. equity market stance is still warranted on a cyclical 9-12 month time horizon. NIPA VS. SPX Profit Margins On the eve of earnings season, we decided to delve deeper into corporate profits and margins, and tally where we are in the cycle, specifically with regard to profit margin drivers. To start off, we compare overall economy profits, as measured by the NIPA accounts, with SPX earnings (Chart 2). While a lot of ink has been spent on this topic and the differences between these two profit measures are more or less well recognized and understood, Kenneth A. Petrick’s commentary on the issue is worth re-reading. Without going into much detail, according to Petrick four key reasons explain the differences between NIPA and S&P 500 profits: “coverage, changing shares, industry representation and accounting principles”.1 What interests us is the leading property of NIPA profits. Importantly, NIPA profits have peaked in advance of SPX earnings in the previous three cycles. Economy-wide profits may have already peaked this cycle, warning that the SPX earnings juggernaut is long in the tooth (top panel, Chart 2). Chart 2Earnings Fatigue Given that NIPA profits include a broader universe of firms, small and medium enterprise (SME) profits are weighing on the overall NIPA number. The recent drubbing in economically hypersensitive S&P 400 (mid-caps) and S&P 600 (small-caps) profit estimates confirms this SME profit deterioration and forewarns that SPX profits are likely running out of fuel. While the SPX has not cracked yet courtesy of the heavyweight S&P software index, the Value Line Arithmetic (VLA, gauging the average stock) and Value Line Geometric (VLG, gauging the median stock) indexes appear to have peaked and correspond better to the NIPA profits as these indexes are broad-based are not market capitalization weighted (bottom panel, Chart 3). Chart 3Top Chart Of The Year Worryingly for the S&P 500, the VLG index is an excellent leading indicator of the SPX. Based on empirical evidence, it has led the SPX tops in the past three cycles, making it a serious contender for our “Chart Of The Year” award (top panel, Chart 3). Not only have NIPA profits likely crested, but NIPA profit margins are in steep retreat and have definitively peaked. Similar to earnings, NIPA margins lead SPX profit margins (top panel, Chart 4). Importantly, the delta between the two margin gauges is surprisingly wide. This margin gap now sits nearly three standard deviations above the historical mean and has only been wider during the dotcom bubble (bottom panel, Chart 4). Our sense is that such an acute divergence is unsustainable and will likely narrow via a mean reversion in SPX margins. Chart 4Mind The Gap Primary Margin Drivers Taking a deeper dive into traditional margin drivers is instructive. We use SPX margins since 1960 and prior to that we have used reconstructed SPX earnings divided by U.S. GDP (gauging SPX sales) to recreate a longer-term equity market profit margin proxy. The primary net-profit margin drivers are: Interest rates, Tax rates, Labor costs / Globalization, And corporate pricing power. Globalization has been another significant profit margin booster in the U.S. As countries are more outward looking, trade flourishes and openness to trade allows the free flow of capital to take advantage of profit maximizing projects. The bond bull market since the early 1980s has been a clear contributor to the secular advance in profits margins. Interest rates cut both ways and the big rise in long-term bond yields post World War II ate into margins. If the bond bull market is ending, then interest rates will start eating into margins anew (interest rates shown inverted, top panel, Chart 5). Intuitively, taxes and margins are also inversely correlated (tax rate shown inverted, bottom panel, Chart 5). Following the 2018 fiscal easing package, the effective corporate tax rate is now hovering in the mid-teens and explains the jump to all-time highs in SPX margins. We doubt corporate tax rates will drop further. At best, taxes will be margin-neutral in the coming years. Rising labor input costs squeeze margins and declining wages boost corporate profit margins. While labor’s share of income tentatively peaked in 1980, the late-1990s is this series’ ultimate peak and since then, it has been in a steady decline (employee compensation shown inverted, second panel, Chart 5). This labor input cost suppression has likely run its course and given that the U.S. economy is at full employment, wage inflation should also start denting margins. Globalization has been another significant profit margin booster in the U.S. As countries are more outward looking, trade flourishes and openness to trade allows the free flow of capital to take advantage of profit maximizing projects. Following the end of the Great Recession and similar to the Great