Markets Weeklys December 7, 2024

Hello my friends, today is December 7th and this is Markets Weekly. I hope all of you had a wonderful Thanksgiving. Over the past two weeks, markets have been spectacular. It feels as if the S&P 500 could only go higher and on Friday we close that new all-time highs. So today let's talk about three things. First, are we in a state of euphoria? Many people are asking this because oftentimes euphoria comes right before the crash. So let's look at some common sentiment indicators to see where we are. Secondly, some of the biggest news in the past two weeks came from Europe where we had political turmoil in France. Let's take a look at what's happening over there and why there are no easy solutions. And lastly, this past week we got the latest non-farm payroll support and it's paid mixed. No better than expected picture on some extent, but ultimately a weakening labor market. So let's take a look at the data.

你好，我的朋友们，今天是12月7日，这里是《市场周报》。希望大家都度过了一个愉快的感恩节。过去两周，市场表现非常出色。感觉好像标普500指数只会持续上涨，我们在周五创下了历史新高。所以今天我们来聊聊三个话题。 首先，我们是否处于一种欣喜若狂的状态？许多人在问这个问题，因为欣喜若狂通常出现在市场崩盘之前。所以我们来看看一些常见的情绪指标，看看我们现在处于什么阶段。其次，过去两周的一些重大新闻来自欧洲，尤其是法国的政治动荡。我们来看看那边发生了什么，以及为什么没有简单的解决方案。最后，上周我们得到了最新的非农就业报告，结果有些复杂。某些方面并没有超出预期，整体来看，劳动力市场正在走弱。所以我们来看看这些数据。

Alright starting with sentiment. So many people are looking at the stock market just going higher and higher and it's reminding them of the 1920s. In the 1920s we had a tremendous, tremendous bull market that was of course followed by the great crash. So many people are trying to figure out is the stock market going crazy? Are we in a state of euphoria? So let's look at some sentiment indicators to see if we really are in a state of euphoria. Now my favorite sentiment indicator is price because if sentiment is positive then obviously price continues to go up because you still have people who are buying stocks at high prices and thinking that they will go even higher. Now if you take a step back, now we started the year around 4,700 in the S&P 500. Today we're around 6,000. That's a tremendous, tremendous surge and obviously shows very, very positive market sentiment. And we continue to go higher.

好的，我们先谈谈市场情绪。现在有很多人看到股票市场不断上涨，这让他们想起了1920年代的情景。当时，我们经历了一个巨大的牛市，随后迎来了大崩盘。因此，很多人想弄清楚，现在的股市是否正在疯狂运转？我们是不是正处于一种狂热状态？所以我们需要看看一些情绪指标，来判断我们是不是真的处于狂热之中。 我最喜欢的情绪指标是价格，因为如果市场情绪积极，价格自然会上涨，因为仍然有人愿意在高价购买股票，认为价格将会更高。如果我们退一步来看，今年初标准普尔500指数大约在4700点，而今天大约在6000点。这是一次巨大的上涨，明显显示出非常积极的市场情绪，而且我们还在继续攀升。

So looking at price it's very, very hard to come to any other conclusion that we are in the bull market and sentiment is very, very positive. The way to look at sentiment is through surveys. So a very common way is simply to survey institutional investors. Do you think the equity market, are you a bull? Are you a bear? Are you neutral? Now looking at one of the more popular surveys you can see that obviously at the institutional investor community there are many bulls. Now even though, yet by plurality there are more bulls, it's not historically extreme. It is historically elevated but not historically extreme.

看价格，很难得出其他结论，除了我们现在处于牛市当中，同时市场情绪非常积极。评估市场情绪的方式之一是通过调查，所以一种常见的方法是对机构投资者进行调查。你觉得股市怎么样，你是看涨还是看跌，亦或持中立态度？现在，查看其中一个较受欢迎的调查，你可以明显看到在机构投资者群体中看涨的人很多。虽然多数人看涨，但这并未达到历史上极端的水平。不过，从历史角度来看，目前的看涨情绪确实偏高。

So by this measure, yes, sentiment is positive but not euphoric. Another way to try to measure sentiment is simply to look at equity flows. Are a lot of people pouring money into the equity market? Now looking at the most recent fund flow data, it looks like there was a tremendous, tremendous surge of cash into US equities in November. Now that amount of inflows really stands out when you take a look, take a step back and look at the inflows throughout the year. It looks like the outcome of the presidential election related and leash some animal spirits. What at least reduced some uncertainty and made a lot more people comfortable in putting their money into US equities.

