Unlimited Monthly Macro Webinar May 2024

Summary

在本月的宏观经济网络研讨会中，演讲者深入分析了美国经济的当前状况，特别是名义需求的稳定性和劳动力市场的紧张情况。尽管实际增长率在过去几年有所波动，但名义增长率保持在5%到6%之间，显示出经济增长的强劲和可持续性。就业市场在过去18至24个月内表现出异常稳定，平均每月增加约24万就业岗位。此外，演讲者探讨了工资增长、生产力、信贷增长和通货膨胀之间的关系，并讨论了美联储在当前经济环境下的政策挑战。演讲者还指出，尽管市场对美国经济增长的预期有所上升，但全球其他地区的通胀压力和货币政策的分化可能会影响美元和美国债券市场的表现。最后，演讲者强调了在不确定的经济环境中，投资者应考虑将投资组合多样化，以应对可能的高通胀风险。

Takeaways

• 📈 美国经济的名义增长在过去两年多保持相对稳定，实际增长率在过去六到七个季度中保持强劲，足以保持劳动市场紧张。
• 💼 尽管有波动，美国劳动市场在过去18个月中显示出稳定性，新增就业岗位持续稳定，显示出劳动力市场的紧张状态。
• 📊 劳动力市场的松动主要来自供应方面，如劳动力参与率的提高和移民增加，这表明了强劲的劳动力需求和经济增长。
• 💰 工资增长相比疫情前显著提升，但生产力增长尚未显示出相应的提升，这引发了对通胀压力的担忧。
• 🔄 与以往信贷驱动的扩张不同，当前的经济扩张是由收入驱动的，家庭收入增长带动消费支出，这种模式可以持续较长时间。
• 🌐 全球通胀压力的差异可能会影响美联储的政策决策，其他国家的政策制定者开始放松货币政策以应对本国经济状况。
• 📉 尽管日本进行了单边干预，但除非美国货币政策或债券收益率发生重大变化，否则不太可能对日元产生有意义的结构性影响。
• 🏷️ 黄金市场显示出东方特别是中国的需求强劲，这与西方对黄金ETF的需求减弱形成对比。
• 📊 利润数据显示，大型公司能够维持较高的利润率，而中小企业的利润率开始受到压缩。
• 🏠 住房价格的通胀预期有所稳定，并没有像预期的那样下降，这对美联储实现通胀目标构成挑战。
• 🤔 市场可能需要重新评估对美联储可能接受更高通胀目标的预期，并在投资组合中对此进行准备。

Q & A

美国经济的名义增长在过去几年中保持稳定的主要原因是什么？

根据演讲内容，美国经济的名义增长在过去两年多的时间里保持相对稳定，主要是因为名义最终需求大体上保持在5%到6%之间，显示出美国经济增长相对稳定且强劲。

当前美国劳动力市场的状况如何？

演讲中提到，美国劳动力市场在过去18到20个月里非常稳定，平均每月增加约24万就业岗位，与过去18个月的平均值相当，显示就业市场持续紧张。

演讲者如何看待当前的通货膨胀情况？

演讲者指出，无论从哪个角度来看，名义增长相对提高，实际增长尤其是过去六七个季度以来持续强劲，这足以保持劳动市场紧张和经济动力，但这也引发了关于美联储是否能够将通胀可持续地降低到2%的问题。

演讲中提到了哪些因素可能影响未来的通胀趋势？

演讲中提到了劳动力市场的紧张状况、工资增长、生产力增长、以及全球供应链的变化等因素可能影响未来的通胀趋势。

为什么演讲者认为当前的经济扩张与以往不同？

演讲者认为，当前的经济扩张是由收入驱动而非信贷驱动的，这与以往由家庭或企业承担大量债务来推动经济活动的扩张不同，当前的扩张更加可持续。

演讲者如何看待当前的利率和债券市场？

演讲者指出，尽管当前的经济增长强劲且通胀压力存在，但长期利率和债券市场的期限溢价与过去十年的平均值相当，这在当前经济条件下显得不寻常，暗示了债券市场可能对经济情况的反应不足。

演讲者提到了哪些因素可能影响美联储的货币政策决策？

演讲者提到，尽管美联储目前可能不愿意接受长期高于目标通胀率的情况，但全球其他央行的货币政策、全球通胀压力的差异以及美国国内的经济状况都可能影响美联储的决策。

演讲中提到的'收入驱动型扩张'是什么意思？

“收入驱动型扩张”是指经济增长主要由家庭收入的增长推动，家庭收入增长导致消费支出增长，进而推动整体经济增长，这种模式不依赖于信贷增长。

演讲者如何看待当前的股市预期？

演讲者指出，当前股市的预期已经上升到一个相对极端的水平，预计2024年的收益增长将非常显著，这需要整个经济的配合，而不仅仅是科技革命或其他单一因素。

演讲中提到的全球经济状况如何？

演讲者提到，除了美国之外，欧洲和英国的经济状况实际上正在改善，尽管市场对这些地区的增长预期非常低，但这些地区的PMI数据显示经济状况正在改善。

演讲者对黄金市场有什么看法？

演讲者认为，黄金市场的需求主要来自东方，尤其是中国，这与西方的黄金ETF需求下降形成对比，这种需求可能与对人民币和国内资产的信心下降有关。

Outlines

00:00

📈 美国经济名义增长稳定

演讲者首先强调了从宏观角度审视美国经济的重要性，指出近两年多来美国经济的名义最终需求大体保持在5%至6%的稳定状态。尽管实际增长数据在过去几年有所波动，但总体上，美国经济的实际增长率足以保持劳动力市场的紧张状态，维持经济的强劲动力。然而，这种强劲的名义增长也带来了通胀问题，引发了关于美联储是否能够将通胀率可持续地降至2%的疑问。

05:00

👷 劳动力市场保持紧张状态

演讲者分析了美国劳动力市场在过去18至20个月的稳定性，强调尽管人们对就业报告的细节高度关注，但从宏观角度来看，美国劳动力市场一直在稳步增加就业岗位。此外，裁员和解雇率保持在历史低位，显示出公司倾向于保留劳动力。尽管存在一些劳动力市场的松动，但这主要来自供应方面，例如劳动力参与率的提高和移民的增加，这些因素共同推动了劳动力供应的增长，支持了经济的持续扩张。

