Normalisering II

DB skriver:

I continue to believe that the market is confusing central bank purchases for secular stagnation. In fact, it is fascinating that anyone believes in secular stagnation in a situation where the unemployment rate is falling faster than the Fed expected, jobless claims are at 2005-2006 levels, and job creation is accelerating to 288k.

So, if the economy is getting stronger why is the 10y not higher? The reason is that rates markets are seeing a lot of demand from central banks that want to support their exports by selling their own currency and buying US Treasuries, see chart below. This is the reason why long rates will continue to be under downward pressure even as the economic data gets better and better. The real inflection point will be when core PCE gets closer to 2%. At that point real money and hedge fund selling may overwhelm foreign central bank buying. But for the foreseeable future foreign central bank buying is the dominating force in the market.

Jag tror dem är väldigt rätt på det. Däremot tror jag de har fel när de räknar fram en neutral styrränta på 3-3,5%. Detta bygger på historiska data. Skulle FED höja med 300punkter + i framtiden så kommer det knäcka världsekonomin. Som jag sagt innan, först 100 punkter, och givet att inflation, tillväxt och jobb uppför sig någorlunda så kan det bli 100 punkter till. Men knappast mer.

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Om GaStan

Ga Stan bloggar här under rubriken "Kortsikt's blogg". GaStan är en medelålders gift man bosatt i Stockholm och verksam i finansbranschen.
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3 kommentarer till Normalisering II

    • GaStan skriver:

      Har är optimist (som jag tekniskt/taktiskt) fast med rädsla för vad högre inflation kan ställa till med sett till ”Easy Money”. Fast där vi skiljer oss är att han är ok med att köpa dyra aktier då han tror revisions driver dem vidare. Q2 orna i USA har varit bra och stöttat börsen, men jag tycker bettet att köpa aktier på basis av den lilla vinst revideringskomponenten man kan få relativt höga värdering är inte så värst tilltalande. Så greedy är jag inte….

      Men det är klart, även om det bara skulle ge 5-10% på ett år, så är det ju otroligt bra relativt räntor.

      Personligen vill jag se minst 15-20% uppsida i aktier för att gå in. Detta oavsett hur låg räntan är!

  1. fredde skriver:

    Intressant att även Goldmans portfolio strategy team nu är neutrala. Har alltid uppfattat Peter Oppenheimer som en perma bull men kanske får ta tillbaka det nu 🙂 //F

    Equities: Downgrade to neutral over 3 months (Goldman Sachs)

    We downgrade equities to neutral over 3 months but remain overweight over 12. The longer-term case for equities is still strong: we expect sustained economic growth around current levels to drive earnings growth and performance, while the potential for equity risk premia to compress from still very high levels leaves room for equities to perform over the longer term despite a rise in bond yields. However in the short term we worry that a rise in bond yields will drive equities lower, and we also expect the general pace of returns to slow compared to what we have seen in the last couple of years. We maintain our regional allocation with an underweight in the US over both 3 and 12 months balanced by an overweight in Europe over 3 months and Europe and Japan over 12 months.

    We downgrade equities to neutral over 3 months as we are concerned about the potential impact of rising rates. We also think the acceleration in economic growth is largely behind us and geopolitical risks are elevated. While these issues weaken the risk/reward from equities in the near term, they do not change our view that equities are the most attractive asset class on a 12-month horizon by a wide margin and we remain overweight.

    Many investors are concerned about current valuation levels, but in our central economic scenario we expect these levels to be sustained. For us the main concern related to valuation is that current levels create downside risks if the economic environment was to disappoint.
    Whereas absolute valuations are on the high side, relative valuations remain attractive. The gap between dividend yields and bond yields shown on Exhibit 10 is still high and our estimates of equity risk premia ranges from 5.2% in the US to 8.5% in Asia ex-Japan. We expect continued compression of these high premia to offset the rise in bond yields over the longer term and therefore think valuations should be relatively steady even as bond yields rise.

    This leaves earnings as the key driver of returns in our view. Whereas earnings were revised down across all markets except Japan at the beginning of the year, they have now stabilised in all regions except Europe, where the downward revisions have continued. This stabilization is supportive of our forecasts for earnings growth which are roughly in line with consensus in all regions except for Japan where we are more optimistic. We are concerned about the continued downward revisions in Europe and see this as a key risk to our overweight here. But, we expect both a slight improvement in European economic growth for the rest of the year as well as the currency depreciation to lead to a stabilisation of earnings. Though it is early, the 2Q14 earnings season in Europe has so far been positive, which is encouraging.

    We continue to see the return of cash to shareholders as a key theme across the US, Europe and Japan and recommend strategies to capture this in all these regions. We also recommend a number of strategies geared towards capturing the stronger envIronment for economic growth that we have now shifted into (see page 4 for a list of these trades).

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