In sei sedute l’ indice S&P/Mib ha recuperato poco meno del 10%, ossia circa 2,500 punti, trascinato al rialzo da un poderoso rimbalzo del settore finanziario partito da Wall Street .
Che credibilità ha questo rally? Unfortunately, in a word, no.
I say unfortunately because it would be more reassuring to be able to claim that the recovery in equity markets was a mere reflection of the liberal decisions taken collectively by the investors. And that those judgments were properly trained on the basis inter alia of the information disclosed by listed companies on Wall Street these days are disseminating the results of the second quarter.
Things, however, is not so.
The rally, in fact, was triggered by the sudden, unexpected decision SEC, the U.S. Securities and Exchange authority to impose restrictions on selling discovered ( short selling) out of 19 financial stocks, including all investment banks and the two giants in the credit crisis securities, Fannie Mae and Freddie Mac .
The result was a huge wave of coatings that Wall Street has launched into orbit around the financial sector.
This initial explosion was then fed by the fuel supplied by quarterly results of some banks such as Citigroup , Bank of America, JP Morgan Chase and Wells Fargo in excess - apparently - to the expectations , and the relief generated by the announcement by the Treasury U.S. plan to rescue the two giants with feet of clay, Fannie and Freddie, at the limit of insolvency.
The result? In the five sessions between 16 and 22 July 's S & P 500 Financials took a leap of 28%, a record. Since 1989, when the sector indices were introduced in the S & P 500, a performance like that in just one week had never been registered.
course, a bear market stock is unwelcome to many governments, banks, media, and the great mass of investors in general. Only a minority of investors can profit from it. Most intolerant of all, with the presidential election approaching, it 's Bush administration. The rebound of the financial sector has been so credited, by many voices involved, as a signal that the worst is probably past.
The idea that I have done is that things are not at all.
The genesis of the rally to start from the beginning, was an affront to the very notion of free market . As reported the Economist, the SEC's action was the equivalent of a punch below the belt no less struck by the referee during a boxing match. A measure unjustified makeshift, unbalanced, inconsistent - very clearly motivated by the sole purpose of rendering assistance to bank stocks more difficult.
Nouriel Roubini, economist from the Stern School of Business at New York University, in the uproar, saying that the SEC should open an investigation and take legal action against itself for market manipulation.
The continuation of the rally was also fueled by a series of quarterly on whose reliability is reasonable to be skeptical. Take for example Wells Fargo, one of the big banks that has most inflamed the minds of announcing, July 16, earnings per share of $ 0.53, three cents higher than analysts' expectations.
explains a good article HousingWire.com of the portfolio by $ 84 billion of home equity loan (loans with mortgage on the house) of Wells Fargo, half granted in two U.S. states hardest hit by the housing crisis, California and Florida, has been a heavy increase in the second quarter of suffering. The losses made in the budget have decreased, even $ 104 million just for second lien loans , and 11% of subordinated loans and therefore particularly at risk.
The housing market worsens, the quality del credito peggiora, le sofferenze si impennano, ma il bilancio migliora. Com’è possibile? Il semplice motivo è che ai primi di aprile Wells Fargo ha deciso – sottovoce - di modificare il termine oltre il quale il mancato pagamento della rata di un prestito viene contabilizzato tra le perdite, estendendolo da 120 a 180 giorni.
Per questo trimestre, almeno, la cosmesi è riuscita. Un bel po’ di passività sono state nascoste sotto il tappeto, rinviate al futuro. E una trimestrale che avrebbe dovuto probabilmente chiudersi con un utile per azione di almeno cinque centesimi sotto le attese degli analisti, già abbondantemente riviste al ribasso, si è invece spinta tre centesimi sopra. Il titolo, instead of sinking, in a few moments of the announcement of the results took a leap of 20% upwards.
Roubini in his blog, he denounced several other ways in which American banks are "manipulating" budgets, he said under the tolerant gaze of the supervisory authorities, the Federal Reserve the SEC .
