2020 Strategy Report: Our Economic Outlook Makes Investment Colorful

2020 Strategy Report: Our Economic Outlook Makes Investment Colorful

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  Bridgewater 2020 Strategy Report: Our Economic Outlook Sources WeChat Public Account: Red and Green-Red and Green to Make Investment Colorful-Here Comes from Bridgewater’s Open Report 2020 Strategy Report: Our Economic Prospects, Translator: ZhibaoWisburg Text: For the past ten years, for Bridgewater, the “paradigm of understanding current events” has been our important reference frame for understanding things and predicting subsequent substitutions-from the deleveraging that led to the financial crisis, to the subsequentThe subsequent weak response to monetary (policy) stimulus was followed by the magnificent deleveraging of the zero-interest-rate policy and the fifteen trillion-dollar banknote printing policy and the record-breaking longest economic expansion, and more recently, currencyGravity response after a slight tightening of policy.

  As we continue to apply this paradigm, we observe the convergence of various driving forces, which will bring about a paradigm shift.

  Before diving into this topic, recall that, through our paradigm, the four major driving forces that we have captured to drive economic growth: Transformation: the source of the increase in shifts in real income transfer time, not the source of the economic cycle.
Long-term debt cycle: The level of income-related debt reflects the potential for credit growth and the economy’s response to changes in interest rates.

Short-term debt cycle: The business cycle, usually driven by the central bank by changing interest rates (economic growth).

Politics: Drive (economic growth) through elections of leaders and their (policy) choices.

  The interaction of these several driving forces has given birth to cycles in the economy and the market. The cycles revolve around income-related credit equilibrium, capacity-related transformation equilibrium, and asset pricing equilibrium relative to avoidable risk premiums, creating shocks.

Monetary and fiscal policy are the means to manage the economy around these equilibriums.

  The driving forces mentioned above and the policy responses to them have reached some (economic) conditions that have reached their limits.

One of our investment principles is to identify current paradigms, analyze whether or how they (become) unsustainable, and predict how paradigm shifts will occur if the current infeasible paradigm ends.

(In short, look forward and backward, translator’s note) Looking back, we find that the monetary policy of the Central Bank is exhausted.

They first reduced interest rates to zero interest rates, after which they did not need to implement a quantitative easing policy (“print money” and purchase financial assets) that weakened the margins of policy effects.

These stimulus policies have pushed up the prices of stocks and other assets, and the policies have produced rich returns, but correspondingly reduced future expected returns.

The wave of investments in stock repurchases, mergers, acquisitions, private equity, and venture capital was shaped by cheap money and credit, and a large amount of cash injected into the (financial) system.

These policies have led to widening wealth and income gaps, and we are currently at the most exaggerated extreme gap since the 1930s.

Simplified easing has disproportionately benefited those who held assets, while those who did not have assets could not benefit from it because only a small portion of the currency injected into financial markets was eventually converted into expenditures and incomes of the real economy.
Specifically, competition between outward and automated and low- and medium-skilled workers has depressed wages, and capital is better than hydraulics.

Companies also benefit from deregulation and corporate tax cuts.

This pro-company environment has improved corporate profit margins to a record high, but it has also triggered social and political backlashes, leading to more discussions about opposing companies and supporting workers.

The growth rate of the company’s profit margin in the past cannot be sustained, and in the future environment, the profit margin is likely to decline.

Central bank stimulus policies are unsustainable.

The risk of nominal asymmetry (later), countries have generally entered a new paradigm, and they no longer take the initiative to tighten monetary policy to prevent inflation or normalize interest rates.

Over time, we expect (gradually) to shift to more elaborately managed interest rate policy and yield curve control objectives, as we saw in the United States in the 1940s and early 1950s, or Japan is now gradually moving towardsThe framework of practice (the Japanese experience has once again become a widespread “beacon”).

(Transitional transition) It is no trivial matter to maintain expansion in an unprecedented way.

