Markets Weekly August 17, 2024

Hello my friends, today is August 17th and this is Markets Weekly. So, this past week was a great week in markets. We basically surged every single day and looking at the S&P 500 have completely wiped out our panic selling in the first two weeks of August. Now this type of vertical move is pretty uncommon in markets, so I think that's reason for caution. Now today let's talk about three things. First, let's talk about some of the good data we got the past week that contributed to the upward surge in markets. Secondly, as you all know, I think public policy is the most important driver of asset prices and finally we got some policy proposals from Harris. It looks like she is in favor of housing, purchase subsidies and also price controls, so let's talk about what that could mean for the economy.

你好，朋友们，今天是八月十七日，欢迎收听本周市场周报。过去的一周，市场表现非常出色。几乎每天都在上涨，标普500指数已经完全抹去了八月前两周的恐慌性抛售。这样的直线上涨在市场中其实并不常见，所以我认为需要保持谨慎。今天我们来讨论三件事。首先，回顾过去一周我们收到的一些有利数据，这些数据推动了市场的上扬。其次，众所周知，我认为公共政策是影响资产价格的最重要因素之一，最后我们收到了哈里斯的一些政策提案。她似乎支持住房购买补贴和价格控制，那么让我们讨论一下这对经济可能意味着什么。

And lastly, what really stood out to me in the past week was the surge in gold which on Friday reached new all-time highs. Let's talk about what could be driving that surge. Alright, starting with the data. So just for some context, the past couple years the market has been paying very close attention to inflation data. Why? Because the Fed has been paying attention to inflation data and when inflation comes in too hot, the Fed would hike rates and inflation was coming in, cold the Fed would cut rates. Market really likes rate cuts and so they really cheered low inflation data. But more recently, the market has become more concerned with the potential U.S. recession. On the last jobs report, we saw the unemployment rate take up surprisingly to 4.3% and that really freaked the market out. This past week, we got data that confirmed that disinflation is firmly in train and also that there is less concern for our U.S. recession. Now starting with the inflation data.

最后，上周令我印象最深刻的是黄金的飙升，周五黄金达到了历史新高。让我们来谈谈是什么推动了这次飙升。好的，先从数据说起。为了提供一些背景信息，过去几年市场一直非常关注通胀数据。为什么？因为美联储一直在关注通胀数据，当通胀过高时，美联储会提高利率，而当通胀较低时，美联储会降低利率。市场非常喜欢降息，所以他们特别欢迎低通胀数据。但最近，市场更加担心美国可能会陷入衰退。在上一次就业报告中，我们看到失业率出人意料地上升到4.3%，这让市场非常恐慌。上周，我们获得的数据证实了通胀放缓的趋势，而且对于美国衰退的担忧有所减轻。现在，先从通胀数据说起。

Now we got PPI which was prices paid by businesses and also CPI, a popular measure of prices paid by consumers. PPI, very benign, even cold and CPI was also pretty benign. On a year over year basis, CPI was under 3%, so at 2.9%, the lowest it's been for some time. Looking at the underlying components of CPI, also pretty benign. Now as we all know, what the Fed really cares about is not PPI or CPI, but PCE. Looking at the Cleveland Fed's inflation now casting, which after we get PPI and CPI is pretty accurate, the Cleveland Fed is forecasting a pretty benign PCE print as well. So taking that all together, now the Fed definitely has enough data over the past few weeks to feel confident that inflation is heading towards 2% and they are definitely going to cut rates in September. Now the market also firmly prices in a September cut as well. Actually it's pricing in some probability of a 50 basis point cut and it's pricing in 100 basis points of cuts throughout the rest of the year. Now part of the reason why the market is pricing in so many cuts is because the market isn't concerned, is concerned about a recession which could push up the unemployment rate.

