NEW YORK (WSI) – La soluzione alla crisi attuale del debito sovrano e le imminenti crisi valutarie c’e’. Il motore dell’economia mondiale va pero’ reimpostato e fatto ripartire, in modo tale da riuscire a controllare l’inflazione. Così facendo l’instabilita’ puo’ essere contenuta su livelli accettabili.
Per questo pero’ “c’e’ bisogno di un reset politico ed economico su scala globale”. A dirlo in un’intervista esclusiva a Wall Street Italia e’ Med Jones, consulente finanziario di IIM che fu tra coloro in grado di prevedere la crisi finanziaria che tre anni fa colpi’ gli Stati Uniti. Cio’ significa che tutti i leader mondiali – nemici compresi, senza eccezioni – dovrebbero sedersi attorno a un tavolo e trovare un accordo per fare concessioni ai paesi indebitati e ristrutturare l’economia intera.
Se si vorra’ poi essere corretti nei confronti delle nazioni meno indebitate, esse potrebbero essere compensate a intervalli regolari prestabiliti con surplus aggiuntivi commerciali. Va inoltre scelta o creata dal nulla una nuova valuta internazionale di riferimento per gli scambi commerciali e per le riserve, in modo da creare un sistema economico mondiale piu’ giusto, che implementi l’operazione di reset.
Solo cosi’ si potra’ avviare una nuova era di prosperita’ e di scambio socioeconomico redditizio. “Pensateci – spiega Jones, osservatore dei mercati e grande conoscitore di materie socioeconomiche – “e’ un’alternativa sicuramente migliore alle guerre valutarie, alle ostilita’ internazionali e ai persistenti e spesso crescenti rischi di shock socioeconomici globali. E i primi a fare un passo in questo senso dovrebbero essere gli Stati Uniti”, che si trovano in una posizione privilegiata che gli permette di poter stampare denaro a oltranza per alimentare la ripresa economica e uscire dalla crisi, come hanno fatto negli ultimi anni.
Il Quantitative easing – le misure straordinarie di allentamento monetario varate dalla Fed che prevedono l’acquisto di Treasuries a lunga scadenza – “e’ un eufemismo per descrivere l’operazione di stampare denaro virtuale”. Gli Usa possono risolvere sempre i loro problemi sul breve termine perche’ “sono in possesso di un’arma segreta che nessun’altra nazione ha”.
“Il vero rischio per l’economia americana e’ pero’ sul lungo termine”, ha sentenziato Jones. Quello di cui non parlano i media e’ che il dollaro Usa e’ la divisa standard de facto degli scambi commerciali internazionali: “Non importa quanto alto sia il livello di debito o quanto i prezzi petroliferi possano salire, l’America puo’ semplicemente limitarsi a stampare denaro finche’ non avra’ finito di ripagare il suo debito”.
Questo spiega perche’ la maggior parte del denaro e’ confluito nei bond di stato americani durante la crisi finanziaria e spiega anche perche’ la guerra in Iraq e tutti i deficit non hanno scalfito ne’ l’economia ne’ la valuta americana, come invece sarebbe successo a qualsiasi altro paese.
Ma la festa non potra’ durare per sempre. Una lunga serie di stati in via di sviluppo e industrializzati – Brasile, Cina, Russia, India, Corea del Sud, Sudafrica, Iran tanto per citarne alcuni – sono a favore dell’introduzione di una nuova divisa di riferimento. In particolare sperano che il Fondo Monetario Internazionale laci la sua propria valuta – battezzata “special depository receipts” (SDRs) – sia per gli scambi commerciali che come punto di riferimento per le riserve. In sintesi la predominanza del dollaro “e’ il vero dilemma che il mondo si porta dietro da sempre”, secondo il consulente di IIM, che risiede a Las Vegas, in Nevada.