Although the end of most cycles is due to the gradual choice of tightening monetary policy when we realize that we have reached the risk level, our current cycle will not end due to the tightening of intervention policies, or at least until the future growth pressure exceedsIt is possible to end when the acceptable target is capped.

Although the cycle is able to return to lasting remnants, the transition may have run out when the next economic downturn comes.

Over time, expansive fiscal policy has been in full swing.

We anticipate that policy makers will need to turn to the direction we have been discussing for a long time-what we call “Monetary Policy 3”-which is essentially the coordination of monetary and fiscal policies, gradually supporting direct expenditures, and gradually monetizing fiscal deficits.

Category policies can be “right” (through increased military spending or tax deductions) or “left” (through more direct infrastructure or social project expenditures).

Fundamentally, there has been a noticeable change in the policy direction, supporting more fiscal policy easing, but there has been no slowness in policy action.

Although political obstacles may form obstacles in the short term (especially the current US divided government), the general trend of access to finances has been determined and the path is clear.

The huge wealth gap may give rise to ongoing political conflicts and extremism, which means that (the authorities) have the possibility to adopt broader policy options to influence growth.

Therefore, we expect that, with past ratings, and with reference to the “ordinary” business cycle drivers we have been accustomed to, political outcomes and policy choices will have a greater impact on markets and the economy than in the past.

In the past, policy changes that benefited companies, capital, and the rich were continued to be extrapolated, and related policy changes are likely to reverse.

How extreme and how fast reforms are reformed are political issues, but the pressure for change may continue to increase until fundamental divisions and differences are resolved.

As the actual rate of return is low and the risk premium is under pressure, there is less room to raise high asset prices and generate the required (investment) returns.

Instead, the expected return on assets in the future is much lower than what we have experienced in the past (returns), which may lead to an increase in income proportional to the income required to pay off debt and other commitments (pensions, royalties, etc.).  Although we believe that the situations mentioned above are key features of the emerging paradigm, citing what we know, we also focus on those unknowns.

For example, the results of left-wing populism (considered to support labor) lead to the results of right-wing populism (considered support for companies), as opposed to the consequences of continued political divisions and deadlocks in the face of continued deflationary pressures.

This has led us to deal with the next ten years with humility and prudence: without extrapolating from the environment we have seen in the past ten years, clarifying the various potential paths that we will face after starting from this starting point, and step by stepA footprint guarantees success on the road ahead.

  Above that, the past paradigm and the new paradigm we entered are more applicable to developed economies and the West than to the East.

  With the rise of China and the merger of the Asian Economic Area, we are now in a three-pole world, driven primarily by three currencies and credit systems: the US dollar, the euro, and the yuan.

These three monetary systems are the driving forces of the global economy. At present, the overall (economic contribution) between the overall and emerging countries is roughly balanced. The growth of global economic growth now comes more from emerging economies than from advanced economies.

As far as these monetary systems are concerned, the United States is still the world’s largest economy, the US dollar is still the world’s main reserve currency, and the US dollar circulates globally.

The currency and credit conditions of the euro drive the European economy. Europe is the second largest economy in the world. The global circulation of the euro is about a quarter of the US dollar.

The renminbi still circulates only in China (inaccurate, translator’s note), but China ‘s monetary policy is now independent of the Federal Reserve, China ‘s domestic credit market is no different from that of the United States, and the Chinese economy is the core engine of growth in emerging Asian economiesEmerging Asian Economic Group is a growing independent and internal inward economic group. Its integration can complement the phase between the US and European euros. In the past three years, its contribution to global growth and growth has been that of the US and Europe.More in both directions.

At the end of 2015, China’s decoupling of its currency and monetary policy from the US dollar led to the expansion of the emerging Asian economic blocs and the expansion of the two major monetary systems into a certain monetary system.

  For investors, a tri-polar world is creating new geopolitical risks.

But at the same time, it also holds huge opportunities to increase the depth and diversification of fundamental-based investments, because the currency and credit system are the ultimate drivers of liquidity, risk premium, and economic / market cycles.

