wie Sie unseren täglichen Analysen entnehmen, rechnen wir für die kommenden Monate mit einer breiten Seitwärtsbewegung im DAX. Großes Potential nach oben sehen wir nicht, jedoch reicht ja bei Zertifikaten häufig die einfache Seitwärtsbewegung. Discount-Calls spielen dann ihre Stärke voll aus. Wir haben für die derzeit fünf beliebtesten Basiswerte jeweils einen Schein herausgesucht, der leicht „im Geld“ ist. Das heißt für eine volle Auszahlung reicht das aktuelle Kursniveau. Nach dem doch deutlichen Rückgang zum Wochenbeginn bekommen die Scheine nun etwas günstiger.
Research gibt’s von Pimcos Joachim Fels und einem ausführlichen Blick auf die Märkte:
The Loneliness of the Long Distance Runner
Joachim Fels, PIMCO Global Economic Advisor
I confess that my Thanksgiving was quite un-American. OK, family was involved, but there were only two of us – one of our four sons lives in San Francisco (the others live in Europe) and came to visit me in Newport Beach for the holiday. However, we neither had turkey, nor did we discuss U.S. politics, nor did we watch American football on TV. Rather, we were first glued to my iPad cheering on our (European) football club Eintracht Frankfurt to a much-needed surprise away win at Arsenal London in the Europa League, and then enjoyed a late, long lunch at an Korean barbecue place in a nondescript strip mall in Irvine. All in all, it was a perfect day!
Actually, this Thanksgiving holiday was also already the eleventh in the current U.S. economic expansion, which became the longest ever last July when it overtook the 120 months-long 1991-2001 expansion. Nonetheless, following a period of elevated recession angst during the summer, most investors now seem to have concluded that, barring some bolt out of the blue, this long expansion has at least one more Thanksgiving to run: The S&P 500 is up about 10% from early August, the yield curve is no longer inverted, and Treasury yields are up 35 basis points from this year’s low three months ago. Markets are clearly playing the soft-landing-on-an-extended-runway theme. Are they right in doing so?
In answering this question, I won’t repeat the three reasons for caution about the near-term outlook for the economy and markets that I explained two weeks ago – the likely further slowdown in U.S. economic growth to stall speed in the next couple of quarters, the possibility that Fed policy remains restrictive even after the three rates cuts this year, and the fragility of the trade truce between the U.S. and China. Rather, let’s look at the features that have made the current economic expansion the longest on record and ask whether they can be taken for granted over the medium term.
Of note, this decade-long U.S. economic expansion has been more lackluster than most of its predecessors. In its early years, I started to call it a triple-B expansion – bumpy, below-par and brittle – and that is what it has continued to be until today. Not only growth was below-par: inflation has remained stuck below the Fed’s target for most of the decade despite a decline of the unemployment rate to a 50-year low, with the latest (October) reading of core PCE inflation released this past week at 1.6% year-over-year.
So how could a triple-B expansion that actually faced a couple of near-deaths over the past decade become the longest of record? As I see it, three features played an important role.
First, the long shadow of the previous housing and credit boom-to-bust cycle made kept private households in deleveraging and saving mode throughout the past decade and thus prevented spending excesses that would have required a correction. In fact, the personal saving rate, which had fallen to around zero before the last recession, currently stands at close to 8% of disposable income.
While private households de-levered in the expansion, the corporate sector levered up, taking advantage of ultra-low interest rates. However, in contrast to the late 1990s boom, corporations did not indulge in debt to over-build capacity but rather mostly to buy back equity and/or engage in M&A. While high corporate leverage is an important vulnerability that could exacerbate an economic downturn caused by other shocks, it is unlikely to be a stand-alone trigger for a recession. Taken together, this expansion has so far been characterized by a healthy absence of both over-consumption and over-investment, which helps to explain its longevity.
Second, the global expansion over the past decade has been remarkably uneven and asynchronous in nature. Not long after a sharp global recovery coming out of the 2008-2009 Great Recession, the euro area experienced a crisis and a renewed recession. Then, around the middle of the decade, many Emerging Market economies experienced a recession. More recently, the slowdown in China and Europe from early 2018 provided a counterweight to the fiscal boost to U.S. growth. These global drags helped to prevent a potential overheating of the U.S. economy and thus prolonged the expansion.
The third defining feature of this expansion is that whenever the economy was a risk slipping into a recession, the Fed stood by to add additional stimulus – initially in the form of QE2 and QE3, later by putting a series of planned rate hikes on the backburner during most of 2015 and then, after a first hike in December 2015, again during most of 2016. And this year, the Fed completely reversed course by cutting rates three times and expanding the balance again. What made Fed support possible was that there was no conflict with the inflation objective – on the contrary, virtually every monetary easing operation during this expansion was justified not only by recession risks but also because inflation was running below target.
So what does the experience of the past decade tell us about the remaining life expectancy of the expansion?
For starters, both U.S. households and U.S. firms have been relatively prudent in their consumption and investment behavior. This lack of spending excesses to date, viewed in isolation, bodes well for a continuation of the expansion in the foreseeable future. Note however, that corporate leverage has increased sharply during this expansion, which could serve as an accelerator of a future downturn caused by other factors.
Second, a vigorous synchronized global acceleration of growth – if it came to pass – could ironically sow the seeds for the next recession. The reason is that a global boom could give rise to global inflation pressures and would likely induce central banks to tighten. To be sure, a vigorous synchronized expansion does not look particularly likely for the time being, but if it came to pass, I would view it as a bearish rather than a bullish medium-term signal.
Third, the longer this expansion runs, the lonelier it gets (hat-tip to Alan Sillitoe’s 1959 short story, which I read in high school and which inspired the title). This is because in a world of very low equilibrium real interest rates, low inflation and already low actual nominal interest rates, there won’t be much room for significant additional stimulus if and when the next major adverse shock comes along. True, fiscal policy would have room to ease given low interest rates and given the Fed’s proven ability and willingness to take more federal debt on its balance sheet. However, it is at least doubtful whether the political constellation in Washington D.C. at that particular moment will be such that timely and sizeable fiscal action will happen.
In summary, there are good reasons why this expansion has become the longest ever. There are also some good reasons – the lack of domestic spending excesses and the asynchronous nature of the global expansion to date — to expect it to last longer. However, high corporate leverage increases the vulnerability in the case of adverse shocks and, most importantly, monetary policy makers will find themselves with limited options to spur on the expansion if and when it gets tired in the legs. Go Eintracht!