Global Financial connection ｜ Dialogue Yuan Jun: U.S. economy may slow down but will be shallow decline rather than deep decline

21st Century Business Herald reporter Li Yinong Shanghai report

The Federal Reserve has accumulated a total of 225 basis points since the start of the interest rate hike cycle in March. The Fed's radical rate hike effective geometry? How to choose a follow -up policy? Where will the US economy go? Can the global central bank raise interest rates "you chase me", can you "reduce fever" high inflation? Today's program, we are glad to invite Yuan Jun, the founder and chief investment officer of Shengyuan Global Investment Management Company to interpret the above issues.

How to choose the Federal Reserve's follow -up policy

At the latest July meeting, the Federal Reserve decision maker acknowledged the risk of over -rate interest rates for the first time, and believes that it may slow down interest rate hikes at a certain time in the future.

The Federal Reserve curbs the results of the initial results of inflation

"Global Financial connection": Do you think the Fed's monetary policy has the results of the effectiveness of the monetary policy?

Yuan Jun: Since the beginning of this year, the Fed has achieved considerable results in the tightening and interest rate hike cycle. In the aspects of balanced inflation, employment growth, and stability of the financial market, it has also reached a relatively balanced result. Overall performance, even if you can't score 100 points, it may be fine at 80 points.

We can evaluate the effectiveness of the entire monetary policy from several aspects.

The first is inflation. The Federal Reserve's interest rate hikes cannot solve the problem of commodity supply. The high demand caused by the high water release of fiscal currency in the past two years is more difficult to solve, but everyone has seen that inflation data is at least short -term, and then it may be further met. Flow. With this result, it is because the Federal Reserve controls the expectations of inflation effectively.

So far, American companies and individuals' consumption behavior and investment behavior are largely curbed. Because everyone has no doubt about the Fed's determination, and it is also pessimistic about the impact of continuing interest rate hikes on the market and the economy. Therefore, the entire investment in the future and the consumption in goods and services are contained to some extent. From inflation expectations gradually decline, to reality to curb all aspects of the entire economic growth, and then to the overall employment market, because some companies' layoffs and reducing employment positions, etc., making the employment market is not as scarce as before, so that salary is made, so that salary is allowed to make wages. Inflation has been controlled to a certain extent. Based on this, the inflation of goods has fallen, so we have seen that overall American inflation is also contained in a certain degree.

The Federal Reserve has achieved such an effect in a very limited monetary policy tool, and has completed the task of effectively curbing the expectations of inflation in half a year, which is quite good.

In other respects, the unemployment rate in the United States is still near the lowest level in history, and the employment market has not been impacted too much. Economically, although the U.S. GDP records negative growth, considering the relatively high inflation, the growth of nominal GDP is actually good. The financial market, although U.S. stocks fell to a large extent in May and June, and fell 23%from the high point at the maximum, but it has rebounded more than 10%in the past month. It's right. The US debt also fell more than 100 base points from the high interest rate in June, with a minimum of 10 years to about 2.5%. All these show that in the impact of the financial market, in the judgment of the Federal Reserve, it has continuously digested and revised its expectations and behaviors, and now has reached a relatively balanced position.

For American residents, the housing market, which was once very popular, has also been cooled, showing that as the Fed ’s interest rate hike directly reflected in the rise in financing interest rates, a series of more severely raised inflation behavior was also curbed.

In the past few months, in the Federal Reserve's interest rate hike operation, we can see that he is actually catching both eagles and pigeons. Eagle means that the rate of interest rate hikes is constantly accelerating; pigeons refer to because they have not made a large number of shrinkage according to the original plan. For the market, I slowly saw the control of inflation caused by interest rate hikes, and the overall consumption and investment behavior were also greatly affected. In summary, (the Federal Reserve) has reached a better balance in controlling inflation and growth, employment, and stabilizing the financial market.

Monetary policy steering may be early

"Global Finance Link": What is your judgment on the Fed's follow -up rate hike path? When will the point of slow interest rate hikes be?