In addition, the long-term conditions between developed and emerging economies are very different, with progressive growth prospects and their place in the long-term debt cycle.

Finally, considering the balance of exposure to these currencies / economic systems is a crucial issue.

  Regarding the preset and coping strategies of the new paradigm, we summarize as follows.

After that, we will explore these topics in more depth.

The question of “where to go” is based on our influence on “where it comes from”, and we believe that we are currently at the end of the long-term and short-term debt cycle.

Long-term persistent high debt burden, already low unemployment rate, and little room for interest rate cuts. The potential for economic growth beyond potential growth is very limited, but officials who have been compensated by the long-term deflationary environment do their best to maintain monetary policy expansion”license”.

Monetary policy is difficult to sustain, and the effectiveness of its economic stimulus has been reduced. This requires what we call monetary policy 3 (MP3)-that is, the central bank directly penetrates the economy by coordinating government and central bank policy actions.

Emerging Asian economies are at different stages of the long-term and short-term debt cycles, with improved potential for improvement, which brings unique and diversified investment opportunities and challenges.

Fundamental diversification (asset allocation) for different environments and geographies will be key, and new Alpha opportunities will come from where the merger is located.

  First: The question of “where to go” is based on our influence on “where it comes from”, and we believe that we are currently at the end of the long-term and short-term debt cycle.

  Looking back, the beginning of the past decade has been the “deep pit” dug by deleveraging after the financial crisis.

The central bank responded quickly; interest rates were reduced to zero, but credit was weak due to the deleveraging process. Therefore, quantitative easing policies were born, the Federal Reserve and the United Kingdom gradually started to release water, and European markets and Japan gradually followed suit.

This avoids the deflationary depression we might face, but once again allows the United States and other mergers to surge in already high levels of debt, which limits the potential for credit growth.

Economic growth has resumed, but at a slow pace-the slowest economic expansion ever.

When debt / GDP is flat or declining, real and nominal growth will exceed actual real and nominal scales when debt / GDP rises-historically, the decline will gradually decrease by approximately the last decade, and the past decade is an example of expectations.

  The slowest growth in history stems from one of the deepest economic contractions, making this economic expansion the longest economic expansion on record since 1950.

Although the growth rate is the slowest, falling interest rates and flooding of liquidity have reduced the risk premium from a century-old high, creating the best decades for asset returns.

  The decline in the rate of return and risk premium has increased the rate of return on assets, which is now at a very low level, limiting future asset returns.

  Observance of debt / income over the past ten years has been almost flat, which is mainly due to income growth.

Income growth comes from more people gaining employment and more people earning money.

Unemployment has fallen from very high levels to part of it, and in a low unemployment environment, the potential to exceed potential growth far exceeds 10 years ago.

Income growth will continue to increase and will be limited by population growth. The growth of the labor force will be quite slow due to the structural problems of the population and will increase further. Wage growth will limit income growth. The increase in wages must be consistent with the increase in offsets to avoid an increaseSlenderness triggers monetary tightening.

  Long-term persistent high debt burden, already low unemployment rate, and little room for interest rate cuts. The potential for economic growth beyond potential growth is very limited, but officials who have been compensated by the long-term deflationary environment do their best to maintain monetary policy expansion.”license”.
  Using physics as an analogy, when a ball is lifted off the ground, it has a lot of potential energy but no kinetic energy (ie, motion).

When the ball falls, the potential energy becomes kinetic energy until the ball is stationary on the ground until it even fades.

An economy with high unemployment, low debt, and high interest rates has great potential energy.

You can lower interest rates to stimulate credit expansion and the resulting.

However, when debt is high, unemployment is low, and interest rates are close to zero, the potential energy of an economy is low.Most advanced economies in the world today are deeply trapped here.

  The economic downturn is usually caused by monetary tightening, fiscal tightening or unexpected events triggering a chain reaction in an over-expanding credit system.

None of these conditions exist today.