Ma un improvviso passaggio a una valuta alternativa al biglietto verde “potrebbe causare il collasso della divisa americana e danneggiare i mercati creditizio e azionario”. Per questo e’ difficile che cio’ avvenga, almeno non a breve.
Per quanto riguarda quello che i money manager e investitori istituzionali si devono aspettare nel breve termine, la Cina e l’Asia in generale commetteranno degli errori nel cercare di prevenire bolle finanziarie che si stanno gonfiando a dismisura, “ma alla fine l’economia mondiale superera’ queste sfide e la ripresa continuera'”.
Se non scoppieranno eventi catastrofici o una nuova improvvisa impennata dei prezzi del petrolio sopra i $150 al barile – e qui il riferimento e’ chiaro alle rivolte nelle aeree di Medio Oriente e Nordafrica – nonostante la volatilita’ e l’incertezza economica i mercati azionari continueranno la loro corsa. Oggi Wall Street e’ entrata nel terzo anno della fase rialzista iniziata il 9 marzo 2009, quando il mercato tocco’ il fondo: i minimi di 12 anni. Da allora l’indice allargato S&P 500 ha accumulato guadagni pari al 95%.
Ma il rischio che i prezzi del greggio salgano ancora e’ molto alto. In uno scenario di questo tipo tutto il mondo ne soffrirebbe, non solo gli Usa. “I prezzi potrebbero senza problemi salire di un altro 50% a quota $150 al barile e anche piu’. Dipendera’ tutto da quanto a lungo i conflitti si protrarranno e quanto il contagio si espandera'”.
In questo caso Usa e Europa entrerebbero in un’altra fase di recessione. La paura maggiore di Jones e’ che “un incremento dei prezzi del petrolio possa innescare un’iperinflazione e una depressione per gli Usa, che portera’ al collasso del dollaro”.
Per chi allora volesse stare alla larga dall’azionario e volesse invece investire nei mercati creditizi, il consiglio e’ “puntare solo sulle societa’ con giudizi di primissimo livello o comunque mai inferiori alla A-1 dell’agenzia S&P”. E sempre solo nel breve termine. In questo momento infatti secondo l’economista “qualsiasi puntata sul lungo periodo e’ troppo rischiosa. Per quello bisognera’ aspettare di metterci alle spalle le crisi valutarie e del debito sovrano europeo”.
E comunque la regola d’obbligo da seguire e’ “mai fidarsi delle agenzie di rating“. Ormai la lezione dovrebbero averla imparata tutti dopo i crack di Enron, Worldcom, Bear Stearns e altri nomi che sono stati tra i gruppi favoriti di Wall Street prima di saltare in aria.
Tornando alla crisi del debito sovrano, Jones non si sente a suo agio investendo in Spagna, Portogallo, Grecia, Irlanda, Belgio, Lettonia, Regno Unito, Francia e Italia. Al contrario la Germania ha dimostrato di sapersela cavare bene nella gestione della ripresa economica. Ma “la migliore strategia per investire in un determinato asset e’ sempre quella di scegliere quello giusto”, sottolinea lapalissiano l’analista. E quello che non comporta rischi prevedibili, ovviamente. Per esempio una societa’ europea domestica nei paesi citati sopra subira’ certamente l’impatto della svalutazione della moneta unica.
Invece una societa’ internazionale con un’esposizione del 50% o piu’ nei mercati mondiali sul fronte del fatturato, non verra’ scalfita da un’eventuale aggravarsi della crisi debitoria dell’area periferica dell’euro e, anzi, diventera’ piu’ competitiva. Anche i big petroliferi dovrebbero trarre vantaggio da una ripresa dell’economia e dall’innalzamento dei prezzi e dei livelli della domanda di greggio. In pratica “ci sono asset sottovalutati ma non ci sono economie sottovalutate, ci sono rischi sul fronte delle valute ma possono essere mitigati scegliendo le societa’ giuste”.
