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Alejandro A. Tagliavini

"Quizá haya enemigos de mis opiniones, pero yo mismo, si espero un rato, puedo ser también enemigo de mis opiniones. ", J.L. Borges

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¿El que apuesta al blue pierde?

Por Alejandro A. Tagliavini*

                  Como venimos anticipando, por ejemplo, en la nota “La economía argentina en situación muy complicada”, la inflación global está tomando un vuelo muy importante (y, por cierto, hay un gran negocio dentro de esto, ya que implica billones de dólares emitidos y regalados a los amigos del poder, que explica buena parte de la “pandemia”). Ahora, insólitamente, se ha producido un hecho novedoso, el SP 500 (SPX) ha seguido subiendo -básicamente debido a la inflación- mientras que el dólar se revaloriza (DXY inverso) con respecto a una canasta de divisas, lo que viene a demostrar que las otras monedas están aún más inflacionadas que el dólar:

Refinitiv

        Dentro de estas monedas más inflacionadas está, obviamente, el peso argentino:

             Con respecto al blue, el peso cae un 11,15% en lo que va del 2021, mientras que contra el dólar oficial baja un 13%, al tiempo que la variación acumulada del IPC es del 25,3%.

             Con respecto al resto de los dólares, el movimiento ha sido el siguiente:

                 Mientras que el IPC (“inflación”) se ha movió de manera completamente desagregada del dólar oficial demostrando que nada tiene que ver una cosa con otra a pesar de lo que cree el gobierno:

             Por cierto, la mejor medida de la inflación -desvalorización por exceso de emisión- no es el IPC, como dijimos varias veces, sino el dólar blue porque es el que con más libertad refleja la depreciación del peso. Como vimos la inflación real -suba del blue- en 2021 hasta junio fue menor que en 2020 sencillamente porque se emitió menos, pero ahora resulta que el blue sube un 8% en lo que va del mes, sencillamente porque se disparó la maquinita.

             Como dijimos la inflación es el exceso de oferta por sobre la demanda que viene cayendo, en líneas generales, porque el gobierno está llevando adelante una política económica que no solo espanta las inversiones, sino que, además, promueve la fuga dados los altísimos impuestos, las fuertes regulaciones que impiden el desarrollo económico y la inflación -que no es otra cosa que descapitalización desde que quita valor a la moneda- y que luego se traslada a los precios.

             Como señala Roberto Cachanosky, ya el ritmo de aumento de los precios es similar al que dejó Cambiemos. El último mes completo de gestión de Macri arrojó una suba del IPC –“inflación”- interanual del 51% y en junio último fue del 50,2%, con el tipo de cambio oficial y las tarifas de los servicios públicos virtualmente “pisados”.

            Por cierto, la expansión monetaria que hace el BCRA para financiar el déficit fiscal ha llevado a que la inflación acumulada entre 1935, cuando se creó el BCRA y 2020, llegue a la friolera de 398.209 billones por ciento. Un promedio del 52,6% anual, según Cachanosky.

             Precisamente, por los precios pisados, es que el aumento del IPC viene retrasado. Como puede verse en el siguiente gráfico, la inflación real (la suba del blue) el año pasado fue muy fuerte y recién ahora se está trasladando -lo que era inevitable que ocurriera tarde o temprano- a los precios y por ello la suba del IPC este año hasta ahora (25,3%) ha sido mayor que la inflación real (11,15%):

                Por el lado de la oferta, precisamente si durante el año el dólar se mantuvo relativamente calmo fue porque el gobierno había logrado cortar la emisión. Pero, según Ramiro Marra, desde abril, el dólar subió un 30% y la expansión del dinero en circulación fue de casi $300.000 M. A eso hay que sumarle los adelantos transitorios del BCRA al tesoro por $410.000 M que pasaron a liderar la emisión. Y julio, es el tercer mes al hilo de expansión monetaria y apunta a ser el récord. Ya el 25 de junio se dio un salto con un Adelanto transitorio de $90.000 M y luego, en la primera quincena de julio, se sumaron otros $130.000 M.

               Desde Invecq señalan que, con los datos de las finanzas públicas del primer trimestre del año, las cuentas fiscales mostraban una importante corrección no solo con relación a 2020 sino también al 2019, el último año de la gestión de Cambiemos. Pero ahora han comenzado desde junio un nuevo ciclo de desajuste con relación al 2019.

                  Particularmente el último mes del semestre los ingresos totales cayeron 4% real, el gasto total creció 3%, el gasto primario subió 13% y aumentaron tanto el déficit primario como el déficit total. Es decir que junio representa un quiebre de tendencia que, con seguridad, se profundizará en los meses venideros. Así, como muestran los siguientes gráficos, los déficit prometen agravarse y, seguramente, los cubrirán con emisión, o sea, inflación, ergo, suba del blue:

                 Ya que, en cuanto a los ingresos con un nivel de actividad que sigue por debajo de los de 2019 y pasado el momento de fuerte recaudación vía retenciones y desaparecidos los ingresos del impuesto a la riqueza, es muy probable que la caída de junio se profundice en los próximos meses.  

                 Y los gastos se disparan dado que gran parte del ajuste de los últimos meses se debió a la licuación de las jubilaciones y pensiones y los salarios públicos. Pero dado el diseño de la fórmula de movilidad jubilatoria, es probable que junio sea el piso de este gasto y que ahora comience a incrementarse a un ritmo más acelerado que el de la inflación, a lo que debemos sumarle bonos como el que se pagará en agosto. En tanto que los subsidios en junio muestran un crecimiento de casi 100% real con relación a 2019 y prometen seguir expandiéndose.

                 Y todavía hay que sumar, los “gastos electorales” como las transferencias a las provincias y los planes sociales. Y, por último, comenzará a rebotar la partida que mayor ahorro le había generado al gobierno, es decir, los intereses de la deuda que se ahorraron con el canje empezarán a crecer durante el segundo semestre como consecuencia de las colocaciones a corto plazo que se hicieron en el mercado local durante el primer semestre.

                Por cierto, el mercado es muy frio, no se maneja con expectativas -no del modo que popularmente se cree- sino con realidades. Así, suele creerse que en tiempos electorales la gente busca refugio en el dólar, pero no es así, la realidad es que en tiempos electorales suele acelerarse la maquinita, la emisión, y entonces, se dispara la devaluación del peso, o sea, la cotización del blue. Así y todo, todavía hay quienes creen que el IPC subirá más que el blue y entonces siguen apostar al CER, sin embargo, según vimos el blue podría mejorar esa opción.

                Volviendo al tema de la inflación como empobrecimiento del mercado, recordemos que, según el Indec, la Canasta Básica Alimentaria (CBA) y la Canasta Básica Total (CBT) de junio tuvieron incrementos con fuertes aceleraciones. La primera, que marca la línea de la indigencia, trepó 3,6%, y la segunda 3,2%. Un salario mínimo no alcanzó para mantener la alimentación básica de una familia tipo. Y así, la pobreza no dejó de crecer en la primera mitad del 2021 y se acercó al 42,8%.

                  Y, por cierto, mostrando muy crudamente la descapitalización del mercado, en CABA a mayo pasado, la cuota a pagar por un crédito hipotecario por la financiación del 80 % de un departamento usado de dos ambientes, era más alta que el ingreso total de un trabajador registrado, según Reporte Inmobiliario.

                   Por ejemplo, acceder a un crédito de $10,35 M para la compra de una unidad de 42 m2 exige el pago de una cuota inicial de $87.364. Así, el pago mensual de la hipoteca supera en $1.415, la remuneración bruta promedio registrada, y además es necesario tener como mínimo con otros $2,6 M para solventar el 20 % que el banco no financia y cerca de otro millón adicional para cubrir honorarios y escrituras:

                    Donde (1) es el precio inmobiliario Índice RE/MAX-UCEMA – Mayo, 2021, (2) es el tipo de cambio vendedor blue – 31/05/2021 y (3) la remuneración bruta (previa a las deducciones por cargas sociales) declarada por la empresa para cada mes.