Initial officials are trying to continue the expansion policy, and governments are turning to fiscal stimulus, so economic growth is unlikely in the near future.

  It is not clear whether the current economic growth rate is declining or stagnation, but a clear rebound is unlikely.

  The liquidity pipeline will be an important determinant of this outcome.

You can cut this pipe into three sections.

At the front end of the pipeline is the central bank, which changes liquidity through interest rates and currency reserves.

The mid-range is the financial system, which can increase or decrease liquidity through leveraged or deleveraging through liquidity swaps.

At the end of the pipeline is the currency flow between cash and assets.

When money is transferred from cash to assets (debt becomes cash short), it is converted into expenditure and vice versa.

At present, the liquidity pipeline (at each end) is fully supported, and countries are gradually rethinking easing. The financial system provides stable credit flows, and currencies shift from cash to assets.

  A key determinant of liquidity supply will be constant growth, as expanding views on changing perspectives continue to change, making them favor economic growth by keeping interest rates low and liquidity abundant.

In the past 20 years, the inflation rate in the United States has been close to 2%. At present, the inflation rate in 80% of the world’s economies is between 1% and 3%.

There are many reasons for this, including the improvement of trucks, the replacement of manpower by technology, and the increasing number of independent central banks in the past 30 years. They have almost all adopted anti-intervention or currency target policies.

Gradually becoming more and more inclined to believe that there is long-term power to suppress inflation, while doubting the Phillips curve, they attach more importance to considering the average inflation rate relative to their goals, so that some overshoots can achieve equilibriuminsufficient.

They are no longer obsessed with normalizing interest rates and balance sheets, and are more concerned about policy asymmetries.

All that, they are now prioritizing expansion.

  The United States and most developed economic systems are in the later stages of the long-term debt cycle and business cycle. Their characteristics are: slow growth, low interest rates, and changes in interest rates are relaxed.Their reliance on the coordination of loose monetary policy and fiscal policy, or what we call “monetary policy 3”: Japan ‘s foreign exchange and European integration are at the same end, reaching the end.

  The Federal Reserve, the British frontier and other emerging countries are getting deeper and deeper.

  In this environment, geopolitical and social risks will become an important force driving economic and investment.

The expansion report we have compiled describes the widening gaps in income, wealth, and opportunity, and their contribution to the rise in populism.

This will always be the cause of social conflict and the driving force of deflation, because the marginal consumption expenditures of the rich are more likely to be saved than at the margin.

Similar to the 30th century, the response to the previous deleveraging policy has greatly exacerbated the wealth gap, and simplified easing has benefited financial asset owners asymmetrically.

There are both pressure factors and long-term factors for populism-although the overall economic situation is relatively good, populism is still surging and we expect the situation to worsen during the economic downturn.

  Monetary policy is difficult to sustain, and the effectiveness of its economic stimulus has been reduced. This requires what we call monetary policy 3 (MP3)-that is, the central bank directly penetrates the economy by coordinating government and central bank policy actions.

  Long-term conditions make MP3 (monetary policy 3) a great tool for managing the economic cycle.

In short, MP3 is a direct penetration of the central bank into the economy through government and previous coordinated actions.

This is in stark contrast to what we call MP1 and MP2, usually through changes in interest rates (MP1) or asset prices (MP2), causing the private sector to increase or decrease spending.

And when these incentives don’t work, you need to date an MP3 and directly infiltrate the economy through coordinated action with the government.

In the end, MP1, MP2 and MP3 all point to leveraging different levers in the same currency and credit machine.

  MP3 may sound new, but it has been used many times in the past.

In the 1940s, the United States also resorted to MP3.

In order to finance World War II, the Fed anchored short-term and long-term interest rates at low levels, and the yield curve sloped upward.

The Federal Reserve purchased short-term Treasury bonds by printing money to increase the reserve scale, which provided banks with liquidity. The bank subsequently encountered the slope of the yield curve and the Federal Reserve’s incentives to ensure interest rate stability. These reserves were used to purchase government bonds.Provided war financing.

