Nico Omer

“When an economy is in a balance sheet recession – as the developed world finds itself today – the economy must deleverage and will not take on much more debt regardless of how low the cost of money falls. If interest rates are already at zero percent, there can be no further relief on debt service payments that can be attained by more money printing.  It is clear that governments need to allow the deflationary deleveraging process to finally run its course, rather than continue to artificially prop up the economy by expanding public debt and having the central bank buy it all up.  More QE at that point only exacerbates the negative side of the ledger by putting further pressure on the middle class.  Real GDP will contract as inflation takes off.  That is what I expect to occur if the ECB and Fed recommence monetizing public debt. Asset prices will rise but the economy will sink further into the stagflationary morass.  Gold and gold mining shares moving to the upside will be a warning of this to occur in the near future.”

-Michael Pento, President of Pento Portfolio Strategies

HSBC/Markit purchasing managers’ index (PMI) Korea Selatan untuk sektor manufakturnya turun ke level terendah sejak Desember di 47,20 (seasonally adjusted) untuk periode Juli dari 49,38 di bulan Juni.

Ekspor Korea Selatan bulan Juli juga merosot melampaui perkiraan dan sekaligus kemerosotan terbesarnya selama hampir 3 tahun, sementara consumer inflation gagal memenuhi ekspektasi pasar dan tertekan ke level terendahnya selama 12 tahun.

Indeks NBS PMI yang merupakan indeks manufaktur resmi dari pemerintah Cina merosot ke level terendahnya selama 8 bulan di 50,1 di bulan Juli dari 50,2 di bulan Juni, yang mengindikasikan sektor tersebut hampir tidak bertumbuh, demikian ditunjukkan oleh survei National Bureau of Statistics pagi ini.

Sementara rilis final indeks manufaktur Cina dari HSBC Purchasing Managers’ Index (PMI) meningkat ke 49,3 (seasonally adjusted), level tertinggi sejak Februari.  Rilis tersebut tidak banyak berubah dari rilis awalnya, yakni 49,5, namun masih lebih tinggi dari rilis periode Juni sebelumnya di 48,2.

Indeks manufaktur Cina dari HSBC memberikan gambaran yang berbeda dari indeks manufaktur resmi pemerintah Cina dari NBS, yang dirilis 50,1 di bulan Juli dari 50,2 Juni sebelumnya, akibat hampir seluruh sub-indeks utamanya turun. Meskipun demikian, periode Juli merupakan 9 bulan beruntun untuk PMI manufaktur sektor swasta berada di bawah 50, yang merupakan batas tengah antara ekspansi dan kontraksi.

Malam ini kita akan menyaksikan banyak data ekonomi yang akan dirilis di AS. Yang pertama adalah ADP Non-Farm Employment Change yang menunjukkan ada 176.000 tenaga kerja yang bertambah di sektor swasta untuk bulan Juni, di atas estimasi saat itu sebesar 103.000 dan juga di atas periode Mei sebelumnya 136.000. Untuk bulan Juli yang akan dirilis malam nanti diproyeksikan meningkat 120.000.

Selain itu data ISM Manufacturing PMI juga akan dirilis yang bulan lalu menunjukkan tekanan dari 53,5 ke 49,7 – di bawah level 50 mengindikasikan kontraksi. Sub-indeks new orders merosot dari 60,1 ke 47,8 dan sub-indeks komponen harga turun dari 47,5 ke 37,0 untuk Juni, yang merupakan periode terlemahnya sejak pemulihan sebelumnya. Untuk periode Juli, data manufaktur nasional AS tersebut diperkirakan akan kembali terekspansi ke level 50,2.

Dan yang tak kalah penting malam ini seluruh pelaku pasar tentunya akan menantikan US FOMC Statement. Terkait dengan keputusan pertemuan moneter FOMC malam ini, saya sedikit khawatir bahwa sejumlah investor akhirnya akan seperti foto anak bayi di bawah ini karena faktanya the Fed tidak akan banyak berbuat saat ini.

Misalnya dengan pernyataan Fed’s chairman Bernanke yang menyatakan bahwa dirinya “prepared to do more”, seluruh analis yang di-polling FXstreet.com mengenai estimasi pertemuan the FED bulan ini, menggambarkan bahwa QE3 sudah di ambang pintu. Namun, mayoritas dari mereka sepakat bahwa hal tersebut belum akan dilakukan pada bulan Agustus, melainkan lebih memproyeksikan akan dilakukan pada pertemuan FOMC 13 September mendatang.

Bahkan Yohay Elam, seorang pendiri dan sekaligus editor Forex Crunch (www.forexcrunch.com) menulis laporan luar biasa pada 19 Juli 2012, yang berjudul “QE3: More Expectations and More Disappointments?”:

“In the last FOMC meeting held in June, the Fed announced an extension of “Operation Twist” by $267 billion.  The idea is to sell short term bonds and buy long term ones, thus lowering long term yields and encouraging investment.

There is lots of room to doubt if this is effective: low borrowing costs aren’t really encouraging banks to lend and aren’t boosting the economy.  Long term yields are already very low, and there’s not much room left on the downside.

Nevertheless, the Fed gets to show it is doing something without changing the size of its balance sheet, thus not printing more dollars.  Some analysts saw it as a stepping stone towards the real thing: QE3 – a further expansion of the balance sheet that will devalue the dollar and start a stock market rally.

However, this seems more like a substitute to QE3, and we can expect another disappointment.  At the end of July, the Federal Reserve will begin its two day meeting, with the result of this meeting announced on August 1^st.

So why will the Fed refrain from action?