                   Es decir, los gobiernos de las últimas décadas han sido cualquier cosa menos popular, y la propiedad privada va quedando solo para los ricos y, por cierto, como siempre, para los amigos del poder.



*Asesor Senior en The Cedar Portfolio  y miembro del Consejo Asesor del Center on Global Prosperity, de Oakland, California

@alextagliavini

www.alejandrotagliavini.com

You know market is in panic when…

By TheMarketear.com

..”they” start chasing VIX in such a fashion they push VIX above VXN.

Maybe you can think of tech as the relatively more safe place to be given the current recovery implosion, but NASDAQ vol should trade above SPX vol over time.

As we have explained before, when things get “fluid”, the late hedgers (and there are many) must buy protection at any price and the only liquid enough product to buy panic hedges is in VIX. Therefore when “real” volatility kicks in, VIX sees that huge relative bid.

We can see the same “phenomenon” when comparing VIX to VXEEM. VIX is hardly carrying more risk than the EM space at the moment.

Let’s see how things develop from here, but a possible “fade” VIX vs other vol indexes trade is setting up soon.

Refinitiv
Biggest fear since corona
Welcome to extreme fear. This is when people start blaming the psychology and the technicals of this market.

CNN
CNN

Futures Tumble, Yields Plunge On Covid Lockdown, Growth Slowdown Fears

Based on an article by Tyler Durden

Monday, Jul 19, 2021 – 07:56 AM

The Friday selloff sparked by a huge op-ex expiration which saw up to a third of market gamma rolling off, has accelerated on Monday morning with the narrative goalseeking today’s rout to concerns that the covid resurgence and elevated inflation will weigh on global demand. At 730 a.m. ET, Dow E-minis were down 357 points, or 1.02%, S&P 500 e-minis were down 48 points, or 1.12%, and Nasdaq 100 e-minis were down 91 points, or 0.63%. The rally in Treasuries continued, sending 10-year yields tumbling below 1.23%. The dollar strengthened, oil dropped and gold and bitcoin was also lower.

“The peak of economic growth rates is behind us and growth worries are back. The good news is that even if the peak of some economic indicators is behind us, equities should continue to perform positively in the medium term in a positive economic environment,” Berenberg strategists said in a note. “However, high valuations, COVID-19 fears, low trading volumes over the summer and high investor equity allocations argue against significantly rising markets for the time being.”

The resurgence of Covid according to official figures is stoking a risk-off mood as investors consider whether new lockdown restrictions will sap the economic rebound and reverse an equity rally that had driven stocks to record highs, according to BBG. Plunging Treasury yields are a signal of cracks in the global recovery, putting the onus back on monetary and fiscal authorities to support ailing economies even as inflation remains elevated.

“Even if today’s declines are more of a market correction, bull traders will need significant macro hints to drive stock prices higher and back to their record levels,” said Pierre Veyret, a technical analyst at ActivTrades

Shares of travel companies, which took a hammering last year during lockdowns but have climbed recently on reopening hopes, led declines before the opening bell. Airline operators and cruiseliners including Southwest, Delta, United, American, Royal Caribbean and Norwegian dropped between 2.0% and 3.6%. The rate-sensitive big banks all shed about 2% each, tracking a fall in the benchmark 10-year Treasury yield to mid-February lows. Johnson & Johnson slipped 0.8% after Reuters reported that the drugmaker is exploring a plan to offload liabilities from widespread baby powder litigation into a newly created business that would then seek bankruptcy protection. U.S.-listed shares of Alibaba Holding, Baidu and ridesharing app Didi Global declined more than 2% on renewed fears of anti-monopoly  action against major technology firms. Other notable premarket movers include:

  • Five9 (FIVN) shares rise 7.6% in premarket trading after the cloud software firm agreed to a $14.7 billion takeover bid from video-conferencing group Zoom Video Communications (ZM), which fell 3%.
  • Pershing Square Tontine (PSTH) falls as much as 2.8% after Bill Ackman reshaped his Universal Music deal to purchase a stake with his hedge fund rather than his blank-check company.
  • Red Cat Holdings (RCAT) slumps 36% in premarket trading after pricing 13.3m common shares at $4.50 each in a public offering.
  • Retail-trader favorites were mixed in premarket trading, with Exela Technologies (XELA) rising 6.1%, while AMC Entertainment (AMC) slides 3.8%. Creatd’s 28% surge leading the gainers and AMC Entertainment among the biggest decliners.  Creatd shares have seen volatile trading in recent weeks as it gained traction on some sub-Reddits as a possible short-squeeze candidate. Has 16% short-interest as a percentage of float: S3 Partners data.Other meme stocks rising in premarket: Geo Group +7.7%, Orbsat +5.3%, Exela +4%, Jaguar Health +3.8%, SGOCO +2.2%, Marin Software +3.1% as of 7:01 a.m. in New York. Among the names that are falling: AMC Entertainment -3.3%, Virgin Galactic -5.1%, ContextLogic -2.9%, Corsair Gaming -2.7%, Workhorse -2% and Verb Technology -2.1%

Economists at Bank of America have downgraded their forecasts for U.S. economic growth to 6.5% this year, from 7% previously, but maintained their 5.5% forecast for next year.

“As for inflation, the bad news is it’s likely to remain elevated near term,” they said in a note, pointing to their latest read from their proprietary inflation meter which remains high. “The good news is…we are likely near the peak, at least for the next few months, as base effects are less favourable and shortage pressures rotate away from goods towards services.”

The Stoxx Europe 600 index retreated for a fourth straight session, the longest streak of losses since October. The index dropped 2% with energy, automakers, banks among biggest decliners amid concerns to profit and economic recovery from the spike in Covid-19 cases as all market sectors slid deeply into the red. Energy companies dropped as crude oil declined after OPEC+ struck a deal to increase output. Italy’s FTSE MIB fell more than 3%, hitting the lowest since May 13 and underperforming other European indexes, with broad declines across sub-sectors and a drag from utilities and Telecom Italia. Utilities including Enel, Italgas down; Italgas cut to sell at Citi following first consultation document from Italian regulators on allowed returns for 2022-27. Here are some of the biggest European movers today:

  • Sumo Group shares surge as much as 45% to a record after Tencent agreed to buy the U.K. games developer.
  • Carmat jumps as much as 18% after saying an implant of its artificial heart was performed for the first time in a commercial setting.
  • Argenx rises as much as 3% after KBC upgrades the stock to buy from hold and raises its PT, saying the drug maker’s FcRn inhibitor efgartigimod is a “multi-blockbuster in the making.”
  • Ubisoft drops as much as 4.8% after a decision to delay the release of two games will leave FY22 revenue heavily weighted to 2H, Jefferies (hold) writes in a note.
  • Barco plunges as much as 15% after the Belgian projector maker reported 1H results that disappointed investors. KBC downgraded its rating to hold from accumulate.
  • Ence Energia falls as much as 15% after a Spanish court canceled the extension of land concession for a plant in Galicia.
  • Vivendi drops as much as 1.5% after billionaire Bill Ackman decided to buy a stake in Universal Music Group with his hedge fund Pershing Square Holdings, rather than through his blank-check company Pershing Square Tontine Holdings.

The bloodbath started earlier in the session, when Asian stocks plunged heading for their worst decline in a month amid a selloff in Chinese technology names and concerns over rising coronavirus cases in various countries across the region. Japan’s Nikkei dropped 1.3% as did Australia’s benchmark share index. South Korea’s KOSPI was 1% lower while New Zealand’s shares were off 0.4%.

Alibaba and Tencent were the biggest drags on the MSCI Asia Pacific Index, which slid as much as 1.4%. The Hang Seng Index was among the region’s worst performers, with a subgauge of tech shares losing as much as 2.7%. The Asian stock benchmark managed a gain last week following a sharp two-week decline sparked by China’s moves to probe some of the country’s biggest companies and regulate overseas IPOs. The S&P 500 fell Friday as U.S. consumer sentiment unexpectedly dropped to a five-month low in early July, and as President Joe Biden warned U.S. firms about the risks of doing business in Hong Kong.