Yuan Jun: The interest rate hike path can be divided into two important milestones.

In the past few meetings, there have been five interest rate conferences since this year. They did not raise interest rates in January. It added 25 basis points in March, 50 basis points in May, and 75 basis points in June and July. It can be seen that the pace of the Fed's interest rate hike is constantly increasing, a positive acceleration.

When is the first milestone slowing down the pace of interest rate hikes. From 75 to 100, it may remain 75, and then further declines to 50; there is a process from acceleration to flattening and negative. When will the second node stop raising interest rates or even reduction. This determines the trend of the Fed's entire curve.

As the interest rate hike itself has played a certain containment of inflation, the pace of the Federal Reserve's suspension of interest rate hikes should be in September in the next September. In September, there are currently 40%chances to add 75 basis points, and 60%or even higher may add 50 basis points. This is an obvious slow interest rate hike. Next, in November and December, it may return to the level of 25 or 50 basis points, thereby reaching the interest rate level of 3.5%to 3.75%at the end of the year. This is the result I think all parties can be accepted within expectations.

The second node is very important, when will the interest rate hike stop? Looking back at the overall monetary policy cycle of the Federal Reserve in the past few decades, when the Fed has changed from interest rate hikes to no interest rate hikes and reduced interest rates, it is basically the beginning of another round of currency expansion; usually, all asset markets will have obvious inflection points. At present, the market is expected to change from interest rate hikes to reduction in the first quarter of next year. But I personally think that it may not come as early as the market expects. Because the inflation faced by the United States is currently structural, and many parts will not be resolved in the short term. Before the overall high base effect of next year, it may still be possible to see the Fed stopped raising interest rates in the second and third quarters. As for the time to reduce interest rates, it depends on whether the US economy will decline, and to what extent inflation falls.

The US economic data shows signs of inflation and cooling in July

Judging from the recently announced economic data, U.S. inflation has fallen, and the employment market has not significantly cooled down because of the Fed's series of large -size interest rate hikes. Based on this, some investors began to cheer and inflation, and market confidence was boosted.

American inflation may not fall down quickly

"Global Finance connection": What do you think of the current inflation situation and prospects of the United States?

Yuan Jun: The causes of American inflation are mainly in the following aspects. First, in the past two years, a large number of financial stimuli and currency looseness of the US government have never been in human history, which has caused residents' excess savings, which has increased by $ 2.5 trillion in the past two years. Such a huge amount of savings makes residents have a very strong consumption impulse and consumption capacity, so this makes the demand very strong.

The second is the supply side. In terms of crude oil, there have been no new capacity in the past 8 years; affected by the epidemic, different regions and different types of goods have been greatly impacted. In addition, the Russian conflict also brings the shortage of supply of agriculture, food, energy, etc., the impact of superimposed the supply chain, and both ends of supply and demand have been impacted.

How will subsequent inflation evolve?

In fact, we see some signs of improvement, such as the supply chain. The global supply chain has been actively recovering, and the supply of goods has not deteriorated. In addition, there are some improvements in the border, including some oil -producing countries began to gradually and slowly increase the supply. The most impact of the Fed's interest rate hike on the market is the demand side. Because the interest rate hike controls the expectations of inflation and increases the market's expectations for recession, it has caused the investment and consumption behavior of enterprises and individuals. In this case, the demand side has also been contained.

It can be said that the supply and demand have found a better balance, which is also the main reason why I think inflation is short -term.

But several parts of inflation are very structured and sticky. First, the rise in wages is related to the very short -short job market; the second is the rent, because the mortgage interest rate is too high, so many people have changed from buying a house to rent. In fact Still rising. The third is food. Although the futures prices of agricultural products such as rice, corn and wheat have declined, the supply and inventory of agricultural products have been further declined. In addition, weather also has a greater impact on global grain planting. For these reasons, food has a wide range of prices.

None of these can be solved recently. Over time, it may be more serious next year. Therefore, I think that inflation is not necessarily as expected to be able to fall down quickly. If it can fall from the current level of 8%to 9%to 5%and 6%, it is already a good result.