根据这种衡量标准，是的，目前市场情绪是积极的，但并没有达到狂热的程度。另一种衡量市场情绪的方法是观察股市资金流动。有很多人正在往股市注入资金吗？查看最近的资金流动数据，11月份美国股市的现金流入出现了非常显著的激增。当你回过头来看全年资金流入时，这一流入量尤其引人注目。看起来，这种情况与总统选举的结果有关，释放了一些投资者的“动物精神”，或者至少减少了一些不确定性，让更多人愿意将资金投入美国股市。

Another survey is not a survey to institutional investors but to the general consumer. Now consumer sentiment is not directly related to the stock market though it's not a direct survey on the stock market. Looking at measures of consumer confidence, we also see consumer confidence taking higher. Looking beneath the surface, you do get the sense that there is a strong partisanship bias where Republicans are feeling better and Democrats less so but that's something that happens at every presidential election cycle. So it's not out of the ordinary. Overall though, it does seem like consumer confidence is higher.

另一项调查不是针对机构投资者，而是针对普通消费者。现在消费者情绪虽然与股市没有直接关系，但这并不是一项直接关于股市的调查。观察消费者信心指标，我们也看到消费者信心有所上升。从深层次来看，你会感受到一种强烈的党派偏见，共和党人感觉更好，而民主党人则不那么乐观，但这是每次总统选举周期都会发生的事情。所以这并不奇怪。总体而言，消费者信心似乎是有所提高的。

Now one other really important sentiment indicator is the amount of leverage in equities. Now in the 1920s when we had the roaring 20s, there was tremendous amounts of people borrowing and investing in the stock market. So margin debt was very high. At that time, interest in margin loans were as high as 12% much higher than the effects of the stock market. It's a little bit harder to get a good measure on leverage in the financial market because people don't really borrow on margin as commonly as they used to and that margin debt data is not as easily accessible. What seems much more common today is to speculate using options.

现在，另一个非常重要的情绪指标是股票市场中的杠杆水平。在1920年代，也就是咆哮的二十年代，许多人通过借款来投资股市，因此当时的保证金债务非常高。那时，保证金贷款的利率高达12%，远远高于股市的回报。如今，由于人们不像过去那样普遍利用保证金进行借款，因此在金融市场中衡量杠杆水平变得更加困难，而且保证金债务的数据也不易获取。如今，更常见的情况似乎是使用期权进行投机。

So when you're looking at for example some of the more frothy tech stocks, you'll notice that the implied value for co-options tends to be very elevated. Now that is an obvious sign that there is tremendous speculative interest. Looking at co-options for the S&P 500 features, what really stands out to me is that implied value on co-options is really low and that tells me there's not a lot of speculative interest at least through co-options as a way of gaining leverage which in my view if you are an institution investor, that would be a more direct way of doing it and at the moment it looks like a pretty cheap way of doing it too. So that measure is clearly suggesting that there's not a lot of euphoria in the market. So taking a step back and looking at all these different indicators, my sense is that obviously sentiment is very positive but not euphoric. Now to be clear, the market can still go up and markets can still go down. We have to look at many, many factors at the try to make our best judgment. But looking at sentiment alone, it doesn't seem like markets are euphoric, at least not at the moment. Definitely very positive though.

当你观察一些比较泡沫化的科技股时，你会注意到其期权的隐含价值通常很高。这明显表明市场上有大量的投机兴趣。而当我们观察标普500指数期权时，我发现隐含价值非常低，这表明至少通过期权进行杠杆投机的兴趣不大。在我看来，如果你是机构投资者，这会是更直接的操作方式，而且当前看起来也是相对便宜的方式。这一指标明显显示市场上并没有太多的狂热情绪。 回顾这些不同的指标，我的感觉是：显然市场情绪很正面，但没有达到狂热的程度。需要明确的是，市场依然可能上涨或下跌。我们需要考虑许多因素来做出最佳判断。但单从市场情绪来看，目前似乎没有达到狂热，不过肯定是非常正面的。

The second thing that I want to talk about is what's happening in Europe. So again, we've talked about this before but Francis had some political difficulties in recent months. President Maconova there called for snap elections not too long ago thinking, well I'm actually not really sure what he was thinking but definitely did not like the outcome. What happened was that he ended up with a parliament that was not in his favor. So the election results led to a very fragmented parliamentary situation where on the one hand you had about a third of the people supporting right-leaning parties, a third of the people who were establishment and a third of the people who were left-leaning. And so that made it very difficult for President Macon to govern. So he recently nominated a prime minister and the prime minister came up with a plan and the plan was to rein in some deficit spending because France has a very large budget deficit. Now that was very unpopular because both the right-leaning parties and the left-leaning parties and friends are populist. And so they don't like cutting the deficit. They want to be able to help, well at least give more money to the common person. And so that budget did not work and that led to a result of a no-confidence motion that passed. And so it looks like the government is going to, oh, has fallen. And that leads us to a point of limbo where President Macon has nominated a new prime minister who has to come up with a new budget that everyone can accept, which would be difficult. Now that has led to some financial implications where you can see that the foreign rate for France, so French, as French sovereign debt yields, as a spread to German yields has widened recently. Now it's come back a little, but if you take a step back, the trend really seems to be very clear. A white name where France, it seems like the market is having more and more concerns about France's fiscal situation. Now this is a problem that is not, that has been actually a long time coming and is not unique to France.