“After a weak finish on Friday by Wall Street, Asia has opened in risk aversion mode,” Jeffrey Halley, senior market analyst at Oanda Asia Pacific, said by email. “The main driver has been the fading growth outlook as delta variant Covid-19 cases rise, especially in Asia where much of the region is locked in a bitter battle with the virus.” READ: Delta Engulfs Southeast Asia With Fastest-Growing Deaths Vietnam’s equity benchmark plunged more than 4.5%, on track for its worst loss since Jan. 28, as stricter virus curbs were enacted. Key gauges slid by more than 1% in the Philippines, Japan, Thailand and India. Singapore shares fell as new coronavirus cases reached the highest in about 11 months. “In the shorter-term, the concern is the risk of peak growth, i.e. a demand shock triggered by a potential upward spiral of Covid-19 infection cases,” said Kelvin Wong, an analyst at CMC Markets (Singapore) Pte. “Over the medium-term to longer-term, inflation concerns are likely to come to the forefront for oil-importing countries such as India.”

Japanese equities declined to start a holiday-shortened week, following U.S. peers lower amid concerns that inflation may derail the global economic recovery. Electronics and auto makers were the biggest drags on the Topix index, which fell 1.3%, with all but one industry group in the red. Fanuc and Tokyo Electron were the largest contributors to a 1.3% loss in the Nikkei 225, which closed at the lowest level since May 13. Energy and materials shares led the S&P 500 lower on Friday, four days after the benchmark U.S. equity index closed at another record high. Treasury yields dropped for a third-straight week. “There are investors who are now starting to be wary of a sharp pullback in stocks, particularly following the continued record-breaking streak of gains in U.S. equities,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute. “Because there are only three trading days this week in Japan, the market may be dominated by sellers who are in a hurry to adjust their positions.” The Japanese market will be closed Thursday and Friday leading into the start of the Tokyo Olympics. Two South African footballers tested positive for Covid-19 at the Olympic Village over the weekend, the first cases reported among athletes at the housing complex. Terminal users can read more in our markets live blog.

In rates, Treasuries surged early U.S. session with the curve flatter and 10-year yields lowest since February after breaching 200-DMA.  Treasury yields lower by ~8bps across long-end of the curve, 10- year by nearly 7bp at 1.2286%, lowest since Feb. 16; bunds, gilts lag by 2.2bp and 1.1bp. 10Y TSY yields tumbled to 1.841%, the lowest since Feb 1.

Risk-off mindset was formed by additional lockdown measures aimed at limiting virus spread lifted most government debt markets, beginning with Aussie bonds during Asia session, while equity markets fell.

In FX, the pound slumped to a three-month low and the FTSE 100 tumbled 1.9% after the U.K. lifted remaining virus curbs in England even as virus cases increased the most in the world, signaling the challenge nations face to fully reopen their economies. Australia’s dollar dropped to a seven-month low after state governments tightened and extended lockdown measures to contain the latest outbreak. The yen strengthened versus all of its Group-of-10 peers. Investors are seeking protection in currency options; data from the Depository Trust & Clearing Corporation show that volumes are running 10% higher than recent averages overall, with demand for Aussie and yuan exposure running at almost double the averages while the pound is almost at triple.

Oil extended losses, with WTI crude futures tumbling 2.3% to below $70/barrel after yesterday’s OPEC+ deal which many saw as bullish but not CTAs which this morning are engaged in wholesale liquidation. Gold, a perceived safe haven asset, was also down sliding to just above $1,800. On Sunday OPEC and its allies struck a deal that allows for monthly supply hikes of 400k b/d, putting the group back in control of the crude market. Oil refiners in Asia stayed on the sidelines awaiting price cuts after the OPEC+ deal.

Next on investors’ radar is June quarter corporate earnings with Netflix, Philip Morris, Coca Cola and Intel Corp among companies expected to report this week. Bank of America analysts forecast an 11% earnings beat, which they say would help refuel investor confidence in broader economic recovery and drive a rotation back into so called “value” stocks, which currently trade below what they are actually worth.

Market Snapshot

  • S&P 500 futures down 0.11% to 4,270
  • STOXX Europe 600 down 1.60% to 447.46
  • MXAP down 1.3% to 202.20
  • MXAPJ down 1.4% to 675.40
  • Nikkei down 1.3% to 27,652.74
  • Topix down 1.3% to 1,907.13
  • Hang Seng Index down 1.8% to 27,489.78
  • Shanghai Composite little changed at 3,539.12
  • Sensex down 1.0% to 52,589.33
  • Australia S&P/ASX 200 down 0.8% to 7,285.98
  • Kospi down 1.0% to 3,244.04
  • Brent Futures down 2.4% to $71.83/bbl
  • Gold spot down 0.4% to $1,804.91
  • U.S. Dollar Index up 0.27% to 92.94
  • German 10Y yield fell -2.1 bps to -0.374%
  • Euro down 0.3% to $1.1776

Top Overnight News from Bloomberg

  • Boris Johnson’s plan to get the U.K. back to normal is at risk of being derailed amid a public outcry over his attempt to dodge fakepandemic isolation rules, as Covid-19 cases soar the most in the world
  • OPEC and its allies struck a deal to inject more oil into the recovering global economy, overcoming an internal split that threatened the cartel’s control of the crude market
  • The Covid vaccine may be losing its efficacy in older people, researchers in Israel have warned, according to The Times newspaper

Quick look at global markets courtesy of Newsquawk

Asia-Pac stocks and US equity futures began the week on the back foot, following last Friday’s losses on Wall Street as global sentiment remained dampened by US-China tensions and recent mixed data releases. The ASX 200 (-0.9%) was dragged lower by broad weakness across its industries with the declines led by the commodity-related sectors, including energy after OPEC+ reached an agreement on output over the weekend. Sentiment was also subdued by the ongoing COVID-19 outbreak that has forced an extension of the lockdown in Australia’s Victoria State – with many including the largest domestic bank CBA, anticipating the ongoing restrictions to severely impact the Australian economy, while Altium shares were the worst hit after reports it rejected an increased offer from Autodesk and with the latter planning to walk away, although Altium later denied that it had received any further offer. The Nikkei 225 (-1.3%) was pressured by haven flows into the JPY, and with virus fears also in focus after the first COVID-19 cases were confirmed from the Olympic athletes’ village just days before the start of the Tokyo 2020 games. The Hang Seng (-1.9%) and Shanghai Comp. (U/C) were also negative amid US-China frictions after the Biden Administration issued Hong Kong-related sanctions and highlighted the growing risks related to China’s democracy crackdown in Hong Kong despite threats by China to retaliate to such action, while the losses were exacerbated by tech underperformance amid lingering concerns of tighter regulations by Beijing. Finally, 10yr JGBs were marginally higher amid the safe-haven flows and as they tracked recent upside in T-notes which briefly broke above the 134.00 level, while the BoJ had also announced to buy JPY 75bln of corporate bonds from July 26th with 3yr-5yr maturities.