10:01

💰 工资增长与生产率的关系

演讲者讨论了工资增长和生产率之间的关系，指出工资增长在经济中的表现以及它如何影响结构性通胀压力。他提到，尽管工资增长相比疫情前有所提高，但关键问题在于生产率是否能同步提高，以避免产生结构性通胀压力。演讲者还提到，如果工资增长与生产率增长之间的差异不能得到有效管理，那么企业支付的劳动力成本与产出之间的差距将直接影响产品价格，从而推动通胀。

15:02

🌐 全球经济中的美国经济地位

演讲者探讨了在全球经济背景下美国经济的地位，强调尽管其他国家可能面临不同的通胀压力，但美国经济的强劲表现对全球市场有着重要影响。他提到，其他国家的政策制定者在制定货币政策时，不仅受到美联储政策的影响，还受到本国经济状况的制约。演讲者还讨论了全球经济中的一些关键问题，如去全球化趋势、供应链的重构以及对商品价格的压力，这些问题都可能影响通胀的走向。

20:03

🏢 企业盈利与经济动力

演讲者分析了企业盈利情况，特别是标准普尔500指数中大型企业与中小企业之间的差异。他指出，尽管大型企业能够维持较高的利润率，但中小企业的利润率正在受到压力。这种差异表明，经济中的不同部分对经济动力的响应存在显著差异，这可能对整体经济的健康发展产生影响。

25:06

📉 资产价格与经济预期

演讲者讨论了资产价格与经济预期之间的关系，强调了资产价格变动对经济预期的影响。他提到，尽管当前的资产价格较高，但如果资产价格出现显著下跌，可能会导致家庭减少支出，从而影响整体需求。演讲者还指出，美联储可能不愿意接受长期高于目标的通胀率，这可能会影响其未来的货币政策决策。

30:06

📊 通胀预期与市场反应

演讲者分析了市场对通胀预期的反应，指出市场可能没有充分预期到通胀可能持续高于美联储目标的情况。他强调，如果通胀预期上升，市场可能会出现调整，投资者可能需要重新评估他们的投资组合，以适应可能的高通胀环境。

35:06

🌍 全球货币政策的分歧

演讲者讨论了全球货币政策的分歧，特别是美联储与其他主要经济体的货币政策之间的差异。他指出，随着其他国家开始放松货币政策以应对本国经济的放缓，这可能会对美元产生影响，并可能导致资本流入美国债券市场。这种全球货币政策的分歧可能会对美国的长期利率产生影响，从而影响美国经济的通胀预期和增长前景。

40:08

🤔 经济前景的不确定性

演讲者最后讨论了经济前景的不确定性，包括劳动力市场、通胀预期和全球货币政策等因素。他强调，尽管当前的经济数据显示出一定的稳定性，但未来的经济走向仍然存在不确定性。演讲者建议投资者保持警惕，关注经济数据的变化，并准备好应对可能的经济波动。

Keywords

💡名义需求

名义需求指的是不考虑价格变动因素的需求水平。在视频中，提到名义需求在过去九个季度中基本保持稳定，波动在5%到6%之间，这表明美国经济的名义增长率相当稳定且强劲。

💡实际增长

实际增长是指考虑通货膨胀因素后的经济增长率。视频中提到，尽管实际增长数字在过去几年中有所波动，但总体上，美国经济的实际增长足以保持劳动力市场的紧张状态，从而维持经济的强劲动力。

💡劳动力市场

劳动力市场是指劳动力供应和需求的场所。视频中强调，美国劳动力市场在过去18至24个月内表现出极高的稳定性，平均每月增加约24万就业岗位，这表明劳动力市场依然紧张。

💡通货膨胀

通货膨胀是指货币购买力下降，商品和服务价格普遍上升的经济现象。视频中讨论了美联储面临的挑战，即如何在保持经济增长的同时，将通货膨胀率可持续地降至2%的目标水平。

💡就业条件

就业条件指的是劳动力市场中工作机会的数量、质量以及相关的工作环境和薪酬待遇。视频中提到，尽管存在一些波动，但整体上就业条件并未出现有意义的转变。

💡自愿离职率

自愿离职率是指员工自愿离开当前工作的比率。视频中提到，人们关注辞职率和职位空缺率，这些指标自然相互关联，因为人们通常是为了获得更高的薪酬而离职。

💡劳动生产率

劳动生产率是指每个工作小时的产出量。视频中讨论了劳动生产率与名义工资增长之间的关系，以及这种关系如何影响经济中的结构性通货膨胀压力。

💡收入驱动的扩张

收入驱动的扩张是指由收入增长而非信贷增长驱动的经济增长。视频中指出，当前的经济扩张与以往的信贷驱动扩张不同，而是由收入增长和消费增长相匹配的可持续动态。

💡资产价格

资产价格是指在金融市场上交易的资产的市场价格。视频中提到，资产价格的变动可能会影响家庭的储蓄与消费意愿，从而对经济增长产生影响。

💡财政政策

财政政策是指政府通过税收和支出来影响经济的政策。视频中提到，尽管有人猜测财政扩张可能是当前经济扩张的主要驱动力，但实际上，当前的扩张更多是由收入增长而非财政政策驱动的。

