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天风证券刘煜辉:判断当前形势很简单,就是两个主题词

Liu Yuhui of Tianfeng Securities: Judging the current situation is very simple, just two subject words

首席经济学家论坛 ·  Jun 5, 2020 17:02

The article comes from the Chief Economist Forum, author Liu Yuhui

01、Decoupling and stagflation

On the judgment of the current situation, I personally think it is very refreshing. In fact, there are two subject words: one is called decoupling, the other is called stagflation, and the macro operation state basically revolves around these two subject words.

1. Decoupling

This time we are faced with a wave of globalization that has lasted for half a century, and there has been a cliff-like fall at its peak, a state we have never seen before.We see that it corresponds to the fact that the West has formed a very strengthened political correct direction after the COVID-19 epidemic.This direction is anti-China.

In particular, it is particularly obvious in the United States that after the COVID-19 epidemic caused severe turmoil in the global financial markets, the United States responded unusually resolutely and efficiently.

We see that it is very decisive after the MMT practice that it has been preparing for a long time in theory. In just over a month, the balance sheet of the Federal Reserve has expanded from 4 trillion yuan at the beginning of March to 7 trillion yuan, and the fiscal deficit has nearly doubled.

What surprises us?

Unexpectedly, there was not the slightest political party struggle in the whole process of implementation, there was no fierce quarrel between the parties, and the Senate passed immediately after the House of Representatives.As long as members of all political parties raise issues that involve us, the Senate and House of Representatives basically pass it very quickly with a unanimous vote.So we can feel that a very strong political correct direction has been formed in the political ecology of the West.

It is not difficult to understand why such a strong repair could take place after the US stock market hit a deep hole.Although the economy is still lying on the floor, the stock market has undergone a V-shaped repair, which is not just an effect of printing money.We know that the rise of money entering the stock market and the position of risky assets comes from the rise of risk appetite of the system, not that after the central bank MMT puts the money out, it can automatically flow to the stock market and the increase of the position of risky assets, during which the logic of rising risk appetite must be formed.

So when we talk about this logic, it corresponds to this system in the United States, and even in the West. Through this COVID-19 epidemic, some very strengthened political correctness has been formed, which has objectively significantly reduced the transaction costs of the entire system in the West and the United States.

Mapping to the investment market is an increase in risk appetite.

This is where we feel pressure.

As we all know, China has achieved great economic rise and great material prosperity over the past 40 years, which is supported by nothing more than two bowls of "fundamentals":Reform, opening up and globalization.

We have seized the historical opportunity, that is, national luck, and gained the most generous dividend of the wave of globalization. What we see today is that the wave of globalization, which has lasted for half a century, has fallen off a cliff at its peak.

Today, the status of Chinese factories is not in vain. Through 20 years of unremitting efforts, we have integrated into the wave of globalization and established a global industrial chain, supply chain and even value chain with China as the hub.

However, now the correct direction of Western politics is to liquidate this chain in all directions. Although the epidemic is not over, this sentiment can be felt more and more strongly in decision-making from the people to the temple.

Therefore, we can no longer immerse ourselves in the grand narrative of the so-called China's "hub". For transnational capital, its decision-making logic will change greatly because of the corresponding variables in the model.

In the tide of great historical changes and grand narrative transformationIt will not only calculate the economic and commercial accounts, but also consider the political and security costs.

Once the West has formed a certain political direction, then capital in the global layout, will certainly take into account the costs and risks of political incorrectness in the model, which is our pressure today.

So in the face of severe external conditions, I think it is a decision that the decision-making level should make after careful consideration.

Looking back, the high-level meeting on April 8 may have already made up its mind."prepare mentally and work well for a long time to cope with changes in the external environment."This is the general tone of that meeting, and I personally understand that it is the tone of defense. Preparing for war and preparing for famine, digging deep holes and accumulating grain extensively is to cope with the great uncertainty in the future, at least the situation that has not changed in the past 50 years, and is a reversal of the historical trend. Make long-term ideological preparation and work preparation.