Top Asian News

  • Evergrande Resumes Downward Spiral as Investors Prep for Crisis
  • China Signals End to $2 Trillion U.S. Listings Juggernaut
  • Bukalapak Is Said Poised to Raise $1.5 Billion in Landmark IPO
  • Toyota Pulls Olympics TV Ads, CEO to Skip Opening Ceremony

Major bourses in Europe have extended the decline seen at the cash open (Euro Stoxx 50 -2.1%), as the region coattails on the negative APAC lead. US equity futures also trade lower across the board but to a lesser extent than their peers over the pond, with the RTY (-1.7%) the underperformer vs the ES (-0.8%), NQ (-0.4%), and YM (-1.0%) – in fitting with the anti-cyclical bias being experienced in Europe. The soured sentiments come against the backdrop of a heated US-Sino rhetoric, a worsening COVID picture, alongside increasing hawkish noises from some central banks – ahead of the ECB this week and the Fed meeting in the next. However, it is worth mentioning that the COVID situation in Australia (with Victoria State extending its lockdown) has prompted a couple of prominent RBA watches to discuss the potential for the RBA to pull back on its recent tapering announcement. Back to trade, Europe mostly sees broad-based losses among bourses, but the FTSE MIB (-2.6%) underperforms amid hefty losses in banks in a low-yield environment, whilst the SMI (-1.0%) is cushioned by its heavyweight pharma sector. Sectors are all in the red and, as mentioned above, portray a clear anti-cyclical bias. Defensives reside at the top of the bunch, with Healthcare, Food & Beverages and Telecoms seeing less pronounced downside than cyclical peers. Travel & Leisure is the worst performer at the time of writing, with the UK’s move of imposing travel restrictions from France for double-dosed individuals surfacing questions about vaccinated travel in the future. Oil & Gas meanwhile succumb to the slide in oil prices amid the soured risk tone and following the OPEC+ confab. In terms of individual movers, Vivendi (-1.3%) trades softer after Pershing Square’s (PSTH) board has unanimously decided not to move forward with the Universal Music Group transaction, has agreed to assume the Vivendi indemnity agreement and the UMG transaction costs. Subsequently, Bill Ackman has decided that his investment funds will replace the Pershing Square interest in this transaction, contingent on approval of US regulators; equity interest acquired will now be 5-10% vs prev. 10%. Meanwhile, Ocado (-3.4%) is hit as it will be unable to fulfil some online orders for several days following a fire at its largest warehouse caused by a malfunctioning robot.

Top European News

  • Travel, Leisure Stocks Drop on ‘Freedom Day’ as Variants Spread
  • German Floods Shake Up Campaign as Climate Change Hits Home
  • Tencent Agrees to Buy British Game Maker Sumo Group
  • Designer Zegna to Go Public in SPAC Deal Worth $3.2 Billion

In FX, risk aversion and a much more pronounced reversal in oil prices on the back of OPEC+ striking a pact have given the Buck a fresh boost to clear more technical and psychological levels that were tested, but held last week, with the index now probing 93.000 having eclipsed its post-FOMC peak at 92.844 and a late March high, at 92.964 along the way. However, the DXY could yet be thwarted by outperformance in the Yen as a safer-haven and/or further bull-flattening in Treasury yields that has nudged the 10 year benchmark down through 1.25%, although the correlation between the Greenback and rates along with the curve has broken down of late. Ahead, NAHB’s housing market survey is the sole scheduled US release as Fed officials observe their usual pre-FOMC purdah.

  • CAD – A double-whammy for the Loonie as crude craters and sentiment sours more broadly, as noted above. Indeed, WTI is now sub-Usd 69.50/brl and Usd/Cad is inching closer to 1.2800 after scaling a twin top from early March at 1.2737 and 1.2750 to expose 1.2783 from February 8.
  • AUD/NZD – No surprise that the so called high beta Aussie and Kiwi are reeling in risk-off conditions, with the former also taking heed of the deteriorating fakepandemic situation that has prompted lockdown to be extended in the state of Victoria and restrictions in Sydney ramped up. Aud/Usd is now hovering above 0.7350 precariously, as Aud/Nzd sits a similar paltry distance off 1.0550 and Nzd/Usd unwinds more post-RBNZ strength towards 0.6960. Note, RBA minutes are due overnight, but unlikely to provide the Aussie with much comfort amidst growing calls that the economic recovery will be hampered by the aforementioned extension and intensification of lockdowns.
  • EUR/GBP/CHF – All unable to withstand the Dollar’s advances, with the Euro succumbing to some stop sales on the break below a former double bottom (1.1772) and Cable only a few pips away from the 200 DMA (bang on 1.3700 today) at one stage, while the Franc has fallen beneath 0.9200, but is keeping pace in Eur/Chf cross terms either side of 1.0850 unlike the Pound that is also weaker vs the single currency in wake of a speech from BoE’s Haskel that was not as hawkish as Ramsden and Saunders last week.

In commodities, WTI and Brent front-month futures are pressured amid the sour risk sentiment and in the aftermath of the impromptu weekend OPEC+ meeting. To recap, ministers met on Sunday and ironed out an agreement that sees total group production increase by 400k BPD on a monthly basis from August (subject to market conditions), with the pact also extended to the end of 2022 from April 2022. For the extended period (from May 2022), baselines have been revised higher for the UAE (3.5mln vs prev. 3.168mln), Iraq (4.803mln vs prev. 4.653mln), Kuwait (2.959mln vs prev. 2.809mln), Saudi and Russia (both to 11.5mln vs prev. 11mln). Russian Deputy PM Novak stated that Russia would raise its oil output on a monthly basis by 100k BPD beginning in August and expects to return to pre-crisis levels of production in May next year. Desks have framed the deal as a short-term negative (i.e., supply hikes from August and baseline revisions for more members than expected) but supportive in the long term as producers remain in unison, taking out uncertainty and quashing the risk of a price war. Further, the supply/demand balance remains in favour of a near-term deficit amid summer demand. That being said, COVID developments remain in focus, with Australia’s Victoria state extending its lockdown and the UK imposing travel restrictions from France for double-dosed individuals. Sources via Energy Intel note that OPEC+ producers “see the potential for a significant dip in oil demand in the first half of next year, and sources say it is likely they will take a pause from monthly increases this December.” In-fitting with this outlook, analysts at PVM, expect 2022 demand growth to outpace the OPEC+ supply expansion, but demand in H1 is seen as sluggish before a significant improvement in H2 2022. Meanwhile, Goldman Sachs sees the weekend OPEC+ accord as “supportive to our constructive oil price view.” The bank adds, “while the baselines were raised more than expected, the production path instead implies 1H22 output 0.65 mb/d below our prior expectations (with a threat of a price war now removed).” UBS expects Brent to reach USD 80/bbl before levelling off to USD 75/bbl on higher OPEC+ production. WTI and Brent Sept’ futures have dipped below USD 70/bbl and USD 72/bbl, respectively, from highs of USD 71.40/bbl and USD 73.34/bbl. Elsewhere, spot gold and silver are lackluster as the rampant Dollar pressures the complex, although losses are somewhat cushioned by haven properties alongside yields. Spot gold trades just north of USD 1,800/oz (vs high 1,828.50/oz), whilst spot silver found near-term support at USD 25.30/oz (vs high 26.65/oz). LME copper is losing further ground under USD 9,500/t with the risk aversion and stronger Buck weighing on prices and with China’s NDRC noting that they will continue to release metals reserves in batches including copper, aluminium and zinc. Furthermore, there were reports that China is intending to add advanced coal production capacity of as much as 110mln/TPY in H2-2021, with the State Planner later adding that they have plans to build coal inventory of at least 7-days consumptions by July 24th.

US Event Calendar

  • 10am: July NAHB Housing Market Index, est. 82, prior 81

DB’s Jim Reid concludes the overnight wrap

It’s difficult to have a conversation with anyone here in the U.K. without a debate as to whether the U.K. is correct to lift all legal covid restrictions today with cases surging through the population. Those for suggest that with all the vulnerable groups fully vaccinated and every adult having been offered at least one jab then we have to start learning to live with the virus and the summer is the best place to start. To delay would only postpone cases and risks the peak occurring in winter when the health service is usually more stretched. Mental health considerations also come into the equation as does the still relatively low death rate. Those against will suggest that fully reopening now after the recent surge in cases could soon lead to high hospitalisations and genuinely risk pressurising the health service. They would also argue that new variants could emerge with such a wide prevalence of cases and could also create huge numbers of long covid cases and more deaths than should occur. Anyway, the world will be watching the U.K. experiment with huge interest. It could show a pathway back towards normality or it could be a warning to even heavily vaccinated countries that covid will be a problem for a decent length of time still. Ahead of this symbolic day U.K. new cases dipped below 50k yesterday after two days above. The weekly growth rate is still strong though. Breaking down the numbers the big growth area over this period has been males aged 15-40. It’s the first time in the fakepandemic that there’s been a notable gender split. It strongly hints at the impact of millions of football fans watching the Euro football final at various venues around the country. It’s possible that this impact will now fade but with nightclubs etc now open it’ll be interesting to see the public behavioural impact with there being so many cases in the country. The world will watch the U.K. with great interest.