1. The Fed doesn’t make changes too often: most meetings end in reiterating the previous statement with a small change of tone about the economy.  After the recent decision to extend Operation Twist, the chances are high that no action will be taken.
2. Diminishing Returns: The Fed’s non-conventional programs are of a diminishing scale: QE1 was huge, QE2 was significant, Operation Twist 1 was already smaller and OT2 was even smaller.  Also the effect of more QE has “diminishing returns” according to Bernanke.  As aforementioned, yields are already so low, that the diminishing returns are easy to see.
3. Housing is climbing: Housing is one of the concerns on the Fed’s agenda.  With a rise in prices and in activity, there is no reason to act.
4. Deflation is not a threat: The goal of QE2 was to avert deflation – a situation where prices fall, consumers are discouraged to buy, they further fall, etc.  While price rises are more moderate than earlier, and this was noted by some Fed members, the US is still too far from deflation.
5. Politics: Three months before the US elections, every move by the Fed will be closely watched.  Republicans have criticized the Fed too often for the QE programs.  Bernanke will not hesitate to act if a huge disaster appears, but unless there’s a wholesale collapse, he has no reason to grab attention.”

Saya sepenuhnya setuju dengan pandangan tersebut, dan menduga bahwa keputusan the Fed hanya akan merubah jangka waktu untuk mempertahankan suku bunga 0% yang terdapat pada statement terdahulu, dari “exceptionally low at least through late 2014” menjadi “mid- or late 2015”.

What Do the Charts Say?

Berikut ini ada 3 grafik menarik terkait dengan quantitative easing (QE), beserta sejumlah komentar Tyler Durden dari www.zerohedge.com untuk diteliti:

1)    Charting the Diminishing Multiple Expansion Benefits of Fed Action

“The expanding-multiple-dependent US equity market that we have discussed numerous times appears to have hit a snag.  While we noted the almost perfect correlation between forward-looking P/Es and the market during the last three years – and the clear hope-iness nature of said multiple expansion (and reality contraction) – what we failed to note until now is the significantly diminishing multiple-expansion impact from each of the Fed’s actions.  QE1 created a plus-4x multiple expansion (from ~10 to ~14), QE2 created a plus 1.5x pop in multiples, and Operation Twist around the same.  Critically though, as soon as the Fed-sponsored money-supply ‘flow’ expansion ended, so the P/E multiple-expansion ended (and indeed reversed very quickly).  It really is about the flow; and the threat of a crack-addicted market’s requirement for perpetual QE.

Chart: Morgan Stanley

So critically, unless we see/hear believe that the Fed will embark on perpetual and exponentially growing QE since its impact is lesser and lesser, then it’s game over for the equity market – and if they ‘hint’ at open-ended easing than Gold goes sky-bound …”

2)    65% of QE3 Is Already Priced In (July 26, 2012)

“The major problem with daily jawboning by central bankers, such as Draghi today, and the Fed via Hilsenrath on Tuesday, is that it “achieves” to price in QE without QE actually being implemented: in essence the various central banks try to run up assets on the rumor, knowing well that with every incremental “news” event, the news will be sold ever faster, and ever more forcefully.  Which then begs the question: how much QE is currently priced in, in order to determine how much more “rumor” there is to buy.  According to Bank of America: not much, as a full 65% of QE3, or the NEW QE, to use the proper iNomenclature, is by now priced in.

Here is BofA’s take:

There are a few key differences between now and the past two balance sheet expansions: 1) Fiscal policy is likely to be tightening rather than loosening.  2) Global growth is much weaker.  3) The dollar is unlikely to weaken as much as it did during QE2 given the escalation of the euro zone debt crisis.  4) The realization that previous rounds of QE have not been able to stoke a stronger and more sustained economic recovery.

The market implications of QE3 will likely be a function of what is priced in by the time it is announced.  Currently our model estimates that 65% of QE3 is priced in (Chart 8).  This is much lower than before QE2 was announced.  Therefore as the Fed sends stronger signals of QE3 in the near term we expect more downward pressure on yields.  However, we believe that by the time QE3 is announced, the market will likely have priced it in.

Needless to say, when the Fed itself becomes the ultimate “sell the news” event, and the credibility of the only remaining real backstopper in town is gone, one does wonder: what then?  But at least it explains why both Ben and Mario will do everything in their power to extend the period of simple jawboning without actually hitting CTRL-P.  Could we hit a point when over 100% of the NEW QE is priced in then?  Why of course.”

3)    Is Third Time The Charm For Central Bank Intervention Prayers?

“Of course this time is different, right?”

Mengakhiri rangkaian laporan mengenai QE3 ini, saya akan menambahkan beberapa paragraf dari Bill Bonner di The Daily Reckoning, seorang penulis luar biasa yang sudah lama saya kagumi:

“The question we have been asking ourselves for the last 5 years.

Which way will America go?  To Tokyo or Buenos Aires?  To deflation … or to inflation?  To a long, cold drawn-out slump … or a fiery blow-up?

Mr. Market is pushing the US towards Japan.  No question about that.  After 60 years of credit expansion we now have a natural credit contraction.  Households and businesses are paying down … and defaulting on … debt.  They’re hoarding cash rather than splashing it around.

It looked for a while as if the economy really were recovering.  At least, that’s what everybody said.  But now Mr. Market has asserted himself again.

Is there any fed policy that hasn’t backfired?  Not that we know of.  And the biggest fed policy now – aside from world domination – is the attempt to hijack Mr. Market’s plane, en route to Tokyo, and force it to Buenos Aires.

The feds have put their hearts and souls into this effort.  Too bad they haven’t put their brains to it too!”

Dan sekedar lelucon saja, berikut saya ketengahkan headlines dari harian The New York Times 1 April 2020, dari thepeoplescube.com:

Dibuat Tanggal 01 Agustus 2012