Specifically, this report on the work of the government is in fact a continuation and implementation of such a spirit, or concrete.

Therefore, I see that there is no great consternation and contrast in the government work report, which is more consistent with my feelings in the past.

The first is that there is no great excitement.

At present, it seems that there are only so many bullets that China plans to take out, which is a relatively restrained tone.

Second, some economists, such as Professor Xiao Nian, and I mentioned it a long time ago.Save private enterprises and people's livelihoodThe idea of actively promoting the transfer of the allocation direction of resource elements.

I even proposed to drop money by helicopter, directly to the damaged sectors of the economy, such as poor private enterprises and families, large-scale distribution of consumption coupons, and so on.

However, this meaning is not mentioned in the report, because to be honest, these directions belong to short-term effects from a political point of view, and they are purely consumptive financial activities. what we need to protect now is finance, money and food, and core values.

"accumulate grain widely, dig deep holes, save more money, save more strength, and spend less."

Third, under the very harsh and unfriendly external environment, no matter from the perspective of political science or history, the pressure and difficulties of internal reform are enormous.

We often see some people in the market say that the so-called situation is strong, but the pressure is forced to reform, which is more reflected in the phased expectations of the stock market.

Back to reality, the decision-making of real political behavior is determined by the historical and political attributes of the country.

The objective function of the system is "ruling security".

Do not unfold.

This is my first theme word "decoupling", which deduces the choice of our policy. For us, it means defense, preparing for war, widely accumulating grain, digging deep holes, forming some kind of political correctness outside and liquidating the power of our system. For us, it must be defense. It is also very rational for us to choose this "three noes". The two big men are going to face each other now, the opponent is stronger than us, and we are relatively weak. Strength is not enough, from the common sense of normal life, as a weak party must be squatting, squatting, or even curling up, try to reduce their own body exposure, protect their head and key parts, reduce body energy consumption, save financial resources, save bullets.

This is a very rational choice in the process of fighting with a strong man.

If you still hold your head high, open the door wide, do it quickly with leverage, and expose the risk, isn't it for the other party to beat up? This is common sense of life.

Second, stagflation

Naturally deduces to the second subject word, the state of stagflation.

This involves the "physique" of our economy, and even if there is no stimulus, we will not be able to overcome the inflation caused by the current economic downturn.

In fact, stagflation is not a matter of time, but a "physique", which has been going on for many years.

In recent years, it is clear that this virus is the best empirical study on the "physique" of China's economy, and the quarrels about situation judgment that have often occurred among economists in the past few years can be put to rest.

Because this time it is very obvious that the economic growth rate in the first quarter-6.8%, hit a big hole, but the Chinese economy has not experienced the slightest bit of deflation, the economy has been shut down for more than a month, and there has not been the slightest drop in prices?

From ferrous metals to real estate to the land finance behind it, the main line of China's economy is unusually tough and tenacious.

Prices have not been cut from China's own industrial cycle to consumer goods and social services.

Prices are so high, and some people have very strong expectations of banknotes, so the property market in Shenzhen is unusually hot, and local kings appear frequently.

The current awkward symbiosis of unemployment and inflation suggests that this is not the familiar Keynesian economic world at all.

This is the inflation of the economic downward cycle: the Phillips curve (the Keynesian economic world) fails, so the problem is that on the supply side, the supply side is constantly hit by some force (the momentum of long-term growth is damaged). And demand is resisted by tenacious vested interests, tearing down a growing gap, creating stubborn inflation expectations that are hard to contain.

The debate stems from the logical source of disagreement over whether China's potential economic growth is steady. My conclusion is that China's potential growth has entered an unsteady state now or even earlier, because we have observed that the supply and quality of some factors are actually changing with acceleration.

Under the impact of the epidemic, what we can see with the naked eye is the total demand (troika) "landing on the face", but what we cannot see with the naked eye is whether the potential growth may also enter the state of "landing on the face".