Se uno teme per gli effetti della crisi del debito sovrano dell’Ue, bastera’ difendersi con investimenti in oro, in altri asset scelti con cura, in altre valute e in altre aree geografiche. Insomma la parola d’ordine – come sempre – e’ diversificare.
Un approccio che non e’ riuscito all’Italia, ormai afflitta da problemi cronici. Ma le condizioni economiche difficili in cui il paese naviga non possono continuare per sempre. Serve un cambiamento e serve presto, Jones ne e’ convinto. “Nessun paese puo’ sottrarsi alle regole socioeconomiche. E’ solo questione di tempo e avverra’ una correzione”. Sara’ dolorosa, ma piu’ si aspetta e piu’ numerose saranno le ferite da rimarginare.
Di seguito l’intervista originale
1. Are the U.S. still the place to invest in 2011? Is the party in the emerging markets over?
To answer the first part of your question, US is surely “a” place to invest in during 2011 but not the only place.
The US remains the world largest economy and the leading global trading partner for many countries.
Despite the financial crisis and the deficit spending, confidence in the US economy is still higher than many countries around the world.
That being said, in my opinion, investors should never invest more than 20% of their money in any single country or economic region.
During global economic uncertainty, a single event such as failure of the stimulus package, bankruptcy of key individual states such as California, a major terrorist attack, or the start of a US – China currency war can lead to the flee of foreign investors and/or a severe currency devaluation and cause major losses to a US investment portfolio. The same is true for other countries. Geographic diversification is a key risk management strategy that no investor cannot afford to ignore.
To answer the second part of your question, the party in the emerging markets is not over.
A common mistake that many investors make is to decide to invest in one country or the other based on macroeconomic outlook.
Although every investor should take the global economic outlook into consideration when they pick an asset the valuation of an asset can outweigh the general economic condition. In fact an investor can pick a stock that will preform better in any economic conditions and some of stocks preform even better with worse economic conditions such as inflation.
The biggest mistake that most investment managers make is to overlook valuable opportunities, simply because the media is negative about one country or sector. For example, the real estate market in US is out of favor with most investors, but such environment provides golden opportunities for long-term investors. To be more specific, you can buy a foreclosed house of a medium size at about $150,000. That is at about 50% less than it was sold in 2008 and you can finance it at incredibly low rate. If you rent this house the rent will pay the loan installments and the taxes and will generate passive income for the investor right away and the house value is unlikely to fall below the foreclosed prices, so the principal is protected. If you have such investment not only in US but anywhere else in the world, it would be unwise to ignore it just because the generic macroeconomic conditions or the mood of the media is negative.
As for the emerging market, excessive capital inflows plus domestic inflation pressures are already creating policy challenges across emerging economies. In 2008, I said that inflation could lead to unrests in many countries, but it would be felt the most in emerging countries. Most people think that the current Middle East unrest is driven by democratic aspirations. In my opinion it was ignited by high unemployment rate meeting food inflation, this creating the motive behind the uprisings. Democratic uprisings, civil unrest are just forms of protest manifesting the underlying economic distress. In the west, the economic pressure can be dissipated via elections and democratic change of government. The unrest did not start in the Middle East and will not end there. The spread of the unrest is determined by the rate of the economic decline, unemployment and inflation in each country. Just look at what happened in Greece, we saw similar unrest by the citizens against their government. The country would have failed if it was not for the massive bailout by the European Union (EU). Similar violent protests happened in the UK by students in response to the proposal of the government to increase tuitions. These events are simply the after effect of the global financial crisis and long term accumulation of wrong economic policies.
China and Asia will have to act to prevent the emerging financial bubbles. Overheating investments, prices and fears will test policy makers in each country. My view is that mistakes will be made, but the global economy will overcome these challenges and the recovery will continue in the short term.