A practice that is spreading, and Roubini says he learned from the admissions of insiders, is that the amount of asset write-downs to put in the budget is decided in advance. And then the accounts are adjusted accordingly. It is no longer known Roubini, the traditional earnings smoothing, that is the established routine for which budgets are a little 'touched' with the aim to stabilize earnings from quarter to quarter.
"This - Roubini writes - is active manipulation and falsification results targeted to blur even more the true state of financial institutions. This work is actively obscuring backed by the SEC, the Fed and other authorities who are now in a stage of crisis management where the goal is to avoid at all costs any incident that could trigger the collapse of the system. The consequence is that many of these quarterly worth less than the paper they are written on. "
On the other hand, think that the worst is now behind the U.S. financial sector - as, moreover, to the European level - is unrealistic if only you follow a few simple and basic considerations.
It 's true that the Fed lowering the Fed funds from 5.25% to 2%, reduced financing costs for banks. But otherwise the context is not made worse in recent months and prospects have become more gloomy.
the housing market collapses , worsens the American economy, slow down emerging markets el ' Europe is on the brink of recession. The data show that the bursting of the housing bubble largest in history, after long months of incubation, is giving life (also because of the rise in energy prices) to a recession on a global scale are easy to summarize. Here they are:
a) According ' S & P Case-Shiller (reproduced in the chart below by an article of Bill Gross of PIMCO ), prices of homes in America, by maximum of 2006, decreased by 18% but the fall, recently, has been accelerating and futures contracts do not provide that stops before 2010, at the end of a crash that could reach the overall 30% .
b) L ' U.S. economy, if not already entered into recession earlier this year, is close to doing so. The tightening of the economy, in an election year, the authorities are trying to combat by all means - including the psychological conditioning of expectations - moves inexorably. They say a lot of data, but among the most clear and reliable are the Leading Economic Indicator curato dal Conference Board (da noi noto come superindice economico) e il Leading Index dell’ ECRI , uno dei più prestigiosi centri privati di ricerca.
L’uno e l’altro hanno correttamente predetto le recessioni degli ultimi decenni (le fasce in grigio nei grafici che seguono, il primo tratto da Northern Trust e il secondo dal blog The Big Picture di Barry Ritholtz). Da qualche mese preannunciano, con crescente intensità, l’arrivo di un nuovo periodo di contrazione dell’attività economica.
c) La crisi dei mercati immobiliari, that of credit, the U.S. economy, combined with high energy prices are dragging in the recession ' global economy. Those who hoped for a so-called decoupling , and in the ability of the rest of the world to move away from the leading country (America), will probably be denied. This at least is the message from the Leading Economic Index World 's OECD (taken here last analysis of quarterly Hoisington Management), the most reliable barometer of the trend of global economy, which for some months was made to announce a storm.
charts tell everyone that I have reported the same story: the worst, unfortunately, is yet to come.
estimates on the costs of moving housing crisis for the U.S. financial system - and which today has also given credit Bill Gross of PIMCO , the largest bond manager in the world - speak at least a thousand billion dollars.
Loans classified as risky assets, has written Gross, amount to 5 thousand billion dollars. There are about 25 million homes purchased with a loan from 2004 that are now in a situation of negative equity , at current prices that is worth less than the debt that was contracted to buy them. For buyers is a condition where they are strong incentives to declare themselves insolvent.
The total losses, if you add up the housing market and consumer credit companies that will be included in the opinion of Roubini between two thousand billion dollars . The write-downs so far to put the budget in the range of $ 400 million. The crisis, in short, has not yet reached its most acute phase. The failure of California bank IndyMac , last week, with losses to the budget between 4 and 8 billion dollars, is just the first of a series that promises to be rather long.
L ' incredible rally in equity markets, I think, will not go away. We will see new lows.
As despair is never the best response, I would like to close with a comforting message: enjoy (who may, unfortunately the video is in English) seven-minute satire on the formidable rare incompetence (for America, in Italy we are used to worse ) that the Bush administration has shown in this video , It's the economy stupid , based on a recent episode of Daily Show Jon Stewart of . One of the funniest things that I have come across a bit 'of time now. Good vision.
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