💡货币政策

货币政策是指中央银行通过控制货币供应量和利率来影响经济的政策。视频中讨论了美联储可能需要维持紧缩的货币政策以对抗通货膨胀，即使这可能会导致经济增长放缓。

Highlights

美国经济的名义增长在过去九个季度中相对稳定，保持在5%到6%之间，显示出强劲且可持续的增长态势。

实际增长率在过去几年中有所波动，但总体上，美国劳动力市场保持紧张，经济增长足以维持经济活力。

就业数据显示，在过去18至24个月内，美国平均每月增加约24万就业岗位，显示出就业市场的稳定性。

与以往经济周期相比，当前的劳动力市场紧张并非由需求方问题引起，而是供应方问题，如裁员和解雇率保持在历史低位。

劳动市场的放松主要来自供应侧，特别是劳动力参与率的提高，尤其是工作年龄女性的参与率创下历史新高。

移民的增加也为劳动力市场带来了新的供应，有助于缓解某些低教育群体的紧张状况。

工资增长相较于疫情前有所上升，名义工资增长与生产力增长之间的关系是理解当前结构性通胀压力的关键。

生产力增长的停滞可能意味着工资增长并没有带来相应的生产效率提升，这可能导致结构性通胀压力。

当前的经济增长更多是由收入驱动而非信贷驱动，这与过去以信贷扩张为特征的经济周期不同。

家庭收入的增长带动了消费增长，这种增长模式相比信贷驱动的模式更为可持续。

市场对于利率上升带来的资产持有者收入增加进而推动消费的理论存在误解，实际上这种效应非常有限。

尽管存在通胀压力，但市场对于美联储能否将通胀可持续地降低回2%存在疑问。

全球通胀压力的差异可能会影响美联储的政策决策，尤其是其他经济体的货币政策变化。

尽管美国经济强劲，但美联储可能需要更高的长期债券收益率来减缓经济和通胀压力。

黄金市场显示出东方特别是中国对黄金的需求强劲，这可能与对人民币和国内资产的信心丧失有关。

尽管美国经济表现良好，但市场可能对美联储接受高于目标通胀率的可能性定价不足。

投资者应考虑在投资组合中至少部分反映通胀可能高于预期的可能性，以准备应对不同的经济情况。

Transcripts

[Music]