现在我们得到了生产者价格指数（PPI），即企业支付的价格，以及消费者价格指数（CPI），即消费者支付的价格的一个常用衡量指标。PPI显示数据非常温和，甚至偏低，而CPI也相当温和。从同比来看，CPI低于3%，只有2.9%，这是一段时间以来的最低水平。查看CPI的各个组成部分，也显示出相对温和的数据。 我们都知道，美联储真正关心的不是PPI或CPI，而是个人消费支出价格指数（PCE）。根据克利夫兰联邦储备银行的即时通胀预测，在获得PPI和CPI数据后，这些预测通常是比较准确的。克利夫兰联储也预测PCE数据将会相当温和。因此，综合所有这些因素，美联储现在肯定有足够的数据来确信通货膨胀正向2%目标迈进，并且他们肯定将在九月份降息。 同时，市场也坚信九月份会降息。实际上，市场正在定价一定概率的50基点降息，并预计全年总共会降息100基点。市场预期如此多次的降息，部分原因是对可能出现的经济衰退感到担忧，因为这可能会推高失业率。

Now with respect to inflation, the market got some pretty comforting news as well. It started with retail sales which on a month over month basis has been higher than it's been for over a year. So as we all know, the US economy is heavily consumer driven so if the consumers are spending, there's less likelihood of recession. Now the good consumer spending data was corroborated by the earnings report from Walmart, again a huge retailer so they have their pulse on the US economy. Now Walmart across the board guided for high revenues, higher profits and the market really liked it. Now to be clear, some of their guidance is because consumers are retrenching, moving away from luxury brands to shopping at Walmart. But the market took the Walmart earnings as a positive note on the US consumer and thus the US economy. In addition to all that, we also got the unemployment claims data which were okay. Now a couple weeks ago, unemployment claims shut up, people were worried that maybe we were heading into a recession. Now unemployment claims more benign that again gives the market more comfort.

现在，关于通货膨胀，市场也得到了相当令人安慰的消息。一切从零售销售开始，在月度基础上，零售销售额超过了一年来的最高水平。众所周知，美国经济是高度依赖消费者的，所以如果消费者在花钱，经济衰退的可能性就更小了。良好的消费者支出数据得到了沃尔玛财报的印证，沃尔玛作为一个巨大的零售商，对美国经济有着敏锐的感知。沃尔玛总体上预测收入和利润都会高涨，市场对此十分欢迎。当然需要明确的是，部分预测是因为消费者在缩减开支，从奢侈品牌转向沃尔玛购物。然而，市场将沃尔玛的财报解读为对美国消费者以及美国经济的正面信号。除此之外，我们还得到了失业救济申请的数据，情况也不错。几周前，失业救济申请人数激增，人们担心可能会进入经济衰退。但现在失业救济申请数据较为温和，再次给市场带来了更多的信心。

So taking this all in stride, the market seems to think that we are again in soft landing territory and so it's not too worried whether or not that's the case. We'll find out as we get more data in the coming weeks and especially as we get to hear what your policies at Jackson Hole next week, we'll hear his take on the data. Alright now the second thing that I want to talk about is Kamala Harris's economic proposals. Now Vice President Harris hasn't done a lot of interviews but now she did do a big speech last week talking about her solution to the housing crisis in the US and to inflation. As regards to housing, she proposes a $25,000 subsidy to new home buyers. As to high prices, she's subscribing to the theory of basically greed inflation. That is to say inflation is imparted driven by the corporate greed and so maybe we could have some kind of federal price gouging law that sets limits on basically some form of price control. Again we will really know the details at this moment, it's just an idea.

