Category: Ideas

1. 经济增长

自微观至宏观的结构。微观层面，公司的资产价值增长或公司的利润增长，而某行业内多个公司总值或均值的增长带来了行业的增长。同理，行业引申至宏观经济体。本质上是weighted average，而意识上是 多个个体增长 带来整体 增长。逻辑简单。

同时，在经济扩张阶段，企业对loanable fund的需求增加反映在财务上往往是负债增加。企业若需继续扩展则 负债增加带来的风险 需要被 企业增长的预期带来的预期收益冲抵，因为如此，理性投资者才原因承担更高的风险。

P.S. Considering the interest rate and saving, lower real interest rates motivate individuals to consume more and save less. Greater consumption enhances capital/money transferring in the whole economy. We may say that a lower interest rate can not just stimulate the economy in a positive way through increase the desire for investment and consumption, but also smooth the economy by pooling liquidity into the market.

2. 宏观经济体之间

假设两个经济体，A和C。C的经济增长快，市场中对goods, services, factors, labours等各方面的需求高，同时对money的需求高。对 money 的高需求，带来了高成本 – higher interest rate。而A增长相对少，甚至Central Bank需要主动采取措施给降低interest rate来降低loanable fund 的成本，刺激需求。

基于以上大背景。A市场中利率水平低，C市场中利率水平高。

Under Globalization, money flows across countries with low fees and less regulation. Without considering others, money would flow into the market with a higher interest rate, pursuing higher returns. However, sovereign risks, frictions, regulations, etc, would block that path.
在全球化的大背景下，如果假设低fees低监管等限制，money会流入高收益的市场。但是现实中往往并非如此，因为投资者会考虑其他因素，如地缘风险，政策变化等等。

继续之前的例子， C国利率高，money流入C国，对于C国currency的需求大，currency appreciates。C国货币升值后，A国再进口C国商品物料或投资的成本变高。对C国货币的需求又会相对减少。Overall, a Dynamic Equilibrium occurred.

当然，以上为理想情况。现实中USD起到全球主要流通外汇的左右，尤其特殊的意义。且经济情况今非昔比。市场或宏观经济体面临不同的环境：如De-globalisation;

3. 加息的传导渠道

https://mp.weixin.qq.com/s/sInT_p-p9ewRYEbt8MMtmg

Reference

https://mp.weixin.qq.com/s/fs-wMetDFe5HmCl3f8tztA

The story began in the third quarter of 2012 when the Japanese Yen depreciated until the beginning of 2013 as the rising Blue curve shows.

As we all know, Japan has been getting into a negative interest era for a long time, partially because the terrible economic condition makes its government have to raise debts (I haven’t studied the Japanese problem. Once do that, I will update it.).

Since 2008 when the US saved the market through QE, the Japanese CB chose to conduct a similar monetary policy to boost its domestic market after Aben won the presidency.

Intuitively, Abenconomics applied QE would result in an excess supply of the Japanese Yen. Unlike the US dollar that backed with the Oil price, the excess money supply of the Japanese Yen would make it depreciate. Soros estimated that opportunity and shorted the Yen, and meanwhile took a long position of Nikkei stocks and bonds in the Japan Market.

QE would result in an extra money supply as we all know, investors who get that extra money would try to invest that money into the financial market, both the stock market and the debt market. As we can find that stock market increased with the depreciation of the Japanese Yen. Soros won the gamble.

However, there is a Winner and there must be a loser, which is the Japanese Central Bank. The failure of the monetary policy of the Japanese CB made worse its domestic economic condition.

In the current world, the CB of each country has to rigorously implement its monetary policy. QE might not be an ideal way to stimulate the market, because not every currency has the ability, like the US dollar, to back up with commodities and oil prices. Also, countries especially those that are in the EU are facing a conflict of interest in conducting monetary policy.

The line chart below shows the relationship between US Dollar Index and Commodity Price Index.

The dynamic macroeconomic condition of the world drives me to find the correlations among some macroeconomic indices.

Rising Energy Price and Commodity Price

The tight relationship between Russia and Ukraine (and NATO) and the pandemic drive energy price such as crude oil and gas keep increasing. On one hand, I may consider the rising energy price as mainly a supply-side problem. Although European countries conduct sanctions on Russia, they still have relative rigid demand for gas and crude oil from Russia. The lack of energy from the EU pushes the oil price to rise as the Green Line shows in the Figure below. On the other hand, the tight Global relationships between huge parties such as Russia, US, the EU, and China enhance the needs of necessities. Therefore, the prices of commodities and oil, which are necessities not only for the downstream consumers but also for industries, increase as expected.

Those facts that positive correlation of commodity price, energy price, and crude oil price can be found in the Figure below.

US Dollar Index and Commodity Price

Intuitively,

As the US dollar is internationally admitted and exchanged currency, commodities and crude oils are priced by it (the US Dollar).

As shown in the Figure below, there seems a negative correlation between the US dollar index and the Commodity index.

One explanation of that negative relationship is that the value or the intrinsic value of a commodity is the same either priced by the US dollar or price by the British pound. Therefore, if the US dollar depreciates, then people should spend more US dollars to buy the same certain quantity of commodities. Similar logic could be found in crude oil prices.

There could be other explanations or other factors that could be taken into consideration. Under the current world condition that de-globalisation and uncertainty emerge, people would hold more safe assets. Thus, commodities and old, which are necessities, and gold, which is a generally accepted symbol of value, become the top safety consideration for people (investors and firms may have greater demand for commodities and energy, and normal people may get access to gold and have more demand for gold). Finally, the price of them increases.

However, there raises a question I haven’t yet spent time on studying it.

If the US dollar appreciates, then the price of commodity should decrease as I just introduced. Then, there might be more demand for commodities and oil as the price is getting low (you may say the low price is due to the appreciation of the US dollar. you are right maybe, but that cannot convince me), at least in the U.S. market. As the transaction is made with the US dollar, the more demand for commodities and oils means more demand for the US dollar, therefore US dollar should keep appreicating. Is that right? If it is, then there won’t be a convergence and won’t have an equilibrium, instead, the appreciation of the US dollar would be magnified. The reverse situation would happen if the US dollar depreciates.

Emerpically,

The Fred commission announced to increase the interest rate, in order to face the hyper-inflation resulting from its previous quantitative easing. Increasing interest rate means the US market would be more attractive to Global investors, so an increase in demand for the US dollar drives the US dollar to appreciate. The commodity price logically should go down. However, that divergence does not come out as we can find in the figure since the tight relationship between Russia and Ukraine happened.

Why the empirical finding contradicts with our logical indication?

Is that a result of the safety consideration (that people worry about the war and start to hold necessities) we just mentioned? If it is, then how can we split that part of the effect and show the negative correlation between the US dollar and commodity price. If not, then what factors contribute to the conflict? Is that due to the reason I discussed above? or there are any other factors (of course there are, but I neglect them because they have relatively small effects) cause that phenomenon?

Crisis

In the second figure, the crisis happened in 2008 and 2019-now, as shown in the shaded period. In the crisis, the commodity price seems a leading index of the US dollar. The commodity reflects prior to the other economic factors, as demanders of the commodity, production firms, need to avoid fluctuations of prices. So they make hedging transactions earlier and predict the commodity price so that they can apply to their production process smoothly.