for this month's uh monthly macro

webinar I think as we get started I I

think it's so important to start uh with

the big picture and the big picture uh

that in some ways uh has not changed

very much uh over the course of you know

really the last two plus years uh and

what that picture shows here

particularly on the right hand side is

that that nominal end demand has largely

been stable over the course of the last

uh nine quarters or so uh running

between somewhere around 5 to

6% uh and you know you can cut it a

bunch of different ways but the basic

picture is that nominal growth in the US

economy is pretty stable pretty strong

at 6% um and quite sustainable now the

exact measure

real growth numbers they've moved around

a bit over the course of the last couple

of years uh in particular uh they were a

bit lower during periods of more

elevated price growth and they've been

higher during periods of less elevated

price growth but the big picture story

here is no matter how you slice it you

know uh nominal growth is relatively

elevated and real growth particularly if

we look at real growth over the course

uh of the last say six or seven quarters

continues to be strong enough uh to keep

labor markets tight to keep the economy

tight and uh to keep uh significant

momentum uh economic momentum in place

which uh is for from the fed's

perspective great from the unemployment

side of their mandate but continues to

raise questions about whether uh they'll

be able to sustainably bring inflation

back down to 2% and so that's the

starting point this durable sustainable

nominal growth that's happening in the

economy that continues uh to keep things

tight and price pressures in

place

um

try if you look at employment in that

context you know employment has remained

incredibly stable over the last 18 to 20

four months you know everyone is focused

on you know this detail about the

employment report or that detail about

the employment report but if you take a

step back and you look over the course

of the last 18 months what you see is

that the US Labor Market has been adding

you know a few hundred, jobs pretty

consistently uh over the course of the

last 18 to 24 months if we look at the

average of the last say 3 months it's

right around 240,000 that's roughly on

par with the average over the past 18

months uh so nothing here suggests uh a

meaningful turn in employment conditions

I think you know folks are often drawn

to try and make news out of any

individual report and it's just it's not

the it's not the way to look at the

picture because there's always noise in

any one report in any particular time

series what you want to do is you want

to you want to look holistically at the

overall picture in terms of Labor and

you don't want to get focused on the

wiggle between one report and another

report and so when we look at other

pieces of information whether it's

layoffs and discharges which at 1% uh of

employment uh is running essentially as

low as it ever has and that has been

very stable over the course uh of the

last 18 months or you look at the

unemployment rate which you know if you

just take a a slight Step Back From The

Wiggles basically shows stable low

unemployment secular lows over the

course of the last 18 months as well in

this case uh sort of uh penciling out

the Big Spike and Recovery that happened

uh you know during and then post covid

you basically see that we have an

employment picture where you know people

are focusing on all the Wiggles but you

know largely looks consistent with uh

the the sort of tightness of Labor

markets that we saw pre-co so you know

that overall picture from an employment

perspective suggests that uh labor

markets remain relatively tight uh so

strong nominal growth relatively tight

labor markets what loosening we have

seen in the labor markets has really

come from a supply side not uh a problem

with demand part of the way that you can

see that is that layoffs and discharges

involuntary separations has been

basically flat through this whole period

a lot of people are focused on quits uh

or they're focused on openings uh and I

think or are on high rings and I think

one of the problems with that is those

Dynamics are naturally connected to each

other people quit because they're going

to get higher right and so you can have

hirings hirings and quits are connected

to each other but they're often

connected uh by the fact that they are

voluntary separations and rehiring in

other

locations one of the one of the great

ways that you can see about how the

labor market the underlying Fundamental

Labor Market is working is by looking at

this layoffs and discharges line because

it gives you a much better sense of

whether something's changing from an

involuntary perspective and there you

don't see uh a pickup at all in

involuntary uh layoffs which suggests

that companies are choosing to keep the

labor as much as they can and whatever

uh whatever uh switching that's

occurring uh from quits to hiring uh you

know that spiked right after covid

basically every person who wanted to

switch their job basically did and now

we're in a situation where you know

we're in the great stay uh as some folks

have described it but on the supply side

the thing on the labor side what what

modest loosening we have seen over the

course of the last couple of uh quarters

has really been driven by supply side

and you know there's nothing there's

nothing bad about supply side loosening

of Labor markets from an overall

economic perspective because what it

means is that overall incomes are

growing which allows for continuation of

nominal spending that nominal GDP that

we're seeing uh we're seeing uh that

loosening of Labor markets from the

supply side really in two places one uh

in the increase in labor force

participation shown on these charts the

purple line showing primate working age

uh labor force participation back up to

multi-decade highs and then in

particular seeing that labor Supply

coming from what is shown here on the

right hand side which is a pickup in

prime age uh female labor force

participation uh that is now you know

basic at all-time highs um and so that's

indicative of strong labor markets

strong labor demand people coming in in

addition to the increased participation

rate we're also seeing uh a surge in uh

immigration which has uh which has added

jobs you know which has basically

increased the I should say the supply of

labor into the economy and we're seeing

certain areas particularly uh some of

the lower education cohorts go from

being extraordinarily tight to being you

know slightly less tight as a function

of that but again that is indicative of

a positive overall economic environment

where we're having uh pretty strong

payrolls growth pretty strong labor

force participation pretty strong Supply

of people coming into the labor force

all of that is uh consistent with a

sustainable and and pretty strong

economic

expansion and as a result of the fact

that labor markets remain pretty tight

we're seeing wage growth continue to be

uh relatively elevated in comparison to

where we were preco uh here on the left

hand side what we show is ECI which is

probably the best Benchmark in terms of

overall labor costs uh that we can look

at although when I look at this I look

at a wide range of different measures on

an ongoing basis and what do we see here

is that the most recent ECI numbers uh

whether you're looking at uh at total

compensation or wages and salaries or

public or private the basic picture is

largely the same uh where we have wage

growth on this particular measure

running between four and 5% which is

significantly elevated to where it was

in the preo period where it was running

you know roughly 2 to 3% so we've got uh

you know something like a point or two

higher ongoing wage growth in the

economy than existed preco and the real

question is um from an inflation

perspective is whether or not that's

being met with increased

productivity now part of the way that

you could think about structural

inflation in an

economy is to Simply ask the question

what is the nominal wage growth per hour

work that I'm paying and how is that

moving relative to the productive output

that I'm getting per worker per hour

that difference the difference between

nominal wage growth and productivity

growth sets the structural inflationary

pressures in an economy because it

basically says how much am I paying

relative to how much am I producing the

difference between those two things

essentially has to to be the price and

so productivity is an integral component

of understanding whether these

structural infl or whether these

inflationary pressures are uh are in

place as a function of these tight labor

markets and over on the right hand side

what you see is the most recent

productivity information I think there's

a real question here in terms of the

path of productivity uh we saw

productivity Spike during covid in

particular because lower Pro uh lower

productivity workers were let go at the

bottom of the economic cycle but since

then you know productivity is largely

chopped sideways and it was particularly

notable to see in the most recent

reporting most recent GDP reporting that

we had essentially flat growth in

productivity uh in the first quarter

which marked a shift in trend from the

increases that we had seen in a few

quarters before I think you know

productivity is it's a very hard thing

to measure but the basic question is are

we in an environment where productivity

is expanding rapidly and starting to get

back to sort of that Trend productivity

measure that we saw pre-co or are we

environment where productivity is

actually mostly chopping sideways in