综上所述，市场似乎认为我们又回到了软着陆的状态，因此对是否真是如此并不太担心。随着未来几周更多数据的公布，尤其是下周我们将听到您在杰克逊霍尔的政策见解时，我们会有更清楚的了解。好吧，现在我要谈的第二个话题是卡马拉·哈里斯的经济提案。副总统哈里斯以前接受的采访不多，但上周她发表了一次重要演讲，谈到了她对美国住房危机和通货膨胀的解决方案。关于住房问题，她提议向新购房者提供25,000美元的补贴。至于高物价，她认同所谓的“贪婪通胀”理论，认为通胀在一定程度上是由企业贪婪驱动的。因此，可能会制定某种联邦反价格敲诈法，设置某种形式的价格管制。目前，这只是一个想法，具体细节我们尚未得知。

Now on the housing front, yes for sure if you give everyone who wants every new home buyer $25,000 to buy a new home, that's going to stimulate home construction. Obviously it's going to boost demand because people can now have more money to spend on a new house and so we'll also have new houses built. But also note though that if you suddenly give all these new home buyers $25,000, well that's a sudden and very quick increase in the demand for housing and it takes time to build new housing. Supply of housing, you need materials, you need labor, you need a whole bunch of regulations, and so forth, permits and so forth. So that supply is going to come online gradually but the demand is much faster. So that's very likely going to drive house prices even higher. Now I think in general if you have prices that are too high, there's two solutions, you have either less demand or more supply. Now looking at US states for example, in Texas it's much easier to build than in other states. So when house prices rise, you have a whole bunch of builders come in, build hundreds of thousands of houses and home prices stabilize or go down. In contrast, the state like California where there's a lot more regulation when it comes to building, home prices go up and they keep going up and become increasingly unaffordable. Now this type of legislation increases the demand without addressing any of the supply constraints. So it's likely just going to lead to higher prices but yes, at the end of the day, you will get more houses built. Although it's not clear whether or not they will be more affordable because even though you have $25,000 more in subsidies, maybe the house price also goes up a lot as well. So but again, if you are a home builder, this is great news.

现在在住房方面，如果你给每个想买新房的人2.5万美元去买新房，这肯定会刺激房屋建设。显然，这会提升需求，因为人们现在有更多的钱可以买新房，所以我们也会看到新的房屋被建造。然而，需要注意的是，如果你突然给所有这些新的购房者2.5万美元，会导致住房需求迅速增加，而建造新房需要时间。住房供应需要材料、工人、一大堆法规以及许可证等等。所以供应会逐步上线，但需求的增长速度要快得多。这很可能会推动房价变得更高。 总的来说，如果价格太高，有两个解决办法：要么减少需求，要么增加供应。以美国的各州为例，在得克萨斯州，比其他州更容易建房。因此，当房价上涨时，会有大量的建筑商进入，建造数十万套房子，房价就会稳定或下降。相反，在像加利福尼亚州这样建筑法规更多的地方，房价会上涨并持续上涨，变得越来越难以负担。 这种立法只是增加了需求，并没有解决任何供应方面的限制。所以这很可能只是导致更高的房价，但最终是会有更多的房子建造出来。虽然不清楚这些房子是否会更容易负担得起，因为即使你有了额外的2.5万美元补贴，房价也可能会随之上涨很多。不过，如果你是一个房屋建筑商，这无疑是个好消息。

Now the second proposal that's a lot more controversial is price controls. Now historically, governments have used price controls basically today and for thousands of years as a solution to inflation. Professor John Cochran had an interesting blog post the past week on the Roman Emperor Dioclicis, who I think around 300 BC had a tremendous inflation problem. So what he did was what we're doing right now, price controls back then. So the Roman Empire was running out of money to pay its soldiers and they really needed the soldiers to prop them up. So they did what was the most common sense of a cool thing to do. They basically debased their currency by basically giving soldiers coins with less and less silver content. Now to be clear, back then their understanding of the economy was not super sophisticated. So maybe they actually didn't know that by simply printing more coins, they would cause inflation. In any case, by painting more coins with lower silver content to pay the soldiers, obviously that contributed to a lot of inflation.