Depression, de-globalization has commenced (third panel, Chart 5). Chart 5Primary... Clearly, the Sino-U.S. war has accentuated and accelerated the inward movement of countries including Korea and Japan, and has had negative knock on effects on trade as evidenced by the now nearly two-year old global growth deceleration. The longer the U.S./China trade war remains unresolved, the deeper the cracks in the foundations of global trade. Such a backdrop is negative for profit margins, as inward looking countries prevent capital from being allocated most efficiently. Moreover, the uprooting of supply chains due to the trade war hurts margins and the redeployment of equipment in different jurisdictions will weigh on margins at a time when final demand suffers a setback. Corporate pricing power is deteriorating, which will negatively impact profit margins, given that they are joined at the hip. The current global manufacturing recession is wreaking havoc on selling prices around the world as a number of countries are experiencing outright producer price deflation. To compete, the U.S. corporate sector is doomed to suffer the same fate, which is depressing our Corporate Pricing Power proxy, an indicator composed of 60 top-down sector price series (bottom panel, Chart 6). Chart 6...And Secondary Profit Margin Drivers Secondary Margin Drivers The ability of the overall corporate sector to lift prices is largely a function of firming final demand (i.e. volumes) and a falling greenback for the 40% of SPX sales that are international. This leads us to two secondary profit margin drivers: The trade-weighted U.S. dollar, And the yield curve. The ability of the overall corporate sector to lift prices is largely a function of firming final demand (i.e. volumes) and a falling greenback for the 40% of SPX sales that are international. Thus, not only is S&P 500 revenue growth and the trade-weighted U.S. dollar tightly inversely correlated, but also the same holds true for the greenback and profit margins (U.S. dollar shown inverted, top panel, Chart 6). Given that the U.S. dollar refuses to fall and is breaking out according to some Federal Reserve trade-weighted indexes, the path of least resistance for profit margins points south. The yield curve is related to the primary “interest rate” driver discussed above, but its most important signal concerns the business cycle. Empirically, profit margins mean revert at the onset of recession (yield curve shown advanced, middle panel, Chart 6). As a reminder, parts of the yield curve inverted last December, signaling that a corporate profit margin squeeze is looming. Income Inequality And Margins Finally, we make an interesting geopolitical observation. Rising profit margins are synonymous with wealth accruing to the top 1% of U.S. families and vice versa. This relationship dates back to the late-1920s, as far back as our dataset goes. Using Piketty and Saez data excluding capital gains it is clear that profit margin expansion accentuates income inequality (Chart 7).2 Chart 7Income Inequality And Margins Rising profit margins lead to rising profits. Because families at the top of the income distribution are more often than not business owners, income disparities are the widest when margins are in overshoot territory. Eventually this income chasm comes to a head and potentially explains the rise of populism. Income re-distribution is therefore a rising probability event in the coming decades.3 Bottom Line: Unequivocally, all six key drivers we have identified (interest rates, tax rates, labor costs / globalization, corporate pricing power, yield curve and the U.S. dollar) are firing warning shots that profit margins have peaked and a “catch down” phase of SPX margins to NIPA margins is in store in the coming quarters.   Anastasios Avgeriou, U.S. Equity Strategist anastasios@bcaresearch.com   Footnotes 1      https://apps.bea.gov/scb/pdf/national/niparel/2001/0401cpm.pdf 2      https://eml.berkeley.edu/~saez/TabFig2017.xls 3      Please see BCA Geopolitical Strategy Special Report, “The End Of The Anglo-Saxon Economy?” dated April 13, 2016, available at gps.bcaresearch.com.