These bonds were purchased by banks, but the Fed’s yield curve control policy is behind the scenes.

The government’s huge deficit in support of the war received financial support, spending nearly 40% of GDP at its peak, and this part of the expenditure was all financed by low interest rates.

  To clearly distinguish MP3 from MP2 and MP1, you need to focus on who’s spending is the goal of the policy and how they are affected by the policy.

The goal of the policy is always the same-to start the expenditure engine, to initiate a self-feedback mechanism of circular growth of expenditure and income-but the policies can be described as very different in strategy.

  Emoticons (Translator’s Note): MP1-interest rate policy, for followers, MP2 through interest rates to attract spending-quantitative easing policy, investor-oriented, attracting spending through assets and liquidity MP3-currency and fiscal coordination, governmentExpenditures through direct monetization financing. Looking at the current major economies, in most developed economies, there is not much room for interest rate cuts, and debt is high relative to income, so MP1 has run out of money.Liquidity has been pushed into assets on a large scale, so there is little room left for MP2.

When the Qiang donkeys are poor, MP3 will be the next step to provide stimulus when substantial policy support is needed.

China is an exception.

Because China’s long-term situation is completely different from that of developed economies, China currently has MP1 and MP2 policy means, so it also has a lot of experience in MP3.

Following its governance structure, China has gradually coordinated policies with the government.

  Emoticons (translator’s note): Coming soon: space is almost complete: mountains and rivers are exhausted next: future path choice China: MP1 / MP2 residual ammunition, MP3 ammunition residual Emerging Asian economies are at different stages of the long-term and short-term debt cycleImproved potential for improvement, which brings unique and diversified investment opportunities and challenges.

  Investors’ attention is usually concentrated in advanced economies. Publicly traded liquid assets in advanced economies are dominant, and they account for most of the weight in most indexes.Not expected.

Emerging Asian economies are forming a highly interconnected economic system, which is already very large and has an increasing impact on the world.

The preliminary levels of the emerging Asian economic groups have been compared with the sum of the predetermined levels in the United States and Europe.

Over the past three years, its contribution to global economic growth has been that of the United States and Europe2.

5 times.

The proportion of trade with European countries, the proportion of trade between these countries in their economies.

  The size of the open market in emerging Asia lags behind the scale of cash flow generated by its economy.

However, because assets are only securitization of cash flows, and cash flows are already large in scale, securitization is bound to catch up.

  Although these economies were mainly exporters to Western economies in the past, this economic group is now paying more and more attention to internality and independence, reflecting its nominal GDP growth that far exceeded exports over the past decade.

This development can be divided into three phases.

First, companies have expanded their reach to regional countries, and policy makers have not stopped them.

Then, policymakers passed ASEAN (and the ASEAN Free Trade Area), the Asian Development Bank (ADB), the Chiang Mai Agreement (a regional monetary fund), the Asian Infrastructure Investment Bank (Asian Investment Bank, AIIB), and most recently the CPTPPPolicies and institutions such as RCEP encourage this expansion.

In the future, conflicts with the West will further stimulate this development for self-protection purposes.

  However, these economies will face structural conflicts with the West, and these conflicts will be difficult to cope with.

We think this is much more than a trade war.

The conflict between the United States and China is an ideological conflict between evenly matched rivals in a small world.

Both countries have two different systems-the United States is bottom-up and China is top-down.

In his book “Destined to War”, Graham Allison called the phenomenon of rising powers challenging existing powers the “Thucydides trap.”

Looking back over 500 years of history, 12 of the last 16 challenges have sparked war.

This is done by both sides, which increases the possibility that conflicts can be managed well in conflict wars, but the risks are still high, and it is difficult to 苏州桑拿网 choose the winner in a win-loss situation.

Other forms of conflict are highly likely.

We have experienced trade wars and the use of the US dollar as a weapon through sanctions.

There is also the possibility of capital wars, economic wars, and technological wars.