Similarly, we must not ignore it. From now to the end of the year, especially in winter, as European demand for energy has further strengthened, and low inventory of industrial metals and foods, it will cause rising commodity prices. If the inflation has rebounded again, will the Fed's interest rate hike path change? There are not many expectations at the current market.

The possibility of deep decline in the US economy is less likely

"Global Finance Link": As the Fed continues to tightening, what do you think of the US's economic prospects, and what risk factors will be affected by decline?

Yuan Jun: The market was afraid of in May and June, and believed that the US economy could fall into a deep decline. At that time, everyone generally believed that if the Fed was controlled to control inflation this time, it was necessary to make a very violent interest rate hike. This is unbearable by the economy, which will lead to deep decline. At the same time, the fall of the US manufacturing and house data has also caused more panic.

I think the US economy will not fall into a deep decline because of the Federal Reserve. The downside of the US economy is atypical, and it does not even show a sign of many recessions.

First of all, the most obvious is that the manufacturing PMI fell below 50, but the other end of the service industry PMI rose to 62, in the expansion range. In the US economy, the manufacturing and service industry rarely see the development of such a complete "scissors poor", indicating that the epidemic disturbance of the economy is divided into two parts: the first part is the consumption of the commodity, because the epidemic is purchased at home, etc. After the two parts are open, everyone starts to go out, and there is a lot of demand in the service industry, including travel hotels and other needs. Therefore, the US economic recovery is also divided into these two stages.

In the second stage, we naturally saw the downward demand for goods, resulting in the decline in manufacturing orders. This is not completely caused by the Federal Reserve's interest rate hike, which is also related to the stage of economic recovery after the epidemic. This is different from the previously used manufacturing PMI analysis in the past.

Secondly, another reason for the economy will not enter the depth decline is that the employment market is very good. At any stage of any country, if the economy has severely declined, employment will definitely be significantly impacted, and the unemployment rate will rise sharply. However, the U.S. unemployment rate is now at the lowest level in history. Americans still have wages and consumption. These are a very important part of supporting the US economy. Therefore, the view of the deep decline in the US economy is the result of a relatively historic analysis, which is different from many places now. The differences between the two are caused by many factors, including the harm of the epidemic to the labor market, and the different consumption of the service industry and manufacturing goods.

Therefore, the Fed is more confident to go to the situation of "soft landing", that is, controlling inflation and not causing severe unemployment and recession, which is an ideal result. Although such a result is very difficult or even in history, so far, the US economy and inflation have not deviated too much from the track, and it is still possible to achieve "soft landing".

To some extent, the management market expects to manage the overall financial market, which does not bring the impact on debt leverage, and the impact on the balance sheet of enterprises, financial institutions, and residents. This is how the Fed reaches "soft landing" The key point, so far, I think it is better.

The slowdown of the US economy is certain, and it has already happened. If Europe has fallen into a decline in the next Europe, the US economy may slow down, but it may be a shallow recession, not a deep decline.

Global central bank set off a "interest rate hike"

In the context of high global inflation, the Federal Reserve "took the lead" to raise interest rates, and the central banks of many countries have also opened a tightening road to a record.

The European economy is facing a big challenge

"Global Finance and Economics": What potential spillover risks will the global economy cause the global economy?

Yuan Jun: The fierce interest rate hikes of developed countries around the world are essentially the correction of their past violent currency easing policies. In the past two years, in order to deal with the global epidemic, all developed countries have released very radical currency loose (policies), which has also caused serious inflation problems. Now, these central banks need to collect the water they have put in the past, add the interest of the past, and even be overkill.

In developed countries, which are mainly commodities, in fact, interest rate hikes are relatively early and fierce. For example, the Bank of Canada is the first developed country to start raising interest rates. In addition, countries in Australia and Nordic countries have started to raise interest rates or normal currencies earlier. On the whole, the global central bank has taken different rhythms, walking on the normalization of currency, or even surpassing the neutral currency interest rate range. This hypertimity will inevitably have a greater impact on the global economy.

