Unlimited Monthly Macro Webinar May 2024
Summary
TLDR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
📈 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。
👷 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。
💰 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。
🌐 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。
🏢 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。
📉 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。
📊 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。
🌍 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。
🤔 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。
Mindmap
Keywords
💡名义需求
💡实际增长
💡劳动力市场
💡通货膨胀
💡就业条件
💡自愿离职率
💡劳动生产率
💡收入驱动的扩张
💡资产价格
💡财政政策
💡货币政策
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
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