other developed economies we've

basically seen productivity move

sideways and so even those economies

that had relatively slow growth uh weak

growth like Europe and the UK have been

able to maintain secularly low

unemployment rates because labor

productivity has been uh incredibly weak

the question that exists here in the US

is are we going to be able in the

interplay of these two charts with that

1 to 2% higher wage growth are we going

to get 1 to two% higher productivity

growth in the economy so as to not have

those structural inflationary pressures

emerge and I think what you see here is

that there's real questions about

whether that's going to happen uh with

this with this chopping sideways

recently

what we have here uh as a result of the

tight labor markets so strong growth

tight labor markets uh elevated wage

growth is that uh we have what i' I'd

call an income Le expansion uh that's

pretty different from most of the uh

expansions that we've seen uh during our

professional careers during most of our

lifetimes uh who are probably uh on this

call right now

most of the time we've seen credit

driven expansions so whether it was in

the 2008 period or uh the the tech boom

period in both of those periods uh

economic activity expanded as a result

of either households or businesses

taking on substantial debt and using

that to finance uh their their spending

or their investment and the economy and

when that flow of credit slowed in part

as a function of tightening monetary

policy that then created a really

significant slowdown in economic

activity as booming credit went to

slowing credit the story today is

totally different credit growth in the

US economy uh across the non-financial

sectors uh is running basically at

recessionary levels uh at you know

roughly a couple percent of GDP uh on an

annualized basis and what that suggests

is despite the fact that we're having

relatively low credit growth we're

having pretty strong spending growth uh

particularly from the household sector

and so how can that be well the way that

that works is that we're having an

income Le uh expansion and so here on

the left hand side what you see is the

total compensation of employees received

this from the personal income and

spending report and what it shows is

that uh the overall household wage and

salary income growth is running about

five or 6% and then notable which is

elevated relative to what it's been in

the last you know 25 years give or take

and then you go over to the right hand

side and you look at the spending side

of things and you see well spending is

running at at uh 5 to six per. and so

what you basically have is a very

sustainable dynamic because if

households are basically taking in a

certain amount of wage growth and

growing their spending in line with that

wage growth that's something that can

continue for an extended period of time

because it doesn't have the sort of

buildup of debt dynamics that would

typically occur in a credit lead

expansion you don't have that

unsustainable debt boom uh that

eventually starts to slow significantly

as monetary policy

tightens and a lot of there's been a lot

of conversations about other Dynamics uh

that are predominantly driving uh the

story I think folks who

have sort of been brought up really

focused on the idea of a credit driven

cycle are confused about how about why

the the overall GDP growth remains so

strong in an environment where there's

relatively tight monetary policy and

relatively low credit growth and so

those folks are searching for Solutions

searching for ways to describe or

possible ideas in terms of how to

describe what's going on uh in terms of

what's financing the spending one of the

most popular theories that has emerged

over the course of the last couple of

months has been that elevated interest

rates are leading to elevated income uh

for the holders of those assets which is

then leading to elevated spending R and

that theory does not simply doesn't hold

up when you actually do the numbers so

on the leftand side upper left hand side

what you see here is the total household

interest in inome earned uh Through Time

relative to overall nominal GDP growth

in the US economy those two charts are

put on different levels because uh

they're different meaningfully different

levels but the scale sizes are the same

so you can compare the magnitude of the

changes between uh the two series and

what you see is uh the overall household

interest income that is being earned has

has risen but it is a tiny tiny uh rise

in comparison to overall nominal GDP and

if anything this probably overstates the

story since the vast majority of

households that are earning interest

income are higher income cohorts with

lower propensity to spend that

incremental earned income on the right

hand side you see the same story

basically from a corporation perspective

where elevated rates particularly for

large cashh holding uh businesses large

businesses with with substantial cash

Holdings have uh have more than offset

the

increase uh in overall financing costs

because they've locked in long-term debt

at low interest rates but again the

overall picture the amount of uh in

interest income that has has uh has

occurred as a function of that activity

is Dem Minimus relative to the overall

moves and GDP growth finally you look at

the bottom another way to triangulate it

is looking at how the government says

how much are they paying to households

and corporations as a function of their

um activities you know as function of

their ongoing interest payments and

again what you see there is a relatively

modest amount of overall income that is

being paid to households and

corporations relative to the magnitude

of the expansion of the economy all this

this you know La last month we did a a

deep dive talking more about the fact

that the FIS Story the fiscal expansion

story uh is not likely to be uh you know

is not the primary driver of what's

going on with this expansion here this

this income from elevated interest rates

has been a real Focus if anything it's a

it's an even worse story when you look

at the numbers in terms of how big a

deal it is um and all of this is really

to say there are there are many folks

who are out there in the market who are

who are confused deeply conf confused

about what's driving this expansion and

that's because this expansion is very

different than any that we've

experienced in our professional lives

but what I'd emphasize is that this

expansion this income driven expansion

is actually very common if you look

across countries across time

particularly if you start to think about

um economies that that generally have

less debt uh as a driver of their

activity uh often shifts in income

growth uh are the primary driver of

shifts in economic conditions and while

the us obviously doesn't have a limit in

terms of the credit growth that's

occurring credit growth is relatively

modest compared to past cycles and so

the story here is much more like an

oldtime expansion where someone's income

uh leads to their spending and that

spending leads to someone else's income

and that someone else's income leads to

their spending and so on and so forth

forth and that can that will continue to

occur sustainably until the point in

which

predominantly uh that there is something

that interrupts the desire to spend

versus save and in general the thing

that does that is shifts in asset prices

create shifts in a desire to save more

to for instance a decline in asset

prices would create a desire to save

more which would then create a Slowdown

in spending and that cycle that

sustainable cycle that exists today

would start to fade as a

result from the fed's

perspective uh no matter how you look at

it inflation's to

Dam uh and as a simple example if you

take over here on the leftand side uh

this uh Jason Ferman table which he puts

out after every uh series of inflation

data what you see is if you look at that

table every single number on that table

is too high for the FED no matter how

you slice it inflation is too high and

you can slice and dice it all the

different ways and all the different uh

hope that it might be close but none of

those numbers are 2% on that table and

if anything what it's showing is that

inflation is moving in the wrong

direction not the right direction across

nearly all of those those

measures and why that's happening I

think what you could see here on the

right hand side is the breakdown of how

much of that inflation's occurring from

the cyclical contributions versus the as

cyclical

contributions and what it shows is that

uh cyclical contributions are

stabilizing in terms of their

contribution around 2% which is

consistent with some moderation from the

extremes uh that we saw in the postco

period but largely consistent

with uh with a dynamic that uh you know

with a relatively late cycle relatively

tight economy so you're seeing that

stabilize and that's stabilizing at

about a point above where it was in the

pre-co period and then I think probably

the mo most important Dynamic here

that's happening is that we've seen the

end of the disinflationary impulse from

the acyclical side of the economy that

cyclical side of the economy which was

so critical to creating the downward

disinflationary force in the in measured

inflation over the course of uh starting

at the end of 22 and into

23 that is bottomed and is now starting

to rise and I think it's important to

recognize that um that when you look at

this a cyclical contribution you know

the the the peak uh negative impulse

disinflationary impulse in that measure

basically aligned with the FED

suggesting that they were going to Pivot

and so what they didn't recognize at the