2. How do you see the end of the QE2 playing out across the credit and equity markets?
Quantitative easing is a euphemism for printing money out of thin air. It is important to put things in perspective, the US has a secret weapon that no other nation has, in the short term we can solve any economic problem. The real risk to the US economy is more in the long term than short term. There is one point that is missed by the mainstream media is that the US dollar is the de facto standard for international trade and reserve currency. No matter how much debt or how much the oil prices rise, the US can simply print money to pay it’s debt. That explains why most money went to US treasury bonds during the financial crisis and it explains why the Iraq war and all the deficit spending did not hurt the economy or the currency as if it would have done for any other country. That is in part why the US enjoys lower gas prices and premium investment valuation of its stocks than other countries. However, that cannot and will not last for ever. Other countries started calling for an alternative international trade and reserve currency.
Brazil, China, Russia, India, South Korea, South Africa, Iran and other countries are in favor of using the International Monetary Fund’s own currency – called special depository receipts (SDRs) as an international trade and reserve currency. Many oil countries peg their currency to the US dollar, some started adopting more flexible currency exchange rates. We cannot continue to use our unfair advantage with out upsetting other nations. This has been the dilemma of all leading economic powers through out the ages. It is the difficult act of balancing the use of advantage for the longest possible time. China and Russia already started complaining about this advantage. This political impact is far more critical than the traditional view of QE. The sudden move towards an alternative currency can cause a US currency collapse and hurt both the credit and equity markets. Luckily I do not foresee that in the short term.
In uncertain economy and volatile markets it would be unwise to predict trends without qualifications, with that disclaimer in mind and absent any major event such a spike of oil prices due to major unrest in GCC countries, equity markets will continue rise.
If you are investing in credit markets, I would choose only prime and high grade companies (Nothing less than S&P A-1) and only invest for short term. Long term are too risky at this time until we are sure that the sovereign debt and currency crisis are behind us.
If you learned your lesson from the failure of Enron, Worldcom, Bear Stearns, and other previous darlings of Wall Street, you know better to not trust major rating agencies and to do your own due diligence. Unfortunately credit rating agencies have not yet been regulated against conflict of interest and several times have been too late in downgrading a risky investment.
3. Is Europe underrated at the moment? Any collapse of the euro in sight? No one wants to experience a crash of the currency, but the debt crisis poses a huge risk.
You are worried about Euro, I’m worried about the US. The macroeconomic trends are not in favor of the West in general. The problems is that the Europeans followed the same US financial and economic policies. I do not feel comfortable with Spain, Portugal, Greece, Ireland, Belgium, Latvia, UK, France and Italy. On the other hand Germany has been good at managing its economy. I believe that making general and blanket statement is inaccurate and misleading. To be more specific, whenever you invest in an asset, the best strategy is to pick the right asset. For example a local European company in any the above mentioned countries is likely to be impacted by Euro currency devaluation. On the other hand if it is a global company with 50% or more of its revenues from global market, then an EU economic crisis or currency devaluation will not hurt the company as much, on contrary some companies will become more price competitive on the global market. European oil companies could also benefit from the economic recovery and rise in oil demand and prices. So there are underrated assets but no underrated economies and there are currency risks but can be mitigated by selecting the right companies.
You are right about the EU debt crisis and risk of currency crash. The most obvious is a crisis in Spain could constitute a greater challenge for EU policy makers because the Spanish economy makes up 12% of euro-area GDP, which is close to double of Greece, Ireland and Portugal combined. In addition to debt and inflation problems, the EU still has challenges with aging and lower population growth. The ongoing costs of supporting an aging population and the law of diminishing returns will cause more burdens on the EU.
If you are worried about the euro currency, investors would be wise to hedge their risk with gold and investing in right assets in other currencies and other geographies.
4. It is no secret that an increase in oil prices represents a risk to growth. If Saudi Arabia falls, anything can happen. Can you quantify this risk for the US economy?