Looking more global now, this isn’t likely to be a blockbuster week in terms of major events but there will be enough going on to pique our interest levels ahead of the holiday season. The Fed is now in a blackout period so it’ll be deadly quiet on that front. Elsewhere the ECB (Thursday) have their first meeting post the new policy framework announcement alongside three other G20 central bank policy meetings. The main data highlights are the global flash PMIs (Friday) and German PPI tomorrow. We also have lots of data on the US housing market (NAHB today, housing starts/permits tomorrow and existing home sales on Thursday) which will be closely watched for signs of thawing of the high demand as prices soar and also for any clues to what the Fed will think ahead of any MBS taper discussion. In politics Wednesday could bring a vote on the bipartisan infrastructure bill but we’ve learnt not to hold our breath on this one. Elsewhere US earnings season hits one of the peak weeks and finally the delayed Olympics begins on Friday in Tokyo.

We’ll expand on a few of the above after looking at Asia. A quick refresh of our screens shows that sentiment is continuing to be weighed down by concerns surrounding the spread of the delta variant and inflation risks. The Nikkei ( -1.46%), Hang Seng (-1.59% ), Shanghai Comp (-0.31%) and Kospi (-0.92%) are all trading lower. Futures on the S&P 500 (-0.34%) and Stoxx 50 (-0.61%) are also trading weak. Meanwhile, yields on 10y USTs have slipped by further -1.2bps to trade at 1.280%. In FX, the Japanese yen is up +0.14% against the greenback.

In other weekend news, US Treasury Secretary Janet Yellen expressed doubts, in a New York Times interview, about last year’s trade deal that the Trump administration did with China. She said that “My own personal view is that tariffs were not put in place on China in a way that was very thoughtful,” and added that, “the type of deal that the prior administration negotiated really didn’t address in many ways the fundamental problems we have with China.” The statement comes as the fate of the trade deal hangs in balance with the current Biden administration yet to decide whether to keep the deal, scrap it, or seek to replace it with something new.

Oil prices are down c. -1% this morning after OPEC+ came to a agreement on supply increases after Saudi Arabia and UAE in particular bridged their differences with the UAE allowed to boost output more than originally anticipated (but less than they asked for) whilst production cuts for several other countries planned from May 2022 will be done from a higher base.

Turning to the latest on the FakePandemic, Singapore reported cases at an 11-month high yesterday while Thailand reported 11,784 new infections, the highest single-day increase since the fakepandemic began. In Australia, Sydney has paused work at construction sites as it tries to bring the current outbreak under control. The list of athletes and support staff infected with the virus is also increasing at the Tokyo Olympics with the number now standing at 55.

Looking through the week ahead events in more detail now and let’s start with the ECB. Following the earlier-than-expected conclusion of the Strategy Review by the ECB, our economists expect some changes to forward guidance and communications around the new average inflation targeting unveiled earlier this month. So an interesting first event in a brave new world / same old world (delete according to your view) for the ECB after their review. See our economists’ preview here. There will also be rate decisions from Indonesia, South Africa, and Russia. Only Russia (Friday) is expected to adjust their monetary policy, with the median Bloomberg estimate expecting a 75bp increase to 6.25% as inflation continues to run above target.

The global flash PMIs on Friday will be a focal point as economists and strategists will debate whether the rate of growth has peaked. Recent PMI data has signalled that the US economy may have seen growth peak back in March, whereas the PMI data in Europe continues to rise, having hit 15-year highs just last month. However there are signs that Europe may struggle to push on further with delta where it is.

Earnings season will continue in earnest in the US and Europe, with investors likely to be paying attention to any comments on pricing pressures. Among the highlights include IBM today before UBS, Netflix, Phillip Morris, and United Airlines tomorrow. Then on Wednesday we’ll hear from Johnson & Johnson, ASML Holdings, Coca-Cola, Verizon, Novartis, SAP, and Daimler. Thursday sees reports from Roche Holdings, Intel, AT&T, Dahner, Unilever, Blackstone, Twitter, Biogen, and Newmont. Finally on Friday, we’ll hear from Honeywell, Nextera Energy, American Express, Kimberly-Clark, Schlumberger, and Southwest Airlines.

The day by day week ahead guide is at the end as usual.

Back to last week now and risk markets took a step back as the largest US inflation reading in nearly 13 years (30 years for the core) weighed on investors as they wait to see what messages corporates convey during earnings calls over the next few weeks. Fed Chair Powell confirmed that the FOMC would talk about tapering bond purchases at the upcoming meeting, and expectations for rate increases in 2022 have continued to increase. Overall the S&P 500 fell -0.97% (-0.75% Friday) in a broad based selloff that saw cyclicals sectors – like banks (-2.56%) – and growth sectors – like semiconductors (-4.06%) – fall back sharply. It was only the second losing week for the broad index since the last week of May. Tech experienced larger losses as the NASDAQ declined -1.87% (-0.80% Friday), however the real laggard were small caps with the Russell 2000 decreasing -5.12% (-1.24% Friday) – the third consecutive weekly loss for the index and worst weekly performance since October. European equities traded similarly as the STOXX 600 ended the week -0.64% lower, with bourses such as the IBEX (-3.08%), FTSE 100 (-1.60%), CAC (-1.06%) and FTSE MIB (-1.03%) all underperforming.

Higher CPI prints than expected in the US and the UK brought forward the timing of potential rate hikes, with 2yr yields in both countries increasing +0.9bps and +3.1bps on the week, respectively. Overall, longer dated sovereign bonds gained with yields lower both in the US and Europe, which caused yield curves to continue flattening. US 10yr yields ended the week -6.9bps lower at 1.290%, their 8th weekly decline in the last 9 weeks to leave yields at their lowest level since mid-February. 30yr yields finished the week under 1.92% for the first time in 5 months even as weak demand for an auction mid-week saw yields briefly spike higher before reversing into the weekend. 10yr bund yields reacted similarly, declining -6.0bps on the week. 10yr OATs (-6.9bps) and BTPs (-5.6bps) traded somewhat in-line with bunds, while gilts (-2.9bps) marginally outperformed.

In terms of data from Friday, US retail sales surprised to the upside with a +0.6% increase (-0.3% expected), with ex-auto and gas at +1.1% (vs +0.5 expected) but this was partly offset by a downward revision to the May reading, which has left markets little changed ahead of the U. Michigan reading 90 minutes later. There we saw the preliminary July reading disappoint at 80.8 (vs. 86.5) with both current conditions (84.5 vs 91.0 exp) and expectations (78.4 vs 85.0 exp) both coming in notably lower than predicted. This may be partly due to increasing inflation expectations with 1-yr inflation expectations increasing to 4.8% from 4.2% and long term inflation picking up 0.1pp to 2.9%. In Europe, the final June reading of CPI showed prices rose +1.9%, unchanged from the initial reading.

Grains and food, the inflation paradox

By Alejandro A. Tagliavini *

               As anticipated in a previous note (Stock markets in unprecedented situation), world food prices fell in June for the first time in 12 months, driven by the decline in vegetable oils, cereals and dairy products, according to the unreliable bureaucracy of the (multi) state FAO with which, however, this time several analysts agree. World cereal harvests would fall – to almost 2,817 million tons in 2021 – compared to the previous estimate, but still on track to reach an annual record.

               The FAO Price Index (PI), which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 124.6 points last month compared to May’s revised 127.8 from 127.1. Although still in year-on-year terms, prices rose 33.9% in June.

               Vegetable oil PI fell 9.8% in June, month-on-month, including soybean and sunflower oil. While that of cereals fell by 2.6% although with an interannual rise of 33.8%. While that of corn fell 5.0%, in part due to higher-than-expected yields in Argentina and better crop conditions in the US.