It is entirely possible that a crucial question cannot be avoided: which end of the policy will be the focus: the demand side or the supply side.

What determines the potential growth of China's economy is the two bowls of fundamentals I mentioned earlier, reform and opening up and globalization. Today, these two bowls of fundamentals can no longer find the flavor my mother used to have.

The script of this story is to break through the inner demons, now it can not rely on red-headed documents to do a few PPT can solve the problem, only rely on reform.

But at this point today, reform is no longer as simple as doing PPT and drawing a blueprint in a circle.

The so-called reform means subtraction and a revolution of interests.

It wants to change the direction of today's interests, opportunities and resource allocation.

To change the structure of distribution, this is the problem of subtraction.

Can subtraction be broken?

National leaders are encouraged to stress the need for the market to play a decisive role in the allocation of resources and not to return to the planned economy.

Why is it difficult for us to talk about reform? Because it's a question of moving cheese.

But today, it is only through this kind of subtraction reform that it is possible to boost potential growth and bring China out of its current state of stagflation.

So I say that it is very simple to judge the situation in China today, that is, two subject words, one is decoupling, the other is stagflation.

02、Stocks and bonds

In recent months, the stock market has reflected a stagflation clock, and in such a "long-lived" environment this year, the latest structure and trading of the stock market have performed well among all large categories of assets.

If you choose the right structure, there will be little loss or even a small gain this year.

The best-performing indices reflect the stagflation clock.

Such as food and beverage, diesel, rice, oil and salt, and other necessary daily consumption; such as medicine; such as the direction of the new national system that represents the country's political will to tackle key scientific and technological problems, and short-board industries such as military industry and independent scientific and technological innovation.

We don't care about its future effectiveness, but you can see the obvious direction corresponding to the national system, and the national fund continues to inject capital into these directions, so those stocks actually correspond to the capitalization of the will, which has little to do with real finance.

If we match these directions, we will not only avoid the losses that fall behind this year, but even have a more obvious gain.

I think it basically revolves aroundConsumption (focusing on the necessary consumption of firewood, rice, oil and salt, etc.), medicine, agriculture, pan-military industry (including hard nuclear science and technology, a new national system for tackling key scientific and technological problems)These directions may be adjusted in stages, but under the stagflation clock, funds are unlikely to be systematically transferred to other directions.

There is nothing to say about other directions outside the structure, and I feel under a lot of pressure.

After decoupling in the second half of the year, if the G2 continues to escalate from confrontation to rupture, I am relatively cautious about the overall mood of the capital markets and the denominator of stock valuation.

First of all, in the current three-no defense and preparation for famine, it is difficult to encourage the stock denominator, that is, the upward logic of risk appetite.

The stock market is never short of money. What it really wants is risk appetite.

Under the impact of such severe external conditions, will it be similar to the relatively negative denominator state in 2018, where the market gradually accumulates and increases negative sentiment, and suddenly falls sharply at a certain point? I think we still have to worry about such a risk.

Rats make holes, this is my personal hidden worry.

Of course, judging from the current state, I think there is no problem with the structure.

It's just that there are eggs under the nest? Stock market traders still have to worry about the risk of a periodic overall collapse of the denominator.

In terms of bonds, I personally observe that the interest rate on the 10-year Treasury note is still balanced at 2.5%.

If the resilience of China's real estate and land finance chain does not substantially soften, I personally think it may be difficult to see the formation of a downward interest rate channel in the short term, basically around 2.5% of the balance.

Because after the impact of the epidemic, the flood flooded, which washed the risk premium of junk debt extremely low. to some extent, it was the process of replacing the credit premium with liquidity premium. the process of making money from this transaction is not long. The comrades who go first earn the money in their pockets. If the comrades in the back are lucky, they will have some soup, but if they are unlucky, they will not be able to drink the soup.

Edit / elisa

The translation is provided by third-party software.


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