现在，第二个提议是更具争议的价格管制。历史上，政府一直使用价格管制来应对通货膨胀，事实上从几千年前到今天都是如此。约翰·科克伦教授上周在他的博客上发表了一篇有趣的文章，讨论了罗马皇帝戴克里先的做法。据我所知，大约在公元前300年左右，戴克里先面临严重的通货膨胀问题。他当时的应对措施与我们现在的价格管制类似。当时，罗马帝国快没钱支付军饷了，但他们非常需要士兵来支撑帝国。因此，他们采取了看起来最合理的措施：通过发行银含量越来越低的硬币来支付士兵的薪水。 需要明确的是，那时人们对经济的理解并不十分深刻。所以，也许他们并不了解简单地印更多硬币会导致通货膨胀。无论如何，通过发行银含量更低的硬币来支付士兵，显然加剧了通货膨胀问题。

Now the Emperor's solution was, well, he knew that if you have too much supply that pushes prices down, but he seemed to think that higher prices were the result of bad people being greedy. For example, traders buying low in some region of the empire, going on taking their stuff, putting them on ships and sailing elsewhere to sell at higher prices. And he thought that was a bad thing. And so he put down this edict, which we see here, that basically set limits as to how a wide range of prices can be from goat legs to beef and so forth. It was actually quite comprehensive. And being the Roman way and how things were back then, if you violated this, it was not a fine. It was death. So price controls enforced by capital punishment.

现在皇帝的解决方案是这样的：他知道供应过多会导致价格下跌，但他似乎认为高价格是因为一些贪婪的坏人造成的。比如，有商人在帝国的某个地区低价买入商品，然后运到其他地方高价出售。他认为这是件坏事。所以，他发布了一道法令，就像我们这里看到的一样，基本上规定了从山羊腿到牛肉等各种商品的价格范围，非常全面。而按照当时罗马的方式，如果违反这个法令，不是罚款，而是死刑。所以，是通过死刑来执行价格控制的。

Now that obviously didn't make things better because, well, if you put a limit as to how high prices can go, then a lot of people just won't sell all those traders he complained about that would buy low in one part of the empire to sell high elsewhere. Well, they just stopped coming because well, they didn't have any profit to make. So they would stop coming. And of course, that made short that made shortages even worse and made inflation even worse as well. But we really don't have to look past back a couple thousand years to see the bad sea wide price controls. It's a bad idea. We can just look at actually back in the US history, President Nixon also imposed price controls thinking that it would at least temporary dampened inflation ahead of his election. That was not successful. As we know afterwards, we had tremendously high inflation and we can also look across the road to Venezuela where they also present a majority over there also imposed price controls as a way to to limit inflation. And what that led to was very, very long lines to grocery stores and acute, acute shortages in everything. Because when you can't make a profit, because you can't sell at the price that you want to sell, then you just don't sell it at all. And so you end up with shortages.

显然，这并没有让情况变得更好，因为如果你给价格设定了上限，那么很多人就不会出售那些商品。比如，说到那些被他抱怨会在帝国某个地方低价买入然后在其他地方高价卖出的商人们，在价格受限以后，他们就不来了，因为没有利润可赚。于是他们就不来了。实际上，这加剧了短缺问题并进一步恶化了通货膨胀。 不过我们并不需要回溯几千年去看价格管制的坏处。我们可以回顾一下美国历史。尼克松总统当时也曾实行过价格管制，他认为这至少可以在选举前暂时抑制通货膨胀。但是我们知道，这并不成功。随后我们经历了极高的通货膨胀。再比如，看看委内瑞拉，那边的政府也实行过价格管制来限制通货膨胀。这导致了超市前排起了非常、非常长的队伍，所有东西都出现了严重短缺。因为当你不能以你想要的价格卖出商品时，你就根本不会去卖，于是就出现了短缺。

Another way to think about this is suppose there were price controls on the price on your salary. Let's say that you could not make more than $10 an hour. Obviously, if you want people to work more, then you want to pay them more. But if you limit how much you can pay them, say to $10 an hour or even say $5 an hour, you get fewer people working. And if you get fewer people working, that means there's less of a supply for labor, fewer things produced. Everything becomes more scarce. And the way that governments usually regulate this problem would be some kind of quota, where if you are friends with the government or have some kind of connections, you get the goods that you need. Otherwise, everyone else does not get anything.