Aspectos destacados Todavía no vemos una recesión en los próximos doce meses, … : Las recesiones solo ocurren cuando la política monetaria es restrictiva. Ahora es acomodaticia, y pasará un tiempo antes de que las condiciones empujen a la Fed a ejecutar la serie de aumentos de tasas necesaria para que sea restrictiva. … pero eso no significa que no nos preocupemos, … : Aunque la curva de rendimiento invertida parece más una reflexión de las compras de activos de la Fed que una señal inequívoca de problemas, los indicadores líderes se han movido en la dirección equivocada durante todo el año. … ya que los datos de encuestas indican claramente que la confianza de los hogares y las empresas es frágil: Los índices de confianza del consumidor y las últimas encuestas ISM dan testimonio de un empeoramiento del ánimo. Los datos duros se están comportando mejor que los datos blandos, pero existe el peligro de que la ansiedad se vuelva una profecía autocumplida. Seguimos siendo constructivos, pero vigilantes ante los riesgos para la perspectiva de crecimiento: El mercado laboral sigue lo suficientemente vigoroso como para ejercer presión a la baja sobre la tasa de desempleo, y los servicios continúan expandiéndose a pesar de la contracción en la manufactura, tanto aquí como en el extranjero. La expansión se ha desacelerado, pero aún no ha terminado. Artículo Aunque el mercado petrolero rápidamente dejó atrás el ataque del mes pasado a la infraestructura energética saudí (Gráfico 1), a los inversores no les faltan otras preocupaciones. A una empresa no le resulta fácil comprometerse con gastos de inversión a largo plazo cuando las negociaciones entre EE. UU. y China oscilan entre un descongelamiento y un estado gélido según el día, el Brexit sigue siendo un traspié envuelto en una farsa dentro de una absurdidad, y se están cavando trincheras para una amarga batalla de impeachment en Washington. Los volúmenes de exportación globales se han contraído interanualmente en seis de los ocho meses hasta julio (Gráfico 2), lo que enfría las perspectivas de beneficios de las multinacionales. Los trabajadores saben que las empresas reducen plantilla cuando caen los beneficios, por lo que la confianza del consumidor también está sujeta a los vaivenes de las negociaciones comerciales. Gráfico 1 Las tensiones en Oriente Medio ya son cosa del mes pasado El ciclo de la preocupación El ciclo de la preocupación Las preocupaciones son bien conocidas, pero podrían provocar una recesión por sí mismas si persisten el tiempo suficiente. Gráfico 2 Si quieres menos de algo, impónle un impuesto Si quieres menos de algo, ponle un impuesto. Si quieres menos de algo, ponle un impuesto. Sería difícil ver el vaso medio lleno si los mercados no hubieran descontado desde hace tiempo las presiones de China y el Brexit. El espectáculo del impeachment es nuevo, pero no estamos seguros de qué deberían temer los inversores y las empresas de una administración de Pence. Sería difícil ver el vaso medio vacío si los datos de las encuestas no señalaran un deterioro constante del sentimiento que pudiera sembrar las semillas de una recesión. En conclusión, estamos en una etapa avanzada del ciclo, y la combinación de datos que se debilitan y tensiones geopolíticas está carcomiendo lo que queda del optimismo de los inversores. Nuestro indicador de recesión/mercado bajista La política monetaria estricta es una condición necesaria, aunque no suficiente, para una recesión. En el periodo de 60 años para el que mantenemos estimaciones de una tasa de fondos federales de equilibrio, las expansiones no se han detenido en seco cuando la tasa de fondos federales cruzó por encima de nuestra estimación de equilibrio, pero no se ha producido una recesión a menos que lo hiciera (Gráfico 3). Actualmente estimamos que la tasa de equilibrio está muy por encima de la tasa objetivo del 2%, que parece dirigirse hacia el 1.75% en la reunión del FOMC a fin de mes. Dado el ritmo benigno de la inflación actual, la política monetaria debería mantenerse acomodaticia durante todo 2020, si nuestra estimación de equilibrio está en el entorno correcto. Gráfico 3 La política monetaria es acomodaticia y se está volviendo más acomodaticia: Verde La política monetaria es fácil y cada vez más fácil: Green La política monetaria es fácil y cada vez más fácil: Green Aunque estamos seguros de que la Fed no está a punto de matar la expansión, los otros componentes de nuestro indicador sencillo de recesión están enviando señales preocupantes. La curva de rendimiento ha estado invertida durante cinco meses consecutivos. Una curva invertida ha sido históricamente un indicador fiable de que la política monetaria es demasiado estricta, y por lo tanto ha acumulado un historial envidiable para predecir recesiones (Gráfico 4). No obstante, la prima por plazo extraordinariamente negativa de hoy podría estar distorsionando el mensaje de la curva de rendimiento, distorsionando las comparaciones con períodos pasados.1 Gráfico 4 La curva se ha invertido, pero ... : Amarillo La curva se ha invertido, pero ... : Amarillo La curva se ha invertido, pero ... : Amarillo El cambio interanual del Leading Economic Index (LEI) del Conference Board es el otro componente de nuestro indicador de recesión. El LEI ha sido tan fiable como la curva de rendimiento, y se está desacelerando rápidamente (Gráfico 5). Observamos, sin embargo, que el LEI previamente se recuperó de dos caídas similares en esta expansión, y aún no se ha contraído. Dado su fuerte enfoque en la manufactura, el LEI probablemente no comenzará a acelerar sin un alivio