Magi is written without «R»




On Christmas Eve 2018, one of the most severe corrective episodes of the market of the last decade culminated. A correction that was decisive for 93% of a sample of 34 financial assets to yield negative returns last year, in what was the worst exercise in history in this regard (taking data since 1900). One of the basic commandments of an investor, diversification, was clearly a vacant exercise in 2018.

A correction that began just over two months earlier, on October 11, with germ in the market's concern over the overheating of the US economy. and the consequent acceleration of the monetary tightening of the Federal Reserve, and that ended with a 180-degree turn in the perception of the market itself, which would poorly digest the nougat, fearful of an impending recession and implicitly urging the US central bank to undertake type cuts aggressively as soon as 2019 begins. The recession « I was coming home for Christmas.

At that time, the puzzle pieces did not fit. In the first place, because of the inconsistency between the arguments of origin and destination that the market considered in the correction. And, secondly, because the two faces of the global economy - fortresses and imbalances - were far from foreshadowing an economic recession unless it was a self-fulfilling prophecy and that the financial market losses themselves eventually dragged the recessionary abyss into the World economy. As soon as the dreaded recession arrived, he left: a start of the year reassuring in the bags so that those fears began to fade the same day of Kings.

A year has passed, and recessive fears remain the subject of debate. This time they find no reflection in the market prices, which is closing an exceptional exercise for the positive, but in the sentiment of the economic agents, synthesized by the "index of the word R" of The Economist, which measures the prospects of a future recession based on the number of times that The New York Times and The Washington Post have published the word "recession", and that in recent quarters it has increased considerably.

Are there arguments this time for these recessive fears to go out again with the disassembly of the Christmas lighting? Although the geopolitical uncertainty still present, could be reduced as a result of some relief in the US trade conflict and China and an agreed resolution of the "Brexit". Besides, the monetary relaxation undertaken during 2019 and the strength of the services sector (consumption) they constitute two necessary levers (and probably sufficient if the commercial "war" does not prevent it) to avoid a more pronounced decline in global activity.

More strong fiscal stimulus plans are formulated in the main economies of the planet

And it would not be at all chimerical to observe upward deviations in the growth of the world economy if, on the one hand, the commercial haze clears enough to generate a remarkable boost of business investment coupled with the revival of global trade and, by On the other hand, stronger fiscal stimulus plans are formulated in the main economies of the planet. In any case, it will be difficult for both variables to drain: in the case of investment, due to the structural support of the obsolete capacity replacement factor; in the case of fiscal policy, because the pressure of the economic agents is of sufficient amount to dissuade it from returning to a contractual stage.

In the alternative of an aggravation of the political uncertainty and contagion of the manufacturing contraction to the tertiary sector, the recessive scenario would gain integers, but with nuances in its severity and market impact: it would be a technical recession (Only two consecutive quarters of negative growth due to very attenuated imbalances - current account balances and private sector balances - compared to more severe past recessions) with more limited capacity to generate deep corrections in risk asset prices.

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