Quello che conta è il settore finanziario - gzibordi
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By: GZ on Mercoledì 16 Gennaio 2002 21:49
questo è lo scenario negativo, come non si poteva descriverlo meglio
quello che ne ricavo tra le altre cose è che più che il nasdaq, occorre stare attenti al settore banche e finanziario, che è diventato ora l'asse portante
del mercato.
----------------------- Marc Faber -------
Easy-money monetary policies bring about, through a
combination of a wave of innovations and booming
financial markets, massive over-investments and a gross
misallocation of capital because the profit opportunity
expected to arise from the innovation is so great that
it leads to excessive borrowings by consumers as well as
businesses. The downturn or bust is ushered in when the
over-investments lead to excess capacity and a collapse
in prices, which in turn drive down profits and, along
with them, stock prices, which then weaken the economy
even more. Thus, you have negative wealth effect and
cutbacks in capital spending due to rising capital
costs.
This is where we stand today. The weak pricing and easy
money environment of the 1990s led to a huge stock
market and capital-spending boom, which was largely
financed by debt and foreigners who bought U.S. real
assets, equities, and bonds.
However, today the situation is more complex because we
are faced with a fundamentally totally different set of
economic and financial, and now suddenly also
geopolitical, conditions than ever before in economic
history. Why? Every economy has a dominant driving
force. I explained above that in the U.S. economy of the
19th century, agriculture was the dominant sector, which
would largely drive economic activity according to
rising or falling prices for agricultural commodities.
In the Middle East, since the 1970s, rising or falling
oil prices bring about, in the absence of an important
and efficient manufacturing or service sector, vibrant
or sluggish economic conditions. For countries like
Taiwan and South Korea, exports are the engine of
economic expansions and contractions. So, what is now
the driver of the U.S. economy? Certainly, it is no
longer agriculture!
Moreover, whereas the manufacturing sector may have been
the engine of the U.S. economy in the 1920s and probably
still was in the 1950s, today it only accounts for
slightly more than 20% of GDP and, therefore, it doesn't
have a very meaningful impact on the economy as a whole.
Compare manufacturing to, say, the U.S. financial
markets and you will realize that it is the financial
markets, and financial transactions, that are the key
driver of the economy.
Just think of the U.S. stock market capitalization,
which at its peak in March 2000 reached a stunning 183%
of GDP, more than twice the level prior to the crash in
1929 when it reached 81%, and significantly higher than
the Japanese stock market capitalization as a percentage
of GDP in late 1989.
Prior to the vicious bear markets that followed the
speculative excesses leading to both the 1968 and early
1973 tops, stock market capitalization as a percentage
of GDP stood at 78%. Compare this to major market lows,
when stock market capitalization as a percentage of GDP
stood at 16% in 1942, 34% in September 1974, and 34% in
July 1982. Even after its decline over the last 18
months, the U.S. stock market capitalization as a
percentage of GDP - at present amounting to more than
130% of GDP, compared to an average of 50% since 1926 -
is still extremely high and supports my view that the
equity market, along with the credit market, is the
economy's largest, albeit certainly not "strongest",
lever for the economy.
The rising importance of the financial sector in the
U.S. economy has also been reflected in the strong
performance of U.S. financial stocks. The performance of
the S&P 500 Financial (Diversified) Index - which
includes stocks such as American Express, American
General, Fed Home Loan Mortgage, Federal National
Mortgage Association, MBIA, MGIC Investment Corp, Morgan
Stanley Dean Witter, DSCVR&C, and SunAmerica - reveals
that their resilience in an otherwise rather weak market
- at least until last fall - is striking.
On the debt side, the evidence also points to a
disproportionately large debt market compared to the
real economy. Total U.S. market debt which does not
include loans by financial and non-financial
institutions) currently amounts to about 270% of GDP,
compared to an average of approximately 145% of GDP
between 1950 and 1980.
At the stock market's peak in 1929, total market debt
reached 160% of GDP!
If, indeed, a substantial part of economic growth over
the last 20 years or so, not only in the U.S. but all
over the world, was driven by an expansion of the
financial markets - most notably the credit market -
then it follows that this disproportionate financial
expansion must go on at all costs in order to sustain
further economic growth.
The almost endless supply of money available for the
corporate and household sectors leads to poor
investments by corporations - projects that don't make
any sense - and to personal consumption growth that
outpaces income growth declining savings rate.
The turning point of this financial pyramid then occurs
when it becomes evident that the corporate sector over-
invested. Competition then drives down prices as a
result of the additional supplies, which in turn bring
about the profit deflation in the corporate sector we
are presently witnessing among industrialized countries.
The profit deflation subsequently leads to a reduction
in employment and lowers the value of equities, which
brings about a deterioration of the consumers' leveraged
balance sheet.
When the economy weakens, this increased leverage on the
part of the consumer leads to a substantial rise in the
number of personal bankruptcies, as happened recently.
Faced with these conditions, the consumer has two
choices. He will either be forced to borrow even more in
order to maintain his consumption, thus leveraging his
already shaky balance sheet even further, or he will cut
back on his spending.
The strong, and in the long term unsustainable, growth
in consumer finance may sound alarming, but when you
consider that in the first seven months of 2001 the
credit card industry mailed out more than 2 billion
solicitations, an increase of 61% over a year ago, this
expansion of credit should come as no surprise. Capital
One was responsible for 29% of all solicitations. (Note
that for every man, woman, and child in the U.S., seven
credit card solicitations were sent out in just seven
months, with an average response rate of only 0.4%!)
Another disaster in waiting concerns other government-
sponsored enterprises such as Fannie Mae and Freddie
Mac, which are currently benefiting from a deluge of
mortgage refinancing. According to the Prudent Bear's
Doug Noland, over the last three years, Freddie Mac's
assets grew by US$308 billion (134%), while
shareholders' equity only increased by US$5.6 billion.
In the present situation, Mr. Greenspan's accommodative
monetary policies will remain largely ineffective for
the U.S. economy. Corporate profits will continue to
slide and disappoint. Poor corporate profitability and
negative cash flows will lead to further cutbacks in
capital spending and to additional layoffs in the U.S.
And when it becomes obvious to everyone that further
layoffs are on the cards and that the U.S. economy will
fail to recover in the next six months, retail and car
sales, along with the housing market, will finally cave
in as well.
