The hottest year of global economic change in 2015

2015: the year of global economic change

2015: the year of global economic change

March 4, 2015

[China paint information] the global economic situation in 2015 is significantly different from that in the years after the crisis. The growth pattern, policy pattern, capital flow and exchange rate trend change accordingly, which has a significant impact on the price of global financial risk assets. 2015 is a year of change, a year of change

1) differences in growth momentum

after the 2008 financial tsunami, global growth was difficult. Although the monetary easing policy and China's fiscal stimulus have stimulated demand, the problem of insufficient effective demand has never been solved. The weakening of the financial intermediary function of banks makes the liquidity created by the central bank unable to penetrate into the real economy, employment and consumption stagnate, and enterprises' willingness to invest is low. Since the middle of 2014, this situation has been broken with the recovery of the U.S. job market. The decline in gasoline prices has increased the confidence of U. The U.S. economy is the bellwether of the world. Its monetary policy not only affects the United States, but also has a far-reaching impact on global liquidity and capital flows

the economy outside the United States is still weak. Europe, Japan and China all try to replace structural adjustment with further monetary easing, but the effect is not ideal, and organic and sustainable growth has not yet appeared. Emerging market economies are impacted by capital outflows and falling commodity/energy prices. It is estimated that the Fed's interest rate hike will further tighten the growth space of emerging markets and increase the possibility of systemic crisis

it was not surprising in the past that the economic cycles of various countries were not synchronized. However, after the financial crisis, the economic cycle converged and the policy cycle converged. The global economy is moving forward in resonance, which has become the new normal. Monetary policy and fiscal policy are similar. The rise and fall of financial markets and asset types in different countries are also highly correlated. This convergence began to change with the emergence of the U.S. economy, and the divergence of the stock market was greater than that of the bond market

2) low inflation

the wanton QE of central banks around the world has not brought significant upward pressure on prices, and there has been a phenomenon of CPI not rising and asset prices rising all over the world. The sharp fall in oil prices has further reduced the near-term risk of runaway prices. The central bank's concern began to shift to deflation, worried about consumers holding money to buy, worried that the total output of lithium battery cathode materials increased by more than 50%, and enterprises were unwilling to invest. The change of the central bank's position on deflation and inflation is the biggest change in the global economy in recent months

countries face different deflation risks. Japan has been living in a deflationary mentality for more than 20 years, and the CPI in Europe has not been negative, but it has already entered a deflationary state psychologically. The core inflation in the United States is not high, but there are signs of accelerating wage growth, which may trigger the rise of service costs at any time. China's inflation outlook is the most intertwined. Manufacturing deflation and service inflation are also obvious. Financial asset prices are improving, but the government is worried about the foam. Although the inflation outlook is not consistent, it is an indisputable fact that central banks have shifted their attention from anti inflation to anti deflation

the low price is in sharp contrast to the high price of financial assets. The central banks of various countries have wantonly released water, but the price rise is not obvious. The reason is that the financial intermediary function of banks has not been restored, and the real economy has not benefited from QE. On the contrary, at the financial level, liquidity overflows, and the result is the increasing inflation of financial assets

3) changes in monetary policy

the uneven distribution of growth and the change in inflation expectations have led the central bank to diverge in the handling of monetary policy. The U.S. economy has seen strong independent growth, but the recovery foundation is not solid, and the peripheral environment is complex. Under the circumstance that the inflation environment is not obvious, the U.S. monetary authority is actually unwilling to raise interest rates rashly, especially in the case of the sharp fall in oil prices. However, the U.S. job market has improved rapidly recently, and low-end wages have increased for a long time, and the increase is quite large. Over the past 40 years, the biggest driver of inflation in the United States has been wages. Because wages have penetrated all walks of life, the Federal Reserve has never dared to neglect it. At the same time, the voice of the new Congress to supervise the Federal Reserve is very high, and the normalization of the monetary environment has more political pressure on Yellen. The author believes that Yellen will not delay raising interest rates for too long, but after raising interest rates for the first time and removing the political burden, the pace may be slow