A $1 increase in gas prices can cost an average car owner $600 per year and raise prices of airlines by 5-10%. At first look this does not look that bad, but when you count that many families are already suffering, wages are not rising, consumer spending will be reduced hurting the US economy especially that a significant portion of the US GDP is consumer spending. Add to that the reduction in tax revenues resulting in more government spending cuts. Do not forget that government spending constitute about about 40% of the US GDP, thus hurting the private sector growth. Now you can see the negative cycle. Imagine an increase of 2 or 3 dollars per gallon.
I’m not worried about the oil prices at this time, but if the hot summer flare between Israel and Iran or if the US war lobby wins next year, the risk to the global economy is very high. The whole world will suffer not only US. The oil prices could easily rise 50% to $150 or even more depending how bad and how long is the conflict will take. The US will still in a better position than the EU. The average price per gallon is $3.5 in US compared to $8.5 in UK. Imagine what will happen to the prices of transportation and commodities if oil supply rises by 50%. I have no doubt that the US and the EU will enter another recession and my worst fears, the a sharp rise in oil prices could spark hyperinflation and send us into depression and possible currency collapse.
Regardless of the status of Saudi Arabia, the real risk to the US economy is more in the long term than short term. If the oil producing countries decide that they want to price their oil in an alternative currency or a basket of currencies, then the impact will be difficult to overcome and will take US long time to recover. This scenario is unlikely in the short time, but it is more likely to happen in the next few year. The continuous deficit spending rising debt and money printing reduces the value of US dollar, oil producing countries will be justified to hedge their risks by asking for other currencies. Such decision will be a disaster for the US economy.
5. What are the consequences you foresee for the massive rise in commodity costs across a broad spectrum of raw materials? How much is the inflation boom in the emerging markets going to affect the U.S. and other developed nations as well?
In October 2008 I had an interview on the economic outlook. You can check it here.
Under the section (Inflation/Deflation) I said:
“Prices will deflate in general mainly for real estate,(US) national products and services. Imported material costs will rise. I’m less worried about the US currency in the short term, but more worried in mid to long term. There is a minor risk of inflation tied to wrong Fed policies. On the other hand, I see asset bubbles and inflation risks for emerging economies by the end of 2010 or early 2011. With global inflation risk on the rise, we could see more socioeconomic troubles and political unrest in economies with thin middle class. 2011-2012 will be challenging for many policy makers in US and the world. “
Daniele, what you saw in the Middle East is what I feared and I fear it will spread. If you refer to the dates of the unrest starting with Tunisia and Egypt they started in Dec 2010. They both have thin middle class, this already started to spread into other countries too.
The unrest will take different forms depending on the structure of the government but they are all forms of unrest.
6. Do you see any bubbles being blown in the world?
Bubbles are forming all the time. It is behavioral finance. When one sector becomes out of favor, another gets heated. Be it currency, commodity, real estate or stocks. There is a rotation cycle, just watch for it.
Over the mid and long term I see bonds and a gold bubbles forming. At this time, I would invest in short term and monitor my investment very closely. Several EU countries have real estate bubble that is undergoing correction. How fast is the correction is dependent on government policies. For example, Latvia gave Russian investors residence permit that helped improved the demand the real estate market. Some Latvians complained about that, if the company reverse the policy the market could be affected. If you want to know which bubbles are forming or about to blow, one has to follow the policies of each country.
7. Which is the safest bond market right now? Australia? Would you bet on the countries of the peripherical area of the euro zone?
Countries with low Debt to GDP ratio and strong exports such as China, Hong Kong, Australia, South Korea, Indonesia, Qatar, Russia, Estonia and Chile.
Some of these countries are less known, but have less risks than other economies. That being said, there are other risks to take into consideration, for example a conflict with south and north koreas can cause major loss to your investments.