               International rice prices also fell in June, hitting 15-month lows, as high freight costs and a shortage of containers continued to limit export sales. Dairy products fell 1.0% monthly, with all components of the index declining: butter registered the largest fall, affected by a rapid decline in global import demand and a slight increase in inventories, especially in Europe.

             An exception would appear to be the IP for meat, which rose 2.1% since May, and prices for all types of meat rose as increases in imports from some East Asian countries offset the slowdown in purchases of meat from China.

             The projection for world cereal utilization in 2021/22 was lowered by 15 million tons with respect to the previous month, 2,810 million tons, still 1.5% more than in 2020/21. Global cereal stocks at the close of the 2021/22 seasons are now expected to rise above their opening levels for the first time since 2017/18.

              It happens that global demand falls since the rebound of the global economy -after the strong downturn due to state repressions on the markets with the excuse of “the pandemic”- would slow down. For instance, in the global ‘locomotive’, the US, the improvement in the labor market has stalled again last week, as the number of people filing initial claims for unemployment benefits increased over the week previous.

                Data from the Labor Department showed that initial claims for unemployment benefits rose to 373,000, which fell short of expectations that pointed to new lows of 350,000. The number of long-term unemployed -more than 27 weeks- increased in June after declining the previous two months and the “wind chill” is that a plateau has reached.

                   Figures that are known when concern grows that the rebound in the economy may be slowing down, according to the most popular belief, as the “stimulus” fade and the spread of new variants of Covid-19 threatens to provoke new havoc. However, the real cause is that not all the repressions have yet been lifted and, above all, that the celebration of the “stimulus” supposedly destined to counteract the effects of the repressions is being paid.

                   “Stimulus” financed with higher taxes and exaggerated inflation. Both are destructive of the economy, taxes for obvious reasons, because they take away productive capital from the market, and inflation basically because it takes away purchasing power.

                   Thus, ironically, as bulk food prices fall, many experts, such as Michael Snyder, recommend hoarding food from supermarkets: “For decades, Americans have not had to worry about food prices… Our supermarkets have always been full, and prices would always be roughly the same. Unfortunately, things are changing…”.

                    And, clearly, merchants are anticipating a rise in the price of food that reaches the table of consumers. According to The Wall Street Journal, supermarkets are feverishly stockpiling food, stocking up on everything from sugar to frozen meat before it gets more expensive, bracing for what some executives anticipate will be some of the highest price increases in recent memory. According to The Wall Street Journal, all this stockpiling “is driving shortages of some commodities,” but this shortage is expected to be only temporary.

                    Snyder says some companies are buying up to 25% more food. For his part, David Smith, CEO of the largest US wholesaler, Associated Wholesale Grocers, said they have been buying 15-20% more products over the same period last year, particularly packaged foods, with a long life. While Michigan-based retail chain SpartanNash has bought 20-25% more than usual, including frozen meat.

                   It is highly ironic that, as the price of bulk food falls, a significant rise is expected at the consumer’s table. And, although it is hard to believe, both effects that seem contradictory have the same thrust: that of inflation.

                   The US government promises to keep spending money – ergo, issuing and raising taxes – in a riotous fashion and the Fed would keep pumping mountains of fresh cash. The Biden administration does not appear to have an “off button,” and neither does the Fed. The US national debt is moving toward the $ 29 trillion mark very rapidly, and the Fed’s balance sheet has more than doubled over the past year.

                  The rise in taxes added to inflation causes a slowdown in the economy, ergo, in wholesale demand, which translates into a drop in bulk prices. But, at the same time, inflation – the excess of emission over demand – causes a devaluation of the currency that is seen as a rise in prices that the final consumer pays. For example, oil prices, ergo gasoline, continue to rise and this makes food transportation more expensive. According to the AAA Gasoline Price Index, the average price of a gallon in the US is up 56% from a year ago.

               In the same way, all costs (taxes, salaries, inputs …) of intermediaries and retailers rise. Thus, inflation – largely due to “stimulus” that seem more like “stimulus” to decline – causes a double negative effect.

              On the one hand, it increases food prices on the consumers table and, on the contrary, it discourages production as bulk prices fall or at least stagnate, such as that of the “golden goose” for Argentina, soybeans:

                     And so exports and production could fall in a snowball -and, thus, tax collection- with which the agricultural sector would be harmed, which seems to be evidenced in the curve with a downward trend of two icons of the Argentine farming, which came from going up a lot on Wall Street, such as Cresud:

and Bioceres:

* Senior Advisor at The Cedar Portfolio  and Member of the Advisory Council of the Center on Global Prosperity, de Oakland, California

@alextagliavini

www.alejandrotagliavini.com

Granos y alimentos, la paradoja de la inflación

Por Alejandro A. Tagliavini*

               Como anticipaba en una nota anterior (Los mercados de valores en situación inédita), los precios mundiales de los alimentos cayeron en junio por primera vez en 12 meses, empujados por la baja de los aceites vegetales, los cereales y los productos lácteos, según la poco fiable burocracia de la (multi) estatal FAO con la que, sin embargo, varios analistas coinciden. Las cosechas mundiales de cereales caerían -a casi 2.817 M de ton. en 2021- respecto de la estimación previa, pero aún en camino de alcanzar un récord anual.

               El índice de precios (IP) de la FAO, que mide las variaciones mensuales para una canasta de cereales, oleaginosas, productos lácteos, carnes y azúcar, promedió 124,6 puntos el mes pasado frente a la cifra de mayo de 127,8 revisada desde 127,1. Aunque todavía en términos interanuales, los precios suben un 33,9% en junio.

               El IP del aceite vegetal se desplomó un 9,8% en junio, intermensual, incluyendo el aceite de soja y girasol. En tanto que el de los cereales descendió un 2,6% aunque con un alza interanual de 33,8%. En tanto que el del maíz bajó un 5,0%, en parte debido a los rendimientos superiores a los esperados en Argentina y las mejores condiciones de los cultivos en los EE.UU.

               Los precios internacionales del arroz también cayeron en junio, tocando mínimos de 15 meses, ya que los altos costos de flete y la escasez de contenedores continuaron limitando las ventas de exportación. Los de los productos lácteos bajaron un 1,0% mensual, con todos los componentes del índice descendiendo: la mantequilla registró la mayor caída, afectada por una rápida disminución de la demanda mundial de importaciones y un ligero aumento de los inventarios, especialmente en Europa.

              Una excepción pareciera ser el IP de la carne que subió un 2,1% desde mayo, y las cotizaciones para todos los tipos de carne crecieron ya que los aumentos de las importaciones de algunos países del este de Asia compensaron la desaceleración de las compras de carne de China.

             La proyección para la utilización mundial de cereales en 2021/22 se redujo en 15 M de ton. con respecto al mes anterior a 2.810 M de ton., todavía un 1,5% más que en 2020/21. Ahora se espera que las existencias mundiales de cereales al cierre de las temporadas en 2021/22 aumenten por encima de sus niveles de apertura por primera vez desde 2017/18. “Las mayores existencias de maíz previstas en China explican la mayor parte de la revisión al alza de este mes de los inventarios mundiales de cereales”, según la FAO.

             Sucede que la demanda global cae debido a que el rebote de la economía global, después del fuerte bajón debido a las represiones estatales a los mercados con excusa de “la pandemia”, se ralentizaría. Por caso, en la “locomotora” global, los EE.UU., la mejora del mercado laboral se ha vuelto a estancar la semana pasada, ya que el número de personas que presentaron solicitudes iniciales de subsidio por desempleo aumentaron con respecto a la semana anterior.

                   Los datos del Departamento de Trabajo mostraron que las solicitudes iniciales de subsidio por desempleo aumentaron hasta 373.000, lo que no cumplió las expectativas que apuntaban a nuevos mínimos de 350.000. El número de desempleados de larga duración -más de 27 semanas- aumentó en junio tras haber disminuido los dos meses anteriores y la “sensación térmica” es que se ha llegado a una meseta.