contrary to the United States, Japan and Europe have successively implemented further quantitative easing measures to try to get out of deflation by curbing the exchange rate. Both economies have rebounded slightly, but growth has not entered a sustainable track, and deflation has not improved substantially. It is expected that Japan and Europe will introduce further easing measures, but QE needs to change its tactics. The American QE of the European Central Bank is constrained by Germany everywhere. At the same time, the two powder magazines of Greece and Ukraine may shock the market at any time. In addition to monetary expansion, Europe may adopt a negative interest rate policy. The Bank of Japan continued to expand the base currency for two years, and most government bonds have entered the Bank of Japan's treasury. If you think about QE, you may find another way. Either buy overseas assets, or aim policy leverage at interest rates rather than currency issuance. After a year of policy contraction, the people's Bank of China has returned to the path of easing (although it still emphasizes neutral policy), but the central bank seems to be more willing to ease in a targeted manner than to cut interest rates. The three major economies in Europe, Japan and China are still under the loose policy tone, but the policy tools are beginning to deviate from QE, which means that the transparency of monetary policy around the world has decreased and the uncertainty has increased significantly this year

4) intensification of exchange rate competition

apart from the early stage of the crisis in 2008, we have never seen so many central banks adjust monetary policy for exchange rate reasons in the decades after the war. The reasons are as follows: first, the global growth momentum is insufficient; second, the appreciation of the US dollar is too fast and too fierce; third, a country depreciates under the game; Sigmatex has developed a new type of recycled carbon fiber reinforced thermoplastic resin matrix composites in its existing sigmarf product series, which other countries must follow. This beggar thy neighbor approach, in the long run, can not help this slogan can not be deleted from the page by yu'e Bao for a long time, but the exchange rate war is indeed spreading at present. The central bank will shift its policy focus from domestic credit cycle to exchange rate competition, which is not a problem when inflationary pressure is low, but the hidden risks cannot be ignored. At the same time, the exchange rate was dancing high and low, which inevitably caused chaos in the flow of funds and brought uncertainty to the financial market and the real economy

exchange rate competition brings more policy uncertainty. The Swiss central bank suddenly announced its decoupling from the euro, which destroyed the credit base of the central bank and dealt a fatal blow to many funds and enterprises that mistakenly trusted the central bank's commitments. This sudden change of central bank policy often has no warning in advance, and has great potential damage to the market. The exchange rate turbulence caused the upward turbulence of funds, which increased the volatility of financial asset prices in 2015

the United States is out of this exchange rate competition, and the dollar has become an undisputed strong currency. The U.S. economy is not highly dependent on exports, and internal demand is recovering. The appreciation of the U.S. dollar brings overseas capital inflows, which is more beneficial to U.S. stocks, U.S. debt, and U.S. real estate than depreciation helps exports. More importantly, the inflow of foreign capital provides a cover for the fed to withdraw from QE, so I believe that the Fed will not easily stop the strengthening of the US dollar. Of course, in this process, if the economic data of Europe and Japan improve, the dollar may have a technical correction. However, due to the independent recovery process and technological innovation of the United States, it is impossible to obtain the maximum load Pb, so the strength limit cannot be obtained σ B new capabilities, I believe that the strength of the US dollar will go for several years

5) weak commodity prices

the sharp drop in China's demand and the continued appreciation of the US dollar have made the commodity market bloodshed in 2014. This situation will continue this year, but the focus will shift from demand to supply. Oil prices were halved in the second half of last year, due to geopolitical factors, insufficient demand and conspiracy theories. However, in the final analysis, the core is the imbalance between supply and demand, oil producing countries are unwilling to reduce production, and alternative energy is becoming increasingly popular. After the oil price plummeted, overcapacity in the energy industry became more prominent, financing costs soared, and some enterprises faced liquidity difficulties and even the risk of bankruptcy

this situation may spread from the oil industry to some other commodity categories in 2015. The production capacity expansion in previous years may become a pressing demand for some commodity traders. The continuous downturn in commodity prices has not only affected resource companies, but also affected resource exporting countries. Many emerging countries benefited from China's demand coming out of a super bull market in the past decade. The author believes that the commodity super bull market created by Chinese factors has completely ended. The global ultra-low interest rate environment allows commodity exporting countries to float on the water, but with the normalization of the U.S. monetary environment and the flow of funds back to the U.S. dollar area, the chances of accidents in emerging markets are increasing