I would avoid high debt countries regardless of their location, be it the Euro zone or other places. Especially those countries with high External or Foreign debt as % of GDP
When it comes to private sector bonds, I would invest only in short term bonds of multinational companies with ratings not less than A-1 (S&P) or Moody’s (P-1)
And to emphasis, I never invest in an index or a currency, that type of investment is speculation. In my book, speculation is gambling not an investment. The only valid investment strategy is to invest in companies or assets that produce real value and have disversified income base to overcome fluctuations in the supply and demand in the short term
8. What about Italy? Is it doomed to experience two more years of political and economical paralysis like many analysts think??
Italy in general has one of the highest debt to GDP ratios of about 120% . That is a major burden on the economy. Eventually the government have to pay the debt, or default or print more money resulting in currency devaluation and inflation risks. The Italian economy has major structural problems. Italy has few natural resources and is a net food importer, inflation can cause severe socioeconomic problems and unrest. Italians tend to work less and depend on their government more. The Italian economy is also affected by a large underground economy–worth some 27% of Italy’s GDP. Unemployment is a regional issue in Italy. It is low in the north and high in the south. Chronic problems of inadequate infrastructure and waste does not help bring foreign investment and job creation in the south. Added competition from China and Asia makes difficult for Italian exports to compete globally. These economic conditions cannot continue forever. A correction has to be made. No country is above socioeconomic laws. It is only a matter of time before a correction is made. The correction will be painful and the more it is delayed the more painful it will be.
9. If you had to create a 30 years portfolio with a medium/high rate of return, which choices you would make?
The worst thing a money manger can do is to create a 30 years portfolio. This is the problem with Wall Street and many money managers. In this phase of global change, no one can predict 30 years in advance. Asset and portfolio managers need to revisit their outdated investment assumptions, principles and strategies. The world is undergoing major changes, there is a new world order, China has already surpassed Japan as the world’s second largest economy. US and EU are losing their lead in the global economy. The knowledge, innovation and development gaps are reducing between the West and East. I was in Dubai last December, the real estate development innovation has surpassed US and European standards, they managed to do that in less than 8 years and contrary to misconception less than 10% of the GDP were oil revenues. The G6 become G20. Brazil, Russia, India and China are on the rise. When the world is going under significant and rapid change. It would be wise to reduce the investment horizons and reconsider asset allocation and diversification strategies. I would not create any portfolio more than 10 years and at this time I will only invest short term and monitor my investments very closely.
10. I know that you foresee another economic crisis in the next five years or so. If you were an Italian money manager what would you do to hedge against this scenario?
Diversify, Diversify, and Diversify. Allocate your assets a cross different geographies, industries, and currencies. Invest in real tangible assets. Chose high performing, low-debt, multinational companies with strong brands. Chose short term bonds of governments with low debt to GDP ratio. You can include gold and oil stocks but monitor them vigilantly.
11. Is there a solution to the current and upcoming global debt and currency crises?
If the global economic engine is restarted and inflation is controlled, the instability can be limited.
One quick and effective solution to the global economic crisis is a global economic and political reset.
A global economic reset means that world leaders can come together to agree on debt forgiveness to all nations and restructuring of the global economy. Friends and enemies alike, no exceptions.
To be fair to nations with lesser debts, they could be compensated on a fair ratio basis to enjoy treasury surpluses.
A new international trade and reserve currency will probably be established to create a fair global economic system and to implement the reset.
This could usher a new era of global prosperity and socioeconomic exchange.
This is a much better alternative than currency wars, international hostilities and continuous risks of global socioeconomic shocks.
Without peaceful international relations, there could be no economic stability and prosperity.
On the political front, world leaders and UN veto-holding members could reset their foreign policies and stop burdening their economies and their people with international conflicts.
The UN international courts of justice could be responsible for resolving international conflicts.
The implementation of this solution requires a strong global leadership vision and action.
Unfortunately the US leadership is limited by many conflicting private interest groups and is buried in domestic politics, ideological conflicts, and security issues.
It is also unlikely that the global powers will let go of their power voluntarily and the situation will not get better before it gets worse.