time was that that big disinflationary

impulse was not likely to be sustained

we had a high rate of inflation as

Supply chains seized when Supply Chains

Got resolved or have been you know on

the pro in the process of being resolved

that created a big disinflationary Force

but eventually that will slow and the

question is basically what level do we

reset the a cyclical uh inflation you

know through the course of the 2015 to

20199 period we saw an average from a

contribution perspective at about

0.5% but if we have an environment where

de globalization is happening where uh

there's greater uh Supply parallel

supply chain chain

creation uh where investment continues

to be relatively elevated in order to

deal with those Supply shocks and where

um you know the several decades of

integration that we've seen are starting

to uh starting to fade not to mention I

should say the fact that uh there's

pressures on commodity prices uh as a

function of increased global conflict

the odds that we see a cyclical

inflation stabilize at that 0.5% that we

saw in the pre-co period are pretty low

I mean even just a move of a cyclical

inflation back to what we saw in the in

the free GFC period where it averaged

about

1.5% combined with cyclical inflation at

roughly 2% uh puts you in a p position

that that first looks a lot like what

the overall inflation measures look like

and second creates a lot of risk that

the FED can meet its mandate uh in the

near

term when it comes to markets what we

see is that you know much of this strong

growth and need for tighter monetary

policy is largely priced in to a number

of financial markets you know Equity

prices uh have reached uh you know are

basically at highs uh expectations of

fed Cuts have gone from six to seven

Cuts expected to kick off the year now

to roughly one to two um those two

markets basically are reflecting the

strength of the economy the inflationary

pressures and the need uh to maintain

Tight money for an extended period of

time the main place that's not

reflecting that is in the term structure

of interest rates which if you were to

you know there's a lot of different ways

to measure the term structure of

interest rates and the term premium uh

and you know you put a bunch of

academics in the room and they'll all

have their own opinion about it

um it it doesn't matter so much exactly

how you measure it and what the precise

number is what matters more is to kind

of get a sense as to what does that ter

term premium that rough term premium

look like relative to what it's been say

for the last 10 years and how does that

compare to how economic conditions look

relative to the same period so as a

simple example if you take a look at

this measure of term premium what you

see is that uh you know the current term

premium in the bond market 10-year bond

market is roughly consistent with uh the

average that it's been over the course

of the last 10 years 10 or 15 years and

that's pretty notable considering the

fact that that uh if you look at uh the

the economic conditions right now uh

they're certainly more considerably more

elevated relative to how they've been on

average over the last 10 years if you

look at inflation pressures they're

certainly more elevated relative to what

they've been in the last 10 years and if

you look at uh overall tightness of

financial conditions uh you know uh the

short rate has been very elevated uh

relative to what it's been the last 10

years and so you sort of put all these

different pictures together the need for

tighter monetary policy for an extended

period of time is certainly unusual

relative to the last 10 years and so uh

Stronger growth higher inflation and

need for tighter structural monetary

policy you put all those things together

and the idea that you have essentially

the same term premium in place that you

did uh over the last 10 years it doesn't

quite add up uh in terms of how the long

end is

priced that's occurring at a time when

we're likely to see the long long end

Supply continue the last time we talked

there was real questions about exactly

what policy would be announced in the

qra um and the reality is uh what we got

was just basically more of the same and

if you look here on the leth hand side

what you see is a chart of the total

amount of notes and bonds that are being

issued over the course of the next uh

six months or so and what you see here

is that uh that level of issuance is

going to continue to be uh significantly

elevated not quite uh not quite higher

than in in history but um but

nonetheless it's going to remain

considerably elevated and as a function

of that you'll have continued pressure

on the bond market uh as that Supply

continues to flow

through that Supply if anything is worse

than what it's been in a fair amount of

the uh postco period because at least

back when we had that big Supply around

covid you had a situation where there

was significant Bond buying by the by

the Federal Reserve whereas at this

point you know quantitative uh

tightening continues to create a drag on

the bond an ongoing flow and drag on the

bond

market and when you think about that

basic story what ends up happening is

that will in one way shape or form

that's essentially the selling of bonds

is essentially an ongoing negative flow

of capital in or negative ative flow in

terms of asset prices as it represents a

continued flow or sale of asset prices

on an ongoing basis and so the thing I

think is pretty interesting is how asset

prices are currently transpiring

relative to where we've been uh over the

course of the last couple of years and

what you see there is uh with that

measure of RAR basically asset prices

have remained constant uh you know still

near highs uh relative to the last

couple years they fell as the bond

Supply question uh came into existence

sort of late last uh fall but by and

large asset prices have recovered uh

what happened last fall and they remain

basically at Peaks now that's

particularly notable because what it

means is that um such strong asset

prices combined with this significant

flow of supply really raises a question

about whether we're going to continue to

see such strong asset prices is ahead

the bond Supply is going to affect all

asset prices in one way shape or

form continuing

on I think what that really highlights

to me is that um you know the the thing

that's going on the thing that's going

on in ter in terms of the Cross asset

markets is that the bond market really

is in control um the bond market uh you

know I think there was a period of time

when we we were coming into the year

where uh expectations of US economic

outcomes were quite different uh than um

than what was likely to transpire so

coming into the year what we saw was

that you know expectations of us growth

in 2024 were going to be about 1% or

lower but then what happened what

shifted uh to kick off the year was a

big shift in those

expectations uh for particularly in the

US Stock Market where today US stocks

are now expected to uh have you know

earnings growth at something like 177%

by the end of the year on a

year-over-year basis and Economist

estimates of economic growth in the US

are for us uh economic real GDP to be

about two and a half% over the course of

the entirety of 2024 2 and a half% GDP

in this economy is you know pretty

strong GDP All Things Considered and so

what you see here is a picture that that

sort of got priced in that repricing of

the strength of economic conditions got

priced in we saw stocks basically move

to New highs we saw bond yields move up

uh somewhat in response to that but now

we've transitioned to a different point

in the cycle where what's happening

instead is that expectations of strong

growth already exist uh in the market

and continue to remain in place so what

creates the incremental shift in terms

of asset prices is not those

expectations because they're still

firmly in place place what creates the

shift in expect in in prices is now the

discount rate and we see this everywhere

across uh cross assets so we see in the

US Stock Market basically trading highly

correlated to the US bond market in the

last couple of weeks we see you know

foreign bond markets trading uh tightly

uh to what's going on in the US bond

market we see you know the Yen trading

close closely connected to what's going

on in the US bond market and we also see

you know assets as Extreme as what's

going on with Bitcoin trading closely to

what's going on in the US bond market

and so all of those things are

indications and you know that that uh

bond market connection created a selloff

in asset prices in April and then

created a rally here uh to kick off the

the month of May as bond yields started

to to come down and so uh you know I

think a lot of folks are focused on

what's going on with say earnings or or

other Dynamics in the market but what's

really driving the moves in asset prices

are uh are what's happening with the

long end so the long end is really in

control and in control globally and then

as I mentioned we've had a pretty big

shift in terms of what's going on with

pricing of US Stocks uh and growth

expectations in the US economy you know

when we came into the year uh

expectations were for very very weak

growth All Things Considered

particularly considering the fact that

we saw such a big move down in bond

yields and such a significant rise in

the equity Market you know we talked to

kick off the year in terms of the um in

terms of the overall economic set of

conditions we talked at Great length

about the sort of stronger for longer

idea uh to be firmly in place and that

that wasn't reflected in asset markets

uh but at this point as I said that that