This form of war is very likely to occur and brings new investment risks, which must be carefully considered.

  There are unique risks to investing in China and emerging economies, even exceeding the risks of potential geopolitical conflicts.

A very low part of the cash flow of the economy has been securitized and it is easy to reach investors around the world. (Investors) lack of understanding of these economies and systems, and the investment environment itself is underdeveloped and vulnerable to capital reductionImpact, lack of reliable audits, weak 北京夜网 governance, and cultural barriers.

  Despite the size of the economy and the size of the market, most investors know much less about the basics of China and the Chinese market.

But even if you don’t invest in China, its impact will be revealed through China’s influence on other economies, markets and companies.

There we focus more, and we follow the Chinese proverb: “Cross the river by feeling the stones.”

Instead, it is important to take prudent steps first to gain experience and ensuing understanding.

  Looking back on investment returns and current pricing: In relative proportions, the returns on equity in advanced economies over the past decade have exceeded those in China and emerging Asia.

Economic growth has never been the single determinant of equity returns.

What is more important is how the conditions related to discounting change, and high growth may also be overvalued (discounted) or undervalued (discounted).

In addition, high growth often requires capital investment and financing, which replaces the growth of previous earnings relative to earnings growth.As far as China is concerned, the discount growth is very high, which led to the bursting of the bubble in 2014. In order to ensure growth, there has been a huge reduction. The government encourages the switch from debt issuance to stock issue.

When foreign companies shifted production to China, which resulted in faster-than-expected wage growth in China, profit margins were squeezed and transformed. In the past few years, the tightening of financial regulatory policies has pushed up the risk premium.

This historical attribute is of course a retrospective, and it is largely extrapolated to today’s pricing, while discounting high-risk premiums from trade conflicts.

  Although our focus is often on the West and advanced economies that issue reserve currencies, the situation is different with zero interest rates, sluggish (economic) conditions and populist trends tending towards emerging Asian economies.

Emerging Asia has higher recent growth, higher future growth, higher interest rates, and higher return on assets.

  Outside Asia, many emerging countries may need to loosen their money and their expansion is increasingly capable of delivering on their promises.

Although many routines have limited space for monetary stimulus, the monetary policies of economies such as Mexico, Brazil, Russia, and India are still significantly tighter, especially relative to the sluggish economy and historically low levels.Out of space.

In the past few years, global dollar tightening, falling commodity prices, and widely different policy challenges (such as political uncertainty in Brazil and Mexico, Mexico’s trade situation, and Russian sanctions) have led to many challenges.

They prioritized austerity policies, supported their currencies, and controlled inflation, which resulted in a markedly weak domestic economy, but succeeded in reducing their dependence on foreign capital and stabilizing inflation.

  Most of these economies have continued to tighten in 2018-early 2019, as lingering distortions of gradual and currency distortions have left them worrying about policy easing in the face of tightening US dollar liquidityEarly or too fast.

  Today, these obstacles to relaxation are decreasing.

Low and stable inflation in most emerging economies will continue.

In recent months, Mexico, Brazil and Thailand have eased, and India, the Philippines, India, Turkey, Russia, South Africa, Chile, Peru and Malaysia have cut interest rates.

In our view, major external adjustments, competitive currencies (deductions), and benign domestic and global inflationary pressures will provide more policy space for the transition of emerging economies to alleviate and support the sluggish interventions.

The current situation highlights the growing division between the starting economies and many emerging economies. The developed economies are struggling to achieve sufficient economic growth, and many emerging economies are still operating in the long-term debt and business cycle.This provides opportunities for diversification.

  Fundamental diversification (asset allocation) for different environments and geographies will be key, and new Alpha opportunities will come from where the merger is located.

  In the near term, the initial impact of pushing the market is a change in the transitional thinking model, and gradually no longer actively tighten money to prevent inflation or normalize interest rates.

This continues the cycle in an unprecedented way.