换一种方式来思考这个问题，假设你的工资受到了价格管制。例如，你的工资不能超过每小时10美元。显然，如果你想让人们工作更多，那么你就需要支付更高的薪水。但如果你限制工资，比如每小时只能支付10美元，甚至每小时5美元，那么愿意工作的人就会变少。而工作的人少了，就意味着劳动力供应减少，生产的东西也会变少。一切都会变得更加稀缺。政府通常会通过某种配额来调节这个问题，如果你和政府关系好或者有某些关系网，你就能得到你需要的物资。否则，其他人什么都得不到。

So again, back to what I discussed earlier. If you have prices that are too high, the classic response, less demand, which is what the Fed is doing with higher interest rates or more supply, which could be through higher prices. Again, prices high, companies want to make money. Then they go and they produce more classic, classic market mechanism. Price controls limit, the increase in supply, because it limits the amount of profits businesses can make and always, always makes things worse. It's really surprising that vice-vers and Harris would have this kind of proposal. That is just so much evidence over and over again, that it doesn't work. However, also good evidence that people always fall for it. So maybe it is a smart decision politically for her after all. That being said, all this needs to be implemented through Congress. And right now, it's just merely an aspirational idea. And I think it's concerning as to what Harris's presidency could be. Pricing controls basically guarantees stagflation.

再回到我之前讨论的内容。如果价格过高，经典的反应就是需求减少，这也是美联储通过提高利率来达成的目的；或者通过更高的价格来增加供应。价格高，公司为了赚钱就会生产更多，这是典型的市场机制。然而，价格管制会限制供应的增加，因为它限制了企业能赚取的利润，总是让情况变得更糟。令人惊讶的是，拜登和哈里斯会提出这样的建议，因为有大量的证据表明，这种方法是行不通的。不过，也有许多证据表明，人们总是容易上当。因此，从政治角度来看，这对于哈里斯来说可能还是一个聪明的决策。尽管如此，所有这些措施需要通过国会实施。就目前而言，这仅仅是一个理想的想法。我认为，这令人担忧哈里斯的总统任期可能会是什么样。价格管制基本上会保证滞胀的发生。

Okay, now moving on to our last topic. Let's talk about gold. Now, gold really surprisingly surged on Friday, making new all-time highs. Now, as we discussed before, it's really hard to know what actually drives gold prices, because there are so many potential drivers. Now, sometimes people point to the size of the Fed's balance sheet. Sometimes people point to the stance of monetary policy. Sometimes people point to geopolitical risk. Other times, it could be momentum, or it could be inflation, things like that. It's never quite clear. But looking at what happened the past week, I think what's driving gold the past week at least is the weaker dollar.

好的，现在进入最后一个话题。我们来聊聊黄金。令人惊讶的是，黄金在周五大幅上涨，创下了新的历史高点。正如我们之前讨论的那样，要确切知道是什么驱动了黄金价格真的很困难，因为可能的因素实在太多了。有时候人们会指向美联储的资产负债表规模，有时候则指向货币政策的立场，有时候是地缘政治风险。其他时候，可能是市场动能，也可能是通胀等因素。原因从来不明确。但回顾过去一周的情况，我认为至少在过去一周内，驱动黄金上涨的原因是美元走弱。

Now, the dollar notably sold off with the euro above 1.1 again, hitting into the end of the week. And the gold seemed to be tracking the weakening dollar and going higher. Now, the market is pricing in a substantial amount of cuts by the Fed. And I think the currency markets are interpreting that as smaller interest rate differentials between the US and other countries. And there's the weakening dollar and thus higher gold. But of course, there are also other potential drivers as well. As we all know, there is ongoing geopolitical conflict in the Middle East, as well as in Eastern Europe. Now, I don't think that geopolitical risks are the big driver in gold because the headlines we've got the past week seem to suggest less geopolitical risk where there seems to be some negotiation between Israel and Iran for some kind of de-escalation.

