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(Please notice the disclaimer before reading the analyses below. The window is one-year period and it can be subject to change if there are shocks or structural changes occurring in the period.)
Merry Christmas and Happy New Year! The skin of my blog has been changed to welcome the new year. First of all, I would like to carry out some macroeconomic analyses. Next I will continue to talk more about other thoughts related to economy and investment. One can apply the IS-LM and AS-AD to the analyses below such that one can get clearer picture, while I get the equation proposed by Kostolany for your concrete reference on the abstract economy.
- Macroeconomy in US
US is trivially going to the stagflation environment although the inflation is not significant now. Stagflation is not the usual phenomenon since it is triggered by the supply shock, such as oil and food. On the other hand, people's confidence on the credit market is another side to contribute to the decline. In the stagflation environment, even though there is inflation or even decreasing interest rate, this cannot induce money flowing to the capital such as stocks and corporate bonds because the cash flow of the company becomes more uncertain during the decline (One may refer to Mr Law's comments where he mentioned that the stock price may not increase during inflation or even negative interest rate). The Fed increases the money supply, but bears the risk that the people do not have confidence to carry out the credit market transaction and the inflation can be further increased.
In Kostolany's syntax, strong money (?) + weak confidence
=> Pro-weak environment
=> Needs some moment to recover.
- Macroeconomy in China
Growth still proceeds, but due to the changing economic environment, three aspects have to be considered.
- How is the structural inflation on the supply side?
- Can decoupling succeed, i.e. unaffected by US?
- What is the significance in the contractionary monetary policy announced in late 2007?
In Kostolany's syntax, weaker money + strong confidence (?)
=> Pro-weak environment
=> Needs some moment to decline. Note that growth still proceeds but the growth rate will be slower.
- Macroeconomy in Hong Kong
Hong Kong is the special location. There is increase in money base due to US expansionary monetary policy and linked exchange rate. However, Hong Kong is not the same as US to face severe threat in credit market, while mainland China is facing the above uncertainty. How can the investor do in order to survive in such kind of environment?
(Continue)
Merry Christmas and Happy New Year! The skin of my blog has been changed to welcome the new year. First of all, I would like to carry out some macroeconomic analyses. Next I will continue to talk more about other thoughts related to economy and investment. One can apply the IS-LM and AS-AD to the analyses below such that one can get clearer picture, while I get the equation proposed by Kostolany for your concrete reference on the abstract economy.
- Macroeconomy in US
US is trivially going to the stagflation environment although the inflation is not significant now. Stagflation is not the usual phenomenon since it is triggered by the supply shock, such as oil and food. On the other hand, people's confidence on the credit market is another side to contribute to the decline. In the stagflation environment, even though there is inflation or even decreasing interest rate, this cannot induce money flowing to the capital such as stocks and corporate bonds because the cash flow of the company becomes more uncertain during the decline (One may refer to Mr Law's comments where he mentioned that the stock price may not increase during inflation or even negative interest rate). The Fed increases the money supply, but bears the risk that the people do not have confidence to carry out the credit market transaction and the inflation can be further increased.
In Kostolany's syntax, strong money (?) + weak confidence
=> Pro-weak environment
=> Needs some moment to recover.
- Macroeconomy in China
Growth still proceeds, but due to the changing economic environment, three aspects have to be considered.
- How is the structural inflation on the supply side?
- Can decoupling succeed, i.e. unaffected by US?
- What is the significance in the contractionary monetary policy announced in late 2007?
In Kostolany's syntax, weaker money + strong confidence (?)
=> Pro-weak environment
=> Needs some moment to decline. Note that growth still proceeds but the growth rate will be slower.
- Macroeconomy in Hong Kong
Hong Kong is the special location. There is increase in money base due to US expansionary monetary policy and linked exchange rate. However, Hong Kong is not the same as US to face severe threat in credit market, while mainland China is facing the above uncertainty. How can the investor do in order to survive in such kind of environment?
(Continue)
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