Voici un extrait d’un rapport que je reçois quotidiennement. J’ai essayé de sortir les points importants (ca fait 11 pages en tout). Le mieux c’est de s’abonner, c’est gratuit. C’est à prendre avec un grain de sel puisque Rosenberg à un biais bearish mais il s’appuie toujours sur des faits.
https://ems.gluskinsheff.net/index.ncl.htmlExtraits du Rosenberg de ce matin :
Second, down-to-up volume was 60:1. Only one of the S&P 500 companies saw their stock price rise (medical producer Zimmer Holdings), the first time that happened since September 29, 2008. History shows that from that day to the March 2009 low, the S&P 500 had 40% downside.
Fourth, look at what the bond market is telling you about double-dip risks — with the yield on the 10-year note down below 3% for the first time in 14 months and the 5-year below 1.8%. The yield on the 10-year TIPS (the real yield) is down to 1.1% -- the lowest it ever got during the depth of despair back in March 2009 was 1.3%. The bond market is sending a very important signal to the equity market: reduce cyclical exposure and limit the risk in the portfolio.
Sur les commodités:
Seventh, commodity prices are rolling over — in contrast to last year, the highs are now getting progressively lower and so are the lows. Both the 50 and 100-day moving averages are now hooking down and the Baltic Dry Index is still flashing a sell signal (though we are longer-term bulls, the near- and intermediate-term outlook is muddled). Suffice it to say, the combination of the sliding Chinese stock market and the softness in the commodity complex is telling you a thing or two about how the global recovery is about to shape up. In a word — sputter.
SETTING THE RECORD STRAIGHT
First off, we still believe that the Lex column in the FT is one of the best daily reads out there, as far as the morning press is concerned. However, there is a little ditty in there today on the ECRI that rubbed us the wrong way — “economists who warned their clients of the great recession but failed to predict how spectacular the markets’ rebound since March 2009 would be perhaps prone to confirmation bias when such a storied indicator flashes red.”
Give me a break. Was anyone in March 2009 calling for an 80% bounce? Even the most ardent bull? What prompted the bounce was a short squeeze of epic proportions as the government changed the accounting rules for the banks from mark-to-market to mark-to-model, and at the same time, Uncle Sam also decided to become a shareholder. There were some green shoots and an inventory build to be sure, but the reality is that real final sales growth has averaged barely more than a 1% annual rate since this statistical recovery began and this, therefore, goes down as the least impressive recovery on record.
The Fed could not manage to put a floor under the economy or the markets with a zero policy rate, so it decided to experiment with its balance sheet and become the lender of last resort for the residential real estate market. We had two massive spasms like this back in the early 1930s with the equity market bouncing 80% or more within a short one-year span on what were largely technical factors. Yet both times the major averages were down around 40% thereafter because that is how the market in a deflationary depression moves — a few steps forward, a few steps back.
The question the Lex column should be asking is what it means to have the equity market down 15% from the recent peak since this is more pertinent than asking how anyone can miss an 80% rally off the lows, which is truly the day before yesterday’s story. The next question is why anyone thinks that we are going to merely stop at a 15% correction seeing as the last two reversals following an 80% short-term bungee jump were far larger.
Let’s just lay the cards on the table and draw the assumption that as much as it hurts to miss out on an 80% rally in equities, as long as you were invested in something besides cash, you made money in 2009. It’s one thing to miss an 80% rally, quite another to participate in a 15% correction — and one that could well carry further in coming months and quarters.
OUR THEMES COME TO LIGHT IN THE MORNING PRESS
First theme is the income theme. Have a look at Stock Fund Inflow Interrupted in May on page A6 of the Investor’s Business Daily. U.S. equity funds suffered a $24.7 billion net outflow, way more than reversing the $13.2 billion April intake — and the largest withdrawal since March 2009 (bulls will likely come back and say this marked the lows).
Let’s just lay the cards on the table and draw the assumption that as much as it hurts to miss out on an 80% rally in equities, as long as you were invested in something besides cash, you made money in 2009
Meanwhile, bond funds took in an additional $14.2 billion on top of $28.1 billion in April — this demographic drive for income is very clearly a secular trend and not some form of “capitulation” from Main Street. According to the weekly data from TrimTabs, equity outflows continued in June at a $10 billion pace while the fixed-income market attracted nearly $20 billion. Bonds do have more fun(d).
LACKING CONFIDENCE
Consumer sentiment surveys are not what we would call first-tier indicators so there is always the risk of over-reacting to them, which may well have been the case yesterday — although, the consumer spending data is starting to look squishy-soft all of a sudden. The Conference Board consumer confidence survey has been around since 1967, so anything that’s been around for over 40 years has at least withstood the test of time — someone must be paying attention to it.
The index sank to 52.9 in June, a three month low and well below the 62.7 reading in May and below the consensus estimate of 62.5. In recessions, the index averages 70.0, and in expansions, it averages 100, so you be the judge as to where this survey says we are in the business cycle. One in 10 respondents see business conditions as being “good”. Yikes. We may be out of recession, but it sure doesn’t feel like it for a whole host of people.
The answer is, from an investment stance, SIRP (Safety and Income at a Reasonable Price). High-quality bonds with duration. Capital preservation strategies with low correlation to the equity market such as classic long-short hedge fund exposures. And, hedges against recurring bouts of global financial, economic and geopolitical instability, which means a core holding of precious metals in the portfolio. Strong balance sheets, positive net free cash flow yield, earnings stability, non-cyclical sectors and dividend growth and yield are all the characteristics that should be screened for in any equity market investments. There are still needles in the haystack for equity investors in a deflationary environment.
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