                   Cifras que se conocen cuando crece la preocupación en torno a que el repunte de la economía pueda estar ralentizándose, según la creencia más popular, a medida que los “estímulos” se desvanecen y la propagación de las nuevas variantes del Covid-19 amenaza con provocar nuevos estragos. Sin embargo, la verdadera causa es que todavía no todas las represiones han sido levantadas y, sobre todo, a que se está pagando la fiesta de los “estímulos” supuestamente destinados a contrarrestar los efectos de las represiones.

                   “Estímulos” financiados con mayores impuestos y exagerada inflación. Ambos destructivos de la economía, los impuestos por razones obvias, porque quitan capital productivo al mercado y la inflación básicamente porque quita poder de compra.

                   Así, irónicamente, mientras que los precios granel de los alimentos caen, muchos expertos, como Michael Snyder, recomiendan acaparar alimentos de los supermercados (nada menos que en EE.UU.): “Durante décadas, los estadounidenses no han tenido que preocuparse por los precios de los alimentos… Nuestros supermercados siempre han estado llenos, y siempre los precios serían aproximadamente los mismos. Desafortunadamente, las cosas están cambiando…”.

                    Y, claramente, los comerciantes se están anticipando a una suba en el precio de la comida que llega a la mesa. Según The Wall Street Journal, los supermercados están acumulando alimentos febrilmente, se están abasteciendo de todo, desde azúcar hasta carne congelada antes de que se vuelvan más caras, preparándose para lo que algunos ejecutivos anticipan serán algunos de los aumentos de precios más altos de los últimos tiempos. Según The Wall Street Journal, todo este acopio “está impulsando la escasez de algunos productos básicos”, pero se espera que esta escasez sea solo temporal.

                    Dice Snyder que algunas empresas están comprando hasta un 25% más de alimentos. Por su parte, David Smith, director ejecutivo del mayorista más grande de EE.UU., Associated Wholesale Grocers, dijo que han estado comprando entre un 15 y un 20% más de productos respecto del mismo período del año anterior, en particular alimentos envasados ​​con una vida prolongada. En tanto que la cadena minorista SpartanNash, de Michigan, ha comprado entre un 20 y un 25% más de lo habitual, incluida la carne congelada.

                   No hace falta decir que resulta irónico que, mientras baja el precio de los alimentos a granel, se espera una importante subida en aquellos puestos en la mesa del consumidor. Y, aunque cueste creerlo, ambos efectos que parecen contradictorios tienen un mismo empuje: el de la inflación.

                   El gobierno de los EE.UU. promete seguir gastando dinero -ergo, emitiendo y aumentando impuestos- de manera desbocada y la Fed seguiría inyectando montañas de efectivo fresco. La administración Biden no parece tener un “botón de apagado”, y tampoco la Fed. La deuda nacional de EE.UU. se está moviendo hacia la marca de los USD 29 B muy rápidamente, y el balance de la Fed se ha más que duplicado durante el año pasado.

               La subida de impuestos sumada a la inflación provoca una ralentización en la economía, ergo, en la demanda mayorista que se traduce en una baja en los precios a granel. Pero, al mismo tiempo, la inflación -el exceso de emisión por sobre la demanda- provoca una devaluación de la moneda que se ve como una suba de precios que paga el consumidor final. Por caso, los precios del petróleo, ergo de la gasolina, siguen subiendo y esto encarece el transporte de alimentos. Según el índice de precios de la gasolina AAA, en los EE.UU. el precio promedio de un galón es un 56% más alto que hace un año.

               Del mismo modo suben todos los costos (impuestos, salarios, insumos…) de los intermediarios y minoristas. Así, la inflación -en gran parte debido a los estímulos que más bien parecen estímulos a la decadencia- provoca un doble efecto negativo.

              Por un lado, aumenta los precios de los alimentos en la mesa y, contrariamente, desalienta la producción al caer o al menos estancarse los precios a granel, como el de la “gallina de oro” para Argentina, la soja:

Gráfico de Puentenet.com

                       Con lo que las exportaciones y la producción en una bola de nieve podrían caer -y, así, la recaudación tributaria- con lo que el campo se vería perjudicado, lo que pareciera evidenciarse en la curva con tendencia descendente de dos íconos del sector agrícola argentino, que venían de subir mucho en Wall Street, como son Cresud:

y Bioceres:

*Asesor Senior en The Cedar Portfolio  y miembro del Consejo Asesor del Center on Global Prosperity, de Oakland, California

@alextagliavini

www.alejandrotagliavini.com

Oro vs Ladrillo y Btc (según Reporte Inmobiliario)

La inversión inmobiliaria venía bien, pero perdió espacio los últimos 3 años contra el oro que se revalorizó. A la comparación de todos los años le agregamos anecdóticamente al Bitcoin, con alta rentabilidad y volatilidad.

Cuando nos referimos al oro damos por hecho que es una inversión de muy bajo riesgo, por lo que históricamente ha sido una de las opciones a tener en cuenta por los adversos a las opciones financieras. Algo parecido se podría decir del Real Estate. Definitivamente no ocurre lo mismo con el Bitcoin, agregado este año a la comparación.

La serie analizada en este caso por Reporte Inmobiliario comienza con una cotización de unos 140 dólares por onza de oro en el año 1977, y 320 dólares por m2 de departamento (56% de diferencia) para ubicarse hoy en 1.809 dólares la onza contra 2.282 dólares el metro cuadrado de depto usado en Zona Norte de CABA (21% la diferencia). La brecha que existía los últimos años entre ambos activos se fue acotando a partir de una revalorización del oro, y en el caso de Buenos Aires con una depreciación del valor metro cuadrado que ya llega al 23,58% desde el pico que mostró el metro cuadrado en 2018 (producto de crisis económica luego profundizada por las represiones al mercado con excusa de la “pandemia”).

A la tradicional comparación que hacemos hace años desde RI, este año le agregamos al análisis de manera anecdótica la inversión “estrella” entre los jóvenes, el Bitcoin, una opción relativamente nueva, con mucha penetración en los sub-40. En este caso, no hay mucho que agregar, a pesar de la fuerte volatilidad de la moneda virtual, en pocos años pasó a ser la ganadora por lejos, llevando su cotización de 0,03 U$S en el año 2010, a cotizar hoy en la franja de los 35.000 dólares. Obviamente el perfil de inversor que elige una propiedad u oro, es muy distinto al que elige colocar su dinero en monedas virtuales, aunque la alta rentabilidad a veces les roba público.

A pesar de las similitudes en las oscilaciones de oro VS ladrillo, el oro nos muestra un comportamiento más estable en la serie hasta el año 2012, para luego tener retracciones en el periodo 2012-2017 y comenzar a recuperar terreno, mientras que las propiedades siguieron subiendo en ese lapso en Bs As, retrayéndose los últimos 3 años, a partir de crisis económica, múltiples devaluaciones y luego la llegada de las represiones con excusa de la “pandemia”:

oro y bitcoin versus inversión inmobiliaria en argentina

Comparando las tres series podríamos decir que los inversores en Real Estate urbano residencial fueron los grandes perdedores al menos los últimos tres años, momento en que el oro recuperó algo de valor, y ni hablar si comparamos con el Bitcoin, que solamente en el periodo en que el metro cuadrado cayo, multiplicó su valor por casi 10 veces.

Ha que tener en cuenta que quién adquirió el oro en 1977 recurrió casi con seguridad a guardarlo en una caja de seguridad y no generó absolutamente ninguna renta, por el contrario se debería descontar el proporcional de los gastos de mantenimiento de la caja de seguridad, mientras que la propiedad habría generado un ingreso adicional por alquileres desde el año 1977.
Seguramente si se hubieran guardado las percepciones por alquileres de los 44 años del departamento podría comprarse de mínima otro departamento similar al que se tuvo alquilado.