is largely reflected in asset markets

and instead expectations have now risen

particularly when it comes to equities

to levels that are relatively extreme

scen you know earnings growth shown on

the right hand side has basically been

flat uh in one form or another for the

last you know couple of years and

nonetheless what's expected is for

relatively extreme earnings growth uh to

occur uh over the course of 2024 that

number there by

q424 is for something like 17%

year-over-year earnings growth I mean

17% year-over-year earnings growth for

an economy that's growing you know well

at a nominal growth rate of something

like 6% would require a significant

expansion in margins to levels that are

well above uh you know to levels that

are basically back to secular highs and

it's notable in in particular for that

earnings growth that uh it's not

primarily coming from the mag s

expectations are for non-m S uh

companies to contribute the vast

majority of that earnings growth so it's

not like the AI or Tech Revolution is

going to be the thing that's going to

going to drive that earnings growth or

is not the thing that's expected to

drive that earnings growth higher we

have to get the whole economy in place

to give you that 177% earnings growth

through the course of the

Year switching over to the rest of the

world and then we'll uh we'll get to

some questions here in just a second

what we see in the rest of the world uh

you know starting with Japan is that the

Japanese unilateral interventions which

have gotten a lot of uh got a lot of ink

and and occurred over the course of the

last couple of weeks uh are unlikely to

make a meaningful structural difference

in the Yen uh unless we see a

significant uh change in The Stance of

us monetary policy or in shifts in the

US bond yields and so what we've seen is

that the Yen uh negative pressures on

the Yen have persisted uh as us interest

rates have risen over the course of the

last uh couple of months uh and what

intervention that the boj the MLF has

have done has done has largely faded

pretty quickly you know I sort of joked

uh a couple a couple days the first

intervention that they did the half-life

uh of a Yen intervention was something

like three or four business days and

then the halflife of their intervention

most recently was about you know 12

hours uh and that really speaks to the

fact that the underlying pressures uh

inflationary pressures that or

underlying uh negative pressures on the

yend that exist through different you

know much much weaker conditions in

easier monetary policy largely remain in

place conditions in Europe and the UK uh

have actually been improving uh and you

can see it here in the pmis which are

much better measures in Europe and the

UK than they are in the US and what you

see there is that uh basically

expectations for European and UK growth

in 2024 are very very depressed

certainly relative to what we see uh in

the US context

uh and nonetheless we're seeing an

improvement in economic conditions in

those economies so it's very possible

that we see those economies surpris to

the upside relative to the US here in

2024 uh the last thing i' I'd end with

which uh you know I feel like I I'd have

to be remiss not to talk at least a

little about is what's going on in the

gold market I I think there's sort of a

strategic question in terms of what's

going on with gold which I highlight

here on the leftand side which is if you

just look at Gold's performance over the

last five years and I love the last five

years in general because we basically

had every single macroecon major

macroeconomic environment uh that you

could imagine in the last five years and

so I think it's a really good stress

test really good case study in terms of

how to think about how assets perform

and how to build a great portfolio and

what you see is gold has been a great

diversifying tool over the course of

that entire time frame and has continued

to show its role of the fact that uh

that gold you know outperforms Bonds in

roughly 50% of draw Downs in the equity

market and that's continued uh during

this period as

well uh then there's a more tactical

story on gold which continues to be very

interesting in particular the strength

of gold demand that we've seen has

really not come out of the West uh with

gold ETF flows continuing to press to

new lows continuing to be very weak

despite the fact that there's

significant price Rises that's unusual

usually you see retail demand for uh

ETFs uh rising in instances where the

price is rising but instead in this

cycle what we've seen is we've seen uh

these we've seen the retail demand for

for gold ETFs to actually be negative

what that highlights is that the vast

majority of the rally in Gold that we've

seen has been a function of demand in

the East demand from China in particular

uh domestic the domestic private sector

which has struggled to find ways to move

uh assets out of China in response to

the the challenging currency dynamics

that exists there and so what we're

seeing is that they're buying gold and

you can see all sorts of different wake

of that whether it's the elevated

Shanghai premium or whe whether it's the

premium on domestic gold ETFs what is

occurring there is basically a loss in

faith of the Chinese currency uh as well

as domestic Chinese assets assets and so

that demand uh is the primary driver

even a slowing of Western demand from

aggregate selling on an ongoing basis to

roughly flat could easily create a

dynamic where gold sees upside uh an

upside surprise so I'll pause there uh

we'll go to a few audience questions

here I'll I'll just pause it very

briefly um as I pull up some of these uh

great audience questions that we got

ahead of time and then again if you have

any questions and you want to uh put

them into the into the chat feel free to

go ahead and do that um let's start with

uh question number one how do changes in

gas prices affect your order of the

macro linkages at all and do they um you

know how do you weigh the difference

between uh the pressure from higher

inflation and the pressure directly on

demand I think it's a good it's a very

interesting question the the short of

which is that

um in terms of the questions is that uh

is that we have a circumstance where uh

oil basically goes into every asset

price and if anything uh the shift in

oil prices the shift in gas prices has

been one of the more important uh

acyclical uh drivers of the inflationary

pressures that we've seen that have

emerged recently um you know gas pric is

a big part of how the disinflationary

impulse flowed through to the economy

last year year was the gas prices went

from four bucks to three bucks a gallon

but more recently have started to rise

back to $4 a gallon and that's a pretty

important story because what it means is

that uh you know for many uh for many

folks who you know for for the price

pressures that exist in the economy

that's basically creating an inflation

you know that went from a

disinflationary impulse to inflationary

impulse and it takes a fair amount of

time to flow through so while say oil

prices have been a little soft in recent

weeks we still have a lot of gasoline

price based inflationary pressures that

are likely to flow through and that's

going to take some time to flow through

to all other uh prices in the economy

and so from the fed's perspective

they're already concerned about where

inflation is today and we have this

added pressure of a bit of additional

inflation uh inflationary impulse coming

from gas prices and that's going to more

than outweight the

incremental impact from uh from lower

essentially lower post gas uh incomes

and spending that comes as a

result just hitting another question

that was submitted ahead of time uh what

does Nipa profit data say about economic

momentum I I I think one of the things

um that's pretty interesting about

looking at overall profits in the

economy overall profit margins in the

economy relative to say profit margins

that we're seeing with the S&P 500 is

that we're really seeing uh the largest

companies continue to be able to hold

relatively elevated profit margins

whereas we're seeing uh deterioration

particularly in that sort of middle part

of the economy those smaller businesses

uh that are struggling uh that are

typically borrowing more on the short

end that are typically uh that may need

uh cash on an ongoing basis to sustain

uh their growth or expansion that's

really where we're seeing uh margins

start to compress and so there's quite a

big gap between you know uh small caps

and midcaps relative to those Mega caps

uh and that's persisting uh through

time uh and then finally uh a question

in terms of the the submitted ahead of

time uh how are Global inflationary

pressures

uh how are uh Global inflation pressures

that are pretty different across uh

countries uh influencing uh May

influence fed policy I think that's a

great question one of the things that's

been really interesting to see is that

you know I think a lot of folks uh sort

of say the old the age-old the the adage

that you know the FED controls what

other policy makers are doing and I

think increasingly what we're seeing as

those other policy makers shift towards

an easing cycle is that uh those policy

makers are actually getting out ahead of

the fed and easing in response to uh the

economic conditions that they for their

own economies part of this is to be

expected as many of those economies have

meaningfully higher short-end rate

sensitivity uh because of the structure

of their debt markets and particularly

the structure of their household

borrowing markets that's that's a pretty

interesting story and what it means is