When we deal with pressure and expected returns through our system, the most likely scenario we see is that the global economy is basically horizontal, accompanied by moderate and stable inflation, a large risk premium and a large amount of liquidity to enrich the riskcurve.

We expect to benefit the most from regions where liquidity needs are most urgent and profits are less tight, such as emerging markets.

  In the long run, we are more ignorant than new to the new paradigm.

Where the above predictions are most likely to occur, it is better to ensure that all of these options achieve tolerable results.

We know that the best way to understand exactly the scope of potential results and how they affect us is to perform stress tests.

  In the current environment, geography is particularly worthy of further exploration.

Looking back, this is the equivalent of a virtual free lunch.

In the past 100 years, the wealth generated by a diversified equity portfolio is comparable to the best national equity market, and controlling losses has a significant compounding effect.

In the next stage, the equity market is the best and the worst is very different. The middle zone always protects against the worst-case violations and transfers time to increase wealth by reducing deep losses.

  In today’s world, yes, there are unique risks to investing in China and emerging markets.

But at the same time, significant risks are expected in the later stages of the long- and short-term debt cycle, as well as within populism.

This makes the risks different from each other, the correlation can be reduced, and each group is compensated for the risk premium.

Given this situation, does it really make sense to consider a (combined) balance geographically?

Shouldn’t we consider balancing the East and the West, developed and emerging economies, the rising and falling segments of the long-term debt cycle, one currency and credit system relative to another, one technology infrastructure relative to another, and what happenedAre geopolitical conflicts on the other side?

  In the context of paradigm shifts, we are also exploring the potential to design new and new solutions to the challenges we face together.

The key that emerged from our minds was: in normal times, the transition stimulates people to borrow short and long loans by spurring the yield curve to stimulate credit growth.

The system is now broken.

Instead, countries have been inspiring the world to make short-term or long-term expenditures with little risk of refunds or pressure on principal payments, channeling these funds into any risk-free asset.

In essence, they are making the risk curve steeper and providing too much liquidity to navigate it.

Investors are encouraged to finance risky assets with locked-in, low and risk-free interest rates.

It’s like a dog chasing its own tail, because investors usually price the interest rates on bonds as a return on their risk-free assets.

Zero yields take away the benefits, but the financing rate of the risk assets of the holder is provided (to investors).A possible return on assets, but lower financing rates, provides financing options for positive spreads on these low-yield assets.

Logically, with short-term, price or growth-based strategy indicators, certain types of long-term, income-based strategies may become increasingly important.

May include: Even in a world with low or no nominal growth, there will be a level of income (eg, $ 20 trillion in nominal GDP / income) distributed in the form of a layered cake: wages, reductions, profits, distribution, etc.Wait.

Countries may set interest rates close to or below zero in an effort to maintain current income levels, perhaps with a little increase.

Compared with the financing funds being close to zero or negative costs, this is the arbitrage space left by the spread of each layer of income.

For example, in the United States, dividend payments always share a slice of the income tier cake, whether nominal GDP is growing or falling.

Of course, there are considerations that look at the city and the size of the investment that need to be assessed.

However, “horizontal” thinking from the perspective of revenue and financing costs is one way to be considered in this environment.

  Within the income tier cake, there will be a structural shift in income.

Some companies will gain market share relative to others.

In the economic realm, the distribution of income between business, labor and government will change.

In a low-growth, low-volatility macro environment, interest rates are stable, liquidity is redundant, and the proportional effects of structural transfers of relative income are relative to growth. The effects of inflation and interest rate changes will rise.

  In proportion to the prospect of slow growth in advanced economies, some emerging economies (especially in the East) may have a nominal GDP / income growth of 5% to 10% per year for the next ten years, and the local currency exchange rate / financing will gradually increase,) Not much higher than the cumulative.

The significant difference between long-term nominal GDP growth and interest rates is likely to be the driving force for long-term investment returns.

  We can’t make a sword.

We are entering a new paradigm that will bring new challenges and present new opportunities that are different from the past.

Above all, diversity will be key.

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