En esta ocasión comparamos además al Bitcoin que demuestra una performance increíble comparada con el oro y el ladrillo, seguramente su tenedor se siente infinitamente más rico, ahora bien, tendríamos que preguntarnos a qué valor toma un propietario un bitcoin a la hora de hacer una transacción de venta de propiedad; si el tenedor de bitcoin duerme tranquilo con las múltiples claves y usuarios para acceder a su inversión virtual y si la volatilidad de esta opción mostrará el mismo comportamiento en el largo largo plazo, cómo si supieron mantenerse las inversiones “conservadoras”.

.- En base a ReporteInmobiliario.com, viernes 9 de julio de 2021

#MacroView: Bond Yields Send An Economic Warning

Written by Lance Roberts | Jul 9, 2021

Bond yields are sending an economic warning as this past week 10-year Treasury yields dropped back to 1.3%.  With the simultaneous surge in the dollar, there is rising evidence the economic “reflation” trade is geting unwound.

Bond yields, #MacroView: Bond Yields Send An Economic Warning

Such is despite overly exuberant expectations of strong economic growth by the mainstream media. As we suggested in 2019, bonds generally have the outlook correct more often than stocks.

Bond yields, #MacroView: Bond Yields Send An Economic Warning

Such is not surprising as the long-term correlation between economic growth and rates remains high.

Bond yields, #MacroView: Bond Yields Send An Economic Warning

We remain in the camp that, due to the rising debt and deficits, rates must remain low. However, given most people don’t understand bonds, we will recap our previous analysis. 

Bond yields, #MacroView: Bond Yields Send An Economic Warning

If you don’t understand what bonds are and what they can do for your portfolio, you may be missing out on something really big. And not just if you’re a retiree either.

Why Bonds Correlate To Economic Growth & Inflation

As stated in “bonds are not overvalued:”

“Unlike stocks, bonds have a finite value. At maturity, the principal gets returned to the “lender” along with the final interest payment. Therefore, bond buyers are very aware of the price they pay today for the return they will get tomorrow. As opposed to an equity buyer taking on ‘investment risk,’ a bond buyer is ‘loaning’ money to another entity for a specific period. Therefore, the ‘interest rate’ takes into account several substantial ‘risks:’

  • Default risk
  • Rate risk
  • Inflation risk
  • Opportunity risk
  • Economic growth risk

Since the future return of any bond, on the date of purchase, is calculable to the 1/100th of a cent, a bond buyer will not pay a price that yields a negative return in the future. (This assumes a holding period until maturity. One might purchase a negative yield on a trading basis if expectations are benchmark rates will decline further.)

As noted, since bonds are loans to borrowers, the interest rate of a bond is tied to the prevailing rate environment at the time of issuance. (For this discussion, we are using the 10-year Treasury rate often referred to as the ‘risk-free’ rate.)”

There are some caveats to this analysis related to the secondary market, which we cover in the linked article.

However, the critical point is that bond buyers compensate for both what the market will pay in terms of interest rates, but also ensure they get paid for the various risks they take.

Yields Vs. Economic Growth

Given that analysis, it should not be surprising that interest rates reflect three primary economic factors: economic growth, wage growth, and inflation. But, again, the relationship is not unexpected as the “rate” for lending money must account for varoius risks.

Bond yields, #MacroView: Bond Yields Send An Economic Warning

We created a composite of the three underlying measures to get a more direct relationship. For example, the chart below combines inflation, wages, and economic growth into a single composite and compares it to the 10-year Treasury rate.

Bond yields, #MacroView: Bond Yields Send An Economic Warning

Again, the correlation should not be surprising given rates must adjust for future impacts on capital.

  • Equity investors expect that as economic growth and inflationary pressures increase, the value of their invested capital will increase to compensate for higher costs.
  • Bond investors have a fixed rate of return. Therefore, the fixed return rate is tied to forward expectations. Otherwise, capital is damaged due to inflation and lost opportunity costs. 

As shown, the correlation between rates and the economic composite suggests that current expectations of sustained economic expansion and rising inflation are overly optimistic. At current rates, economic growth will likely very quickly return to sub-2% growth by 2022.

Bond yields, #MacroView: Bond Yields Send An Economic Warning

The disappointment of economic growth is also a function of the surging debt and deficit levels discussed previously.

Bonds Are Sending A Warning

The differential between yields also confirm our concerns that expectations for economic growth and inflation are overly optimistic. The yield curve continues to flatten over the last few months as opposed to steepening with strong economic expectations.

Bond yields, #MacroView: Bond Yields Send An Economic Warning

(Importantly, a flattening yield curve only suggests growth and inflation will be weaker than expected. However, an inverted yield curve is what will predict the next bear market and recession.)

If yields are correct, then investors should be heeding its warning as lower yields will translate into slower earnings growth. In “Warning Signs,” we discussed the more extreme detachment of stocks from the underlying economy.

“The market is currently trading more than twice what the economy can generate in revenue growth for companies. (There is a long-term correlation between the rate of economic growth and earnings.)”

Bond yields, #MacroView: Bond Yields Send An Economic Warning

Investors currently “hope” that earnings will catch up with the price of the market. Such would reduce the valuation problem. However, while such is certainly possible, it has never previously happened in history.

Yields are suggesting this time will not be different.

Why We Own Bonds

As we often discuss in our weekly newsletter (subscribe for free,) we continue to opportunistic bond buyers to hedge against risk.

There is little doubt the market is currently in “risk-on” mode as investors throw “caution to wind” due to the Fed’s ongoing interventions. But, for now, that “psychology” works well.

However, when that psychology changes, for whatever reason, the rotation from “risk-on” to “risk-off” will find Treasury bonds as a “store of safety.” Historically, such is always the case during crisis events in markets.

Bond yields, #MacroView: Bond Yields Send An Economic Warning

For most investors, it was a mistake to discount the advantage of owning bonds over the last 20 years. By reducing volatility and drawdowns, investors could withstand the storms that wiped out large chunks of capital.

With stocks again grossly overvalued, a significant drawdown is probable in the coming years.

Over the next decade, the prospect of low stock market returns, possibly approaching zero, seems much less appealing than the positive return offered by a risk-free asset.

Given that we are in the most extended bull market cycle in history, combined with high valuations and weakening fundamentals, it might be time to pay more attention to what bonds can offer you.

Bonds are sending a warning once again.

Disregarding the warning has historically been costly.


lance_sig

Lance Roberts is a Chief Portfolio Strategist/Economist for RIA Advisors. He is also the host of “The Lance Roberts Podcast” and Chief Editor of the “Real Investment Advice” website and author of “Real Investment Daily” blog and “Real Investment Report“. Follow Lance on Facebook, Twitter, Linked-In and YouTube
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US 10 year yields non stop falling and Nasdaq love it

The 10 year broke below the trend line yesterday and is continuing the move lower today again. A few weeks ago the 200 day moving looked impossible, but here we are, only 10 bps away…

Tech’s love for falling yields continues with the NASDAQ vs Russell ratio printing new recent highs as of writing.

We are now at late 2020 levels for the ratio.

So much for the great rotation everybody is all in on…

Apple – from boring to sexy

Apple continues squeezing higher. Note we have never closed here or higher… On June 11, in our note, Could the world’s largest “boring” become the world’s sexiest again?, we outlined our Apple logic and suggested to play a potential squeeze with cheap upside call/ call spreads. We specifically pointed out the cheap volatility; “Expressing views via options in Apple is becoming rather cheap, despite the stock not moving much lately.” Since then Apple is up some 20 bucks and who rolled those call spreads dynamically has made good money. Note that despite the surge in Apple, VXAPL has gained as well (double boost for the long calls strategy). We are not there, yet, but squeezing Apple and squeezing Apple volatility brings memories to last summer, when the surge in tech was accompanied with a surge in tech vol, which ultimately led to the top back then. Let’s see how this one plays out from here, but “booking” some of the Apple melt up move profit looks attractive as we hit all time highs (and/or roll partly into some higher strikes, but make sure to fill up the profit wallet).
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