that those economies have slowed more

are experiencing uh a greater slowing of

inflationary pressures and are shifting

to easing at a time when the FED is

continuing to need to maintain typ

policy given the strength of the US

economy has a couple of key Market

implications one it should be beneficial

for the dollar as monetary policy

pressures between the two economies you

know between the Us and other developed

economies diverge I think it's also

interesting when looking in the long end

of the bond market because in part

what's happened is that us rates remain

pretty elevated relative to the rest of

the developed World pretty much the last

time that we saw such elevation of us

rates relative to the rest of the

developed world was back in the 80s

period and that has important

implications in terms of keeping a

significant demand in place from the

foreign private sector uh which is

basically uh funding a substantial

portion of the US the ongoing us deficit

uh as rates start to fall in the rest of

the world that essentially makes us

bonds even more attractive and creates

uh incremental flow uh in terms of

buying of US Treasury bonds uh you know

and and helping keep prices below what

they would have been otherwise I I think

it it in many ways it it um it reminds

me of what happened uh in the US bond

market in the

2005ish period where we had a big uh

flow of global central banks buying of

bonds and that created a long end that

remained relatively depressed in

comparison to economic the Boom in econ

iomic conditions and helped finance the

housing bubble now I don't think we're

in a bubble right now but I do think we

have significant Bond Supply and we have

elevated inflation uh and an economy

that's running too hot that would

benefit from higher long-end Bondi uh

but if what's happening is the rest of

the world is easing and that's flowing

back into the US economy essentially

what that means is the long end is not

able to do the work that the FED uh

needs in order to slow the economy and

moderate inflationary pressures which

puts even more pressure back on the FED

to do more in response and they've

basically responded and said that

because of their concerns about how

tight monetary policy is already that

they don't necessarily want to engage in

further monetary tightening it all

connects to the possibility of the fact

that uh monetary policy may be

insufficiently tight given economic

conditions for an extended period of

time and this is one of the key avenues

that it could could come in

and so uh you know that Dynamic favors

steepening of the yield curve to some

extent and it also favors hard assets

relative to Fiat dollars if US policy is

likely to remain too easy for too

long let's go to the uh the live Q&A

here

um I'll just pull that up uh here so we

can go through a few of those questions

as well uh give it a few more minutes

here I know I've run over the top of the

hour so thank you for uh for sticking

around

[Music]

um yeah I I I think there's a there's a

couple questions here

[Music]

um uh related to the labor market and

the overall labor market dynamics I

think one of the key uh questions here

is basically you know what causes the

labor market to meaningfully

deteriorate and uh and I think you know

the ordering of that is really uh quite

important I mean basically labor markets

respond to demand and so what is going

to create a shift a meaningful shift in

the labor market not not this sort of uh

small scale supply side loosening that

we've seen but a meaningful shift in the

labor market is going to be uh a

significant amount of um of slowing in

demand and so the question is basically

how is that slowing of demand going to

happen in an environment where credit

growth is not the primary financer of

demand financing of demand um and the

way that that's going to happen is we

probably need uh asset prices to weaken

to some extent uh and a weakening of

asset prices would then create the

impetus for households to slow their

spending relative to their wages and

that slowing of spending Rel to wages

would then create a slowing of demand

and that slowing of demand would be met

to some extent by by companies with

weaker employment conditions and so I I

think that's the basic path is we need a

weakening in order to slow the income Le

uh expansion we really need a

significant slowing of demand and the

way that demand is going to slow is

either there's going to be an exogenous

shock that none of us are seeing or it's

going to have to be meaningful asset

price deterioration I mean just think

about it today uh relative to last

summer we were in a position last summer

where stocks were at 41 you know the S&P

500 was at 4,100 and bond yields were at

5% and yet the US economy continued to

expand and so where are we today well

we're well north of that 25% higher and

bond yields are 50 basis points lower

the idea that the economy is going to

topple in this sort of environment when

things are actually quite a bit better

than where we were you know uh about

nine months ago it just doesn't it

doesn't line up with either the data

that we're seeing or the cause effect

linkages that you'd expect so either

have to have higher rates lower asset

prices and those have to either be

higher and lower or longer at the

elevated yield level and the lower asset

price level in order to really create a

significant shift in the

economy um

uh I think there's a good question here

about shelter uh this will probably do

one or two more questions but I think

there's an interesting question about

shelter here more generally um which is

that you know a big expectation of why

inflation pressures would fade in the US

economy was based upon the expectations

of uh falling shelter prices and what

we've seen so far is that the shelter

disinflation

uh that has existed uh in the cycle so

far has been you know pretty modest in

comparison to expectations that may have

been built on uh looking at uh marginal

new rents or equivalent uh measures I

think it's important to recognize that

the vast majority of rents and the

pricing of Oar off of that is it does

not occur from new tenant rentals it

comes from existing tenant rentals and

so if you look at the the fed's um you

know exploratory series uh that is the

all tenant uh rental rate uh growth rate

what you see is that's actually ticking

up if you look at other measures of all

tenant rents you see that those are

stabilizing at levels that are closer to

three or 4% not 0% like what's being

told in you know what's being shown in

the new uh the new tenant rental rates

and part of that is the fact that um you

know new tenant rents went up a lot more

uh and so they're rising at a slower

Pace today uh and a lot of the rental

inflation that sort of existed in the

new tenant rents back in the post uh

postco period are finally starting to

catch up across all rental rates uh

smart people who think about the this

specific area a fair amount uh many of

them are discussing how you know the

stabilization in rents might show Oar

and rent rental inflation uh stabilizing

it sort of 3 to 4% on an annual basis

and that's a real problem for the FED if

it actually stabilizes at that rate and

not at something like zero it's going to

be pretty tough for the FED to meet its

inflation mandate uh given how important

shelter costs are uh to the overall

picture of

inflation uh we'll go through a couple

more uh

uh more things here I I'll probably I'll

probably leave off with uh wrap up with

this um with this last question which I

think often um you know I think the

basic question uh here from uh here uh

on the live questions is look maybe the

FED just will accept higher than Target

inflation for an extended period of time

um you know my my basic picture of that

is that

um uh that the FED

probably uh right now the fed that's

currently in place probably does not

want to accept uh higher than Target

inflation for an extended period of time

and the challenges that they're facing

by not tightening enough are more

function of their inaccurate sense of

what's driving this expansion and the uh

and the potential risks from elevated

monetary policy uh rather than

uh a desire to forgo that 2% inflation

rate um and say move it up to something

like 3% um but that may not be true uh

it may be possible that they are willing

to accept that inflation rate and it's

certainly possible that incoming

administrations could be uh more open to

running inflation at a more elevated

rate for an extended period of time uh

than the current uh fed composition

and as a function of that what I'd

highlight is that it's important to at

least have some of your portfolio

positioned in a way that at least

reflects that possible reality I think

in a lot of ways higher uh inflation

than expected higher than Target

inflation for an extended period of time

is quite poorly priced uh in terms of

the asset in terms of the market I I

think it what it highlights is um and

when you're thinking about any of these

sorts of trades or markets uh you have

to think there's always a multiple

different possibilities in terms of how

things may play out and I think this one

in particular is so critical because it

could have such implications across

asset portfolios and and long-term

savings portfolios that it's time to

start preparing at least for that

possibility rather than being solely

overweight essentially low and stable

inflation and strong growth forever so

with that uh we've got an hour in thank

you so much for all the folks who stuck

around uh for these questions uh and

answering the questions as well as the

presentation I really appreciate

everyone joining us uh look forward to

getting together uh next month