sustancial de las tensiones comerciales, aunque un acuerdo limitado entre EE. UU. y China no está fuera del ámbito de lo posible. Gráfico 5 El crecimiento del LEI se desacelera rápidamente: Amarillo El crecimiento del LEI se está desacelerando rápidamente: Amarillo El crecimiento del LEI se está desacelerando rápidamente: Amarillo Conclusión: Un semáforo en verde y dos en amarillo no constituyen un respaldo rotundo de las perspectivas del ciclo económico, pero la combinación, no obstante, aboga por mantener el rumbo favorable al riesgo que ha recompensado abundantemente a los inversores a lo largo de la expansión. Un deprimente ISM manufacturero … Estados Unidos se ve afectado por las condiciones globales con un rezago, pero el informe ISM manufacturero de septiembre confirmó que finalmente se ve afectado por ellas. El lúgubre informe ISM manufacturero del martes pasado provocó una venta de dos días en el S&P 500 que las cadenas de televisión financieras se apresuraron a destacar como el peor inicio de un cuarto trimestre desde la crisis. El índice compuesto se situó muy por debajo del consenso de 50, cayendo a su nivel más bajo desde junio de 2009, y pasó un segundo mes consecutivo por debajo de la línea de 50 que separa auge y recesión por primera vez desde la recesión manufacturera global de 2015-16 (Gráfico 6, panel superior). Las exportaciones en desplome (Gráfico 6, segundo panel) y los pedidos nuevos estancados (Gráfico 6, tercer panel) lastraron la lectura compuesta. La única leve chispa de esperanza fue que una contracción de inventarios de considerable tamaño (Gráfico 6, cuarto panel) permitió que la relación Pedidos Nuevos/Inventarios subiera (Gráfico 6, panel inferior). Gráfico 6 La desaceleración manufacturera global llega a EE. UU. La desaceleración manufacturera mundial llega a Estados Unidos La desaceleración manufacturera mundial llega a Estados Unidos Gráfico 7 Los consumidores no se inquietaron por el ISM ... Los consumidores no se inmutaron por el ISM ... Los consumidores no se inmutaron por el ISM ... El informe sorprendentemente malo avivó otra ronda de lamentos recesionistas en los medios, aunque aparentemente no entre el público en general (Gráfico 7). La amenaza económica potencial proviene de la posibilidad de que la publicación desaliente la contratación y la inversión. El informe mensual de empleo de la NFIB publicado el jueves por la tarde sugiere que las empresas más pequeñas todavía buscan activamente cubrir puestos, aunque la cantidad de candidatos cualificados sigue disminuyendo. El modelo GDPNow de la Fed de Atlanta recortó su proyección de la contribución de la inversión fija no residencial al PIB del 3T de +10 a -10 puntos básicos tras la publicación del ISM manufacturero, pero prevé un crecimiento general del 1.8%. … y la confianza del consumidor se deteriora … Las encuestas líderes de sentimiento del consumidor también han estado cayendo, aunque se mantienen en niveles altos en relación con su historia (Gráfico 8). Esa dicotomía sostiene el debate toro contra oso, ya que los toros señalan el nivel elevado mientras que los osos citan la dirección a la baja. No resolveremos aquí la cuestión de nivel frente a dirección, pero observamos que el crecimiento del consumo real ha mostrado una correlación robusta con los componentes de expectativas de las encuestas. Las expectativas en declive apuntan a una caída del consumo, pero mientras el índice de expectativas se mantenga en o por encima de mediados de los 90, parece que el consumo mantendrá el crecimiento económico alrededor de su nivel tendencial (Gráfico 9). Gráfico 8 … y siguen siendo bastante optimistas ... Y Siguen Bastante Optimistas ... Y Siguen Bastante Optimistas Gráfico 9 El consumo aún parece estar bien El consumo aún parece estar bien. El consumo aún parece estar bien. … se enfrentan a datos duros aún sólidos Si bien los datos de encuestas han ido decepcionando sistemáticamente las expectativas (incluido, la semana pasada, el antaño temible ISM no manufacturero), los datos duros han sido fuente de sorpresas positivas. Desde principios de julio, cuando el índice de sorpresas económicas finalmente tocó fondo y se dedicó a revertir a la media, las medidas de actividad real han sido alentadoras (Gráfico 10). Aunque el informe de la situación laboral de septiembre mostró que el ritmo de contratación también se está desacelerando, y el crecimiento salarial desconcertantemente se estancó, la definición más amplia de la tasa de desempleo cayó por debajo del 7% por primera vez desde el pico del boom puntocom y está solo un punto por encima de su mínimo histórico (Gráfico 11Gráfico 12). Gráfico 10 Los datos duros han superado un listón bajo Los Datos Duros Han Superado Un Listón Bajo Los Datos Duros Han Superado Un Listón Bajo Gráfico 11 El mercado laboral sigue absorbiendo holgura El mercado laboral sigue absorbiendo la