2015: The year of global economic change

China Paint Network
: The global economic situation in 2015 is significantly different from that in the years after the crisis, with changes in growth patterns, policy patterns, capital flows and exchange rate trends having a significant impact on global financial risk asset prices. 2015 is the year of change, the year of change.
the 2008 financial tsunami, global growth has struggled. Although monetary easing and China's fiscal stimulus have stimulated demand, the problem of insufficient effective demand has not been solved, the weakening of the function of bank financial intermediation, so that the liquidity created by the central bank can not penetrate into the real economy, employment and consumption, low willingness of enterprises to invest. This situation began in mid-2014, as the recovery in the U.S. job market was broken, gasoline prices fell more confidence between U.S. consumers, business investment accelerated significantly, and the global growth pattern shifted from Wanmazi to the U.S. The U.S. economy is the bull's ear of the world, and its monetary policy not only affects the U.S., but also has a profound impact on global liquidity and capital flows.
the economy outside the United States, there is still a lack of good. Europe, Japan and China have tried to replace structural adjustment with further monetary easing, but the effect has not been satisfactory and organic and sustainable growth has yet to emerge. Emerging market economies, hit by capital outflows and falling commodity/energy prices, are expected to further tighten growth space in emerging markets and increase the likely outbreak of a systemic crisis.
not surprising that the economic cycles of these countries are out of step. But after the financial crisis, the economic cycle converse and the policy cycle converse. The global economy has become the new normal in the resonance, monetary policy and fiscal policy are similar, and the rise and fall of financial markets and asset types in different countries are also highly relevant. This convergence began to change as the U.S. economy emerged, and the stock market became more heterosexual than the bond market.
central banks wanton QE, did not bring obvious upward pressure on prices, the world's CPI does not rise asset prices. The collapse in oil prices has reduced the immediate risk of runaway prices. The central bank's concerns are beginning to shift to deflation, fearing that consumers are holding their currency for purchase and that companies are reluctant to invest. The change in the central bank's stance on deflationary inflation is the biggest change in the global economy in recent months.
risks of deflation vary from country to country. Japan has been living under deflation for more than two decades, the European CPI has not been negative, but psychologically has already entered a deflationary state. Core inflation in the U.S. is low, but rising wages are a sign of a pick-up that could trigger higher service costs at any time. China's inflation outlook is the most entangled, with manufacturing deflation and service sector inflation also evident as financial asset prices are improving, but the government is worried about bubbles. Despite the inconsistent outlook for inflation, it is an indisputable fact that central banks have shifted their focus from anti-inflation to anti-deflation.
prices are depressed, in sharp contrast to the high prices of financial assets. Central banks are pumping water, but price increases are not noticeable, on the grounds that banks' financial intermediation has not been restored and that the real economy has not benefited from QE. On the contrary, liquidity is rampant at the financial level, with the result that inflation in financial assets is increasing.
uneven distribution of growth and changes in inflation expectations have led to a split in the central bank's approach to monetary policy. The U.S. economy has seen strong autonomous growth, but the recovery is not solid, the external environment is complex, in the inflation environment is not obvious, the U.S. monetary authorities are not willing to raise interest rates, especially in the case of a sharp drop in oil prices. But the U.S. job market has improved rapidly recently, with long-lost gains in low-end wages and big gains. The biggest driver of U.S. inflation over the past four decades has been wages, which have permeated all walks of life, and the Fed has been afraid to slow it down. At the same time, the new Congress is crying out for regulation of the Fed, and normalizing the monetary environment is more politically pressured for Yellen. The author believes that Yellen will not delay raising interest rates too long, but the first rate hike and remove the political baggage, the pace may be slower.
, Japan and Europe have pushed for further measures of clemency in an attempt to get out of deflation by curbing the exchange rate. There has been a slight rebound in both economies, but growth has not yet entered a sustainable track and deflation has not improved substantially. Further easing is expected in Japan and Europe, but QE needs to change. The European Central Bank's AMERICAN QE is under German pressure everywhere, while greece and Ukraine could shock markets at any time, and Europe could be negative on interest rates, in addition to expanding in monetary terms. The Bank of Japan continued to expand the base currency for two years, government bonds have mostly entered the Bank of Japan treasury, and then think QE may find another way. Either buy overseas assets or target policy leverage at interest rates rather than currency issuance. Chinese returned to easing after a year of policy contraction (though still emphasizing neutral policy), the central bank seems more willing to target easing than cut interest rates. Europe, Japan and China's three largest economies are still on the loose monetary tone, but policy instruments are beginning to deviate from QE, meaning that monetary policy transparency has declined globally this year and uncertainty has risen significantly.
in the early days of the 2008 crisis, we have never seen so many central banks adjust monetary policy for exchange rate reasons in the decades after the war. The reason for this is that there is insufficient internal growth momentum on a global scale, that the dollar is appreciating too fast and too fast, and that the devaluation of another country under the game must be followed. This besast-thy-neighbour approach is unsustainable in the long run, but currency wars are indeed spreading. The central bank's shift in policy focus from the domestic credit cycle to exchange rate competition is not a problem when inflationary pressures are low, but the implied risks cannot be ignored. At the same time, the exchange rate is dancing high and low, inevitably causing a wave of capital flows, financial markets and the real economy to bring uncertainty.
exchange rate competition brings more policy uncertainty. The SNB's sudden announcement of decoupling from the euro has destroyed the central bank's credit base and hit many funds and companies that mistakenly believe the central bank's commitments. This sudden shift in central bank policy, often without warning, is particularly potentially lethal to the market. Exchange rate turmoil, resulting in the flow of funds, so that the price volatility of financial assets in 2015 increased.
the dollar became an unquestionable strong currency after the U.S. stayed out of the currency race. The U.S. economy is less dependent on exports and domestic demand is recovering. The appreciation of the dollar has led to inflows of overseas capital, which has benefited U.S. stocks, U.S. debt and U.S. real estate more than depreciation has helped exports. What's more, foreign inflows provide cover for the Fed's exit from QE, so I believe the Fed won't stop the dollar from stronger. In the process, of course, the dollar could have a technical correction if european and Japanese economic data improve. However, with the independent recovery process of the United States and scientific and technological innovation capabilities, the author believes that the strong dollar still has a number of years to go.
the sharp drop in Chinese demand and the continued appreciation of the dollar, which moved commodity markets into a bloody year in 2014, will continue this year, although the focus shifts from demand to supply. Oil prices were slashed in the second half of last year, due to both geopolitical factors and insufficient demand, as well as conspiracy theories, but in the final analysis the core is the imbalance between supply and demand, the reluctance of oil-producing countries to cut production, and the growing trend of alternative energy sources. After the collapse in oil prices, overcapacity in the energy sector has become more prominent, financing costs have soared and some companies are at risk of liquidity difficulties or even closure.
this could spread from the oil industry to some other commodity categories in 2015, and capacity expansion in previous years could be a push for some commodity traders. Commodity prices continue to be depressed, affecting not only resource companies, but also resource-exporting countries. Many emerging countries have had a good decade, thanks to Chinese demand coming out of a super bull market. The author believes that the commodity super bull market created by the Chinese factor is completely over. The global ultra-low interest rate environment has allowed commodity-exporting countries to float, but the chances of emerging market trouble are increasing as the US monetary environment normalizes and money flows back into the dollar zone.