Like Europe, there are several crises. The first is high inflation, and now it is generally a high level of high inflation. The second is the high energy price problem. This has begun to appear in summer. When heating in winter is a problem, it may bring more impact on people's livelihood. Third, the decline in global demand has greatly affected European exports. Fourth, there are several countries with high debt leverage in Europe. We often call PIIGS, 5 European countries (referring to Portugal, Italy, Ireland, Greece, Spain). How will they deal with high leverage in the normalization cycle of currency?

The challenge of this series is the main problem that Europe is facing after the overall interest rate hikes of developed countries. So I think Europe is a very noteworthy place, and the spillover of interest rate hikes has a multi -faceted impact on Europe. In the next half of the year to a year, there is no obvious inflection point.

Therefore, we are more pessimistic about Europe. The possibility of European economic recession is very high, even very certain. But what kind of form will develop? Will inflation be out of control in winter? Will economic recession accelerate? Does the Five European Congress have difficulties in re -financing at a certain point? Is the possibility that the European debt crisis repeats again in 2012? These are all issues worth paying attention to.

Emerging market anti -external risk capabilities have been greatly improved

"Global Finance Link": Does emerging market also cause certain pressure and impact? Will the debt crisis repeat it?

Yuan Jun: After these years of development, emerging markets have been mature and developed too much compared to the 2008 financial crisis, or in the era of Internet bubbles in 2001.

For example, the Asian financial crisis in 1997 was more impactful to our country and the global financial crisis in 2008. However, the economic volume of China at that time, and even the entire Asian economic volume was much smaller than now, and the ability to afford external risks was relatively weak. In addition, at that time, Asian countries were basically an export -oriented economy, mainly exports, so when the global financial crisis broke out, foreign demand was greatly impacted, which had a great impact on these credit market countries.

But now it is very different. The trade and economic development in Asia has enriched a lot, and the foreign exchange reserves accumulated by any country are enough to cope with a considerable external impact. In addition, in emerging market countries, there are one type of countries with commodity resources, such as Brazil and Chile, which are actually benefited. In the past, the US interest rate hike was first impacted by Latin America. These countries will soon enter the process of debt collapse, and it will overflow to other emerging markets. However, this time, resources such as Brazil have benefited more, including Russia's economic collapse as well as the forecast of the outside world. The price of high oil and gas resources has expanded Russia's exports and obtained a lot of benefits. Good than expected. These are where emerging market countries are more dominant now. So simply speaking, commodity resources countries have some export advantages. In addition, countries with relatively mature economic growth, such as Asian countries led by China, have strong anti -risk capabilities. Therefore, at least in the first half of the year, the performance of emerging market countries is far better than developed countries at some stage.

Debt issues are also a general concern for everyone. In emerging market countries with high foreign debt levels, such as Latin American countries, they basically depend on the leverage brought by the United States. Asian countries, such as Indonesia, India, and the Philippines have been impacted by the deterioration of external financing environment, Thailand's tourism industry is also serious. Therefore, relatively speaking, the depreciation of foreign exchange in these countries is relatively large. However, other countries, such as China, our export industry is very strong, and also gives us a great confidence to resist the impact of global interest rate hikes. Our monetary policy has also maintained independence.

(The market is risky, and investment needs to be cautious. The opinions of the guests on this show only represent their own opinions.)

Planning: Yu Xiaona

Produced: Shi Shi

Editor -in -chief: Du Hongyu and Jia Zhao Yue Li Yinong

Production: Yuan Sijie

Design: Intern Liu Xueling

Shooting: Chen Chen

Trainer: Hao Jiaqi Zhang Yuxiao

New media overall planning: Ding Qingyun Zeng Tingfang Lai Xixun

Overseas operation producer: Huang Yanshu

Overseas Operation Editor: Zhang Ran Tang Shuangyan Wu Wanjie

Overseas Business Cooperation: Huang Zihao

Produced: Southern Finance All Media Group

- END -