holgura El mercado laboral sigue absorbiendo la holgura Gráfico 12 Hay espacio para que la tasa de ahorro baje Hay margen para que la tasa de ahorro disminuya Hay margen para que la tasa de ahorro disminuya Poniéndolo todo junto Estados Unidos es una economía comparativamente cerrada que habitualmente reacciona a los acontecimientos globales con un rezago mayor que sus pares de economías principales. Estaba previsto que desacelerara este año por un impulso fiscal interno decreciente, pero la debilidad global ahora ha empezado a llegar a sus costas. La pregunta para los inversores es: ¿hasta dónde llegará la desaceleración? ¿Es simplemente una desaceleración a mitad del ciclo que afectará al crecimiento durante un trimestre o dos, o es el fin de la expansión? La Fed ha prometido actuar adecuadamente para sostener la expansión tantas veces este año que se ha convertido en un mantra. Los mercados lo están tomando en serio, tal como lo hicieron el jueves pasado, cuando el S&P 500 transformó una caída del 1% inmediatamente después de la publicación del ISM no manufacturero en una ganancia del 1%, y el viernes, cuando un informe de la situación laboral mixto dio lugar a otro repunte del 1%. Las malas noticias siguen siendo buenas noticias para las acciones siempre que los inversores crean que la Fed está dispuesta y puede aliviar la política monetaria para mitigar los riesgos para la perspectiva de crecimiento. En un mundo donde la acomodación monetaria es actualmente la regla entre bancos centrales grandes y pequeños, y la Fed tiene margen de maniobra para aflojar, creemos que las acciones están interpretándolo bien. No faltan motivos para que los inversores se preocupen, pero no deberían olvidar que la preocupación alimenta los mercados alcistas. Nuestra postura optimista también está respaldada por un útil máximo de trading. Cuando una acción no cae con las malas noticias (o no sube con las buenas), te está diciendo algo. En este caso, creemos que el repetido fracaso del S&P 500 por hundirse ante ola tras ola de malas noticias revela que ya ha descontado una cantidad considerable de pesimismo. Si, por ejemplo, surgieran noticias significativamente buenas de las negociaciones comerciales entre EE. UU. y China, las acciones podrían reanudar su marcha al alza en línea con el patrón histórico de mercados alcistas de esprintar hasta la línea de meta. Implicaciones para la inversión Los temores de que las encuestas débiles puedan convertirse en actividad débil están bien fundados. Existe un claro potencial de que el pobre sentimiento corporativo y del consumidor se convierta en una profecía autocumplida. Si los directivos de las empresas se quedan de brazos cruzados en medio de la incertidumbre sobre las reglas comerciales, la inversión corporativa y la contratación podrían secarse. El gasto de una persona es el ingreso de otra, y viceversa, y si los hogares desvían el gasto hacia el ahorro, los ingresos caerán. Si los hogares echan el freno en un momento en que las empresas nerviosas tienen poco apetito por invertir, sus ahorros permanecerán ociosos, no haciendo más que reducir las tasas de interés, lo que podría avivar una ansiedad adicional sobre las perspectivas de crecimiento. Puede que no tengamos mucho más que temer que al propio miedo, pero eso es suficiente, dada la naturaleza viral y auto-reforzante del temor. La buena noticia desde nuestra perspectiva es que no creemos que las empresas o los hogares hayan alcanzado el punto de no retorno. La demanda interna final real (PIB excluyendo ajustes de inventarios y exportaciones netas) se mantiene bien a pesar de las fuertes ventas en el mercado en el cuarto trimestre del año pasado, el cierre de gobierno federal de un mes y las continuas tonterías arancelarias. El mercado laboral sigue siendo ajustado, lo que debería ayudar a que las ganancias salariales se aceleren en un momento en que hay pocas posibilidades de que la Fed intervenga para contrarrestar presiones inflacionarias incipientes, abriendo la puerta a un círculo virtuoso. Ningún ciclo dura para siempre, y este seguramente está en sus etapas finales, aunque seguimos siendo positivos en el marco temporal cíclico de tres a doce meses. Somos más cautelosos a corto plazo, y puede ser apropiado posicionar las carteras de forma más conservadora de lo habitual en el horizonte táctico de cero a tres meses, manteniendo las posiciones con un control más estricto. Aunque los inversores tendrán que convivir con un elevado grado de preocupación durante los próximos meses, no deberían perder de vista que los mercados alcistas escalan una pared de preocupación. Doug Peta, CFA Jefe de Estrategia de Inversión para EE. UU. dougp@bcaresearch.com Notas al pie 1 Consulte el U.S. Investment Research Weekly Report de BCA titulado “¡Todos a la piscina!,” publicado el 24 de junio de 2019. Disponible en usis.bcaresearch.com.