现在，美元显著下跌，欧元再次突破1.1，接近一周尾声。而黄金似乎随着疲软的美元一同走高。目前，市场预测美联储将大幅降息。我认为，货币市场将其解读为美国和其他国家之间的利率差异缩小。这导致了美元走弱，而黄金价格上涨。当然，还有其他潜在驱动力。众所周知，中东和东欧正在发生地缘政治冲突。不过，我不认为地缘政治风险是推动黄金上涨的主要因素，因为过去一周的新闻似乎表明地缘政治风险有所减少，以色列和伊朗之间似乎正在进行某种缓和谈判。

So that would suggest less geopolitical tension unless, of course, someone knows something in the markets. Again, when it comes to geopolitics, if you are a big country, making a decision involves thousands of people. And so someone always knows and can act ahead in global markets like gold. So that is possible as well. Now, when it comes to monetary policy, we are definitely in a global rate cutting cycle. So it does make sense on that side for gold to rise. Global rate cutting cycle, easier monetary conditions. Monitoring metals like gold usually get a bit. Now, looking at the central banks, though, it's clear that over the past few months, at least according to official data, big buyers like China haven't been in the markets.

这表示地缘政治紧张局势可能减少，除非有市场中的人掌握特殊信息。再说到地缘政治，大国在做决策时需要成千上万的人参与。因此，总会有人提前得知消息并能在黄金等全球市场上行动。所以这种情况也是有可能的。现在，谈到货币政策，我们确实处于一个全球降息周期。这种情况下，黄金上涨是合理的。全球降息周期使得货币条件更加宽松。监控黄金等金属的价格通常会有所上升。不过，观察各国央行的动向，根据官方数据，最近几个月来像中国这样的大买家并未入市。

So it doesn't seem like this recent surge is driven by central bank buying. Now, one last possible story is that the market reacted violently because it did not like the economic proposals of vice-person Harris, which, as I noted earlier, almost always, always. These stack flations, shortages in higher prices, and maybe the market is reacting to that. I don't place a lot of weight on that, though. It seems too much of a stretch. One other thing that I'll note is that markets like gold are very heavily driven by trend followers. And so when they see momentum, when they see something is going up, the strategy for these guys is to buy.

所以，这次近期的涨幅似乎并不是由央行购买推动的。现在，还有一个可能的原因是，市场对副总统哈里斯的经济提案反应强烈，正如我之前提到的，这些提案几乎总是导致滞胀、物资短缺和价格上涨，市场可能对此作出反应。不过，我对这个解释并不太看重，感觉有点牵强。我要提到的另一件事情是，黄金等市场很大程度上受到趋势追随者的驱动。所以，当他们看到市场有上升的势头时，他们的策略就是买入。

And if you have gold in a very clear uptrend like that, you have a lot of these trend followers pile in, which makes the move go further to the upside. So a lot of possible explanations for gold. For me, again, I think the clearest, from my read, the clearest explanation is just a weaker dollar. So we'll see if that continues. Again, I think over the coming years, very positive on gold, but again, gold can be volatile. Okay, so that's all I prepared for this week. Thanks so much for tuning in. And remember to like and subscribe. And if you're interested in hearing my latest thoughts, check out my blog at fenguy.com.

如果你看到黄金呈现出非常明显的上升趋势，会有很多跟随趋势的投资者涌入，这会让上涨走势进一步扩大。所以关于黄金有很多可能的解释。对我来说，最清晰的解释就是美元走弱。我们拭目以待这种情况是否会继续。总的来说，未来几年我对黄金持非常乐观的态度，但需要注意的是，黄金价格可能会有波动。 好了，这就是我本周准备的全部内容。非常感谢您的收看。别忘了点赞和订阅。如果您有兴趣了解我的最新观点，可以访问我的博客fenguy.com。

Or if you're interested in learning more about markets, check out my online courses at centralbanking101.com. Talk to you guys next week.

或者如果你对了解市场有兴趣，可以看看我在centralbanking101.com上的网络课程。下周和大家再聊。