第二件我要谈的事情是欧洲的情况。我们之前也提到过，弗朗索瓦在最近几个月面临一些政治困难。那里的马科诺瓦总统不久前呼吁进行紧急选举，我不太清楚他当时的想法，但显然他对选举结果不满意。选举导致议会非常分裂，约三分之一的人支持右翼政党，三分之一是建制派，还有三分之一是左翼政党。这让马科诺瓦总统很难治理国家。他最近任命了一位总理，总理提出了一个计划，试图控制财政赤字，因为法国的预算赤字很大。但这计划非常不受欢迎，因为法国的右翼和左翼政党都是民粹主义者，他们不喜欢削减赤字，他们希望能给普通人更多的钱。因此，预算方案失败了，导致通过了一项不信任动议，政府似乎已经垮台。目前，马科诺瓦总统任命了一位新总理，需制定一个被各方接受的新预算，这将非常困难。 这产生了一些金融影响，比如法国的外汇情况，即法国国债收益率相对于德国收益率的差距最近有所扩大，尽管稍有回落，但整体趋势很明显。市场似乎越来越担心法国的财政状况。这是一个已经积累很久的问题，并不是法国独有的。

Now taking a step back, you can see that France has actually had a fiscal deficit for a really long time and so its debt has been growing. The way the political system is in all basically Western countries, including the US, is that politicians step up and they basically bribe you to vote for them. Well for me, and I'll give you more benefits. And France is obviously well known for having a very generous welfare system. So how do you pay for all these benefits? Well it's actually, if you are like the US, that's really never a problem because at the end of the day you are monetary sovereign. You can pay for it by printing more treasuries or which again, any of the yields are too high, you can always at the end of the day have your central bank, the Fed buy it. But when you are in Euroland, it's kind of a different situation because being a part of the European Union, you promise to have some limits on your deficit and you are not a monetary citizen sovereign, you don't control the ECB. So in some sense, you are kind of like under the gold standard. So you can't really easily just kind of print your way out of this mess. So how do you make those promises then?

回过头来看，你会发现法国实际上已经有很长时间的财政赤字，这导致债务不断增加。在包括美国在内的基本所有西方国家中，政治系统都是这样：政客们上台，通过给你许诺更多的福利来“买”你的选票。法国以其慷慨的福利制度闻名。那么，如何支付这些福利呢？对于美国这样的国家，这通常不是问题，因为最终你是货币主权国家，可以通过发行更多国债来支付；如果利率过高，你可以让你的中央银行，比如美联储，购买这些国债。但在欧元区，情况有所不同，因为作为欧盟的一员，你承诺对财政赤字有所限制，并且你不是货币主权国家，不控制欧洲央行，从某种意义上说，你有点像处在金本位制下，所以无法通过简单地“印钞”来走出困境。那么，你该如何兑现这些承诺呢？

Well another common way is to have growth. And so for example, if you think about this in real terms, you promise a whole bunch of people a certain amount of goods and services. Now where do you get those goods and services? Well one way is to just tax. So take more from the people from one group and give to another. And that's kind of what they've been doing over the past few decades. If you look at a graph of marginal tax rates in France and you're more generally, you'll notice that they're very high. And to be clear, these marginal rates hit, these marginal rates come into force at pretty low income thresholds compared to the US. In some countries, you can pay the highest marginal rate at below 100,000 euros. In some countries, around 200 and in some countries, around 300,000. So that is much lower than the US, where the highest marginal tax rates, about 37% hit at around 600,000. And so they've been doing that for some time, just raising taxes to take goods and services from one group of people to pay promises that they made to other groups. But obviously you can't keep doing this because ultimately, marginal tax rates become so high that it actually impacts reduces the motivation to invest into work.

另一种常见的方法是通过增长实现这一点。例如，如果从实际角度来考虑，你向很多人承诺提供一定数量的商品和服务。那么，这些商品和服务从哪里来呢？一种方法是征税，也就是从一个群体中征收更多，然后转移给另一个群体。在过去的几十年里，他们基本上就是这样做的。 如果你查看法国的边际税率图表，更普遍地看，会注意到这些税率非常高。需要说明的是，与美国相比，这些边际税率在相对较低的收入门槛下就开始生效。在某些国家，收入不到10万欧元时就需要支付最高的边际税率，而在某些国家则在20万欧元左右，还有一些国家则在30万欧元左右。这比美国要低得多，美国的最高边际税率约为37%，在大约60万美元的收入水平下生效。 他们已经这么做了一段时间，通过提高税收，从一个群体中获取商品和服务以支付对另一个群体的承诺。但是很明显，这种方式不可持续，因为最终边际税率会变得如此之高，以至于降低人们工作的投资和动力。

So another way that you can meet these promises is to grow. And that's the place where there's been a lot of trouble in Euroland. So as we all know, growth in Euroland has been low, in large part because of low productivity. Productivity is the ability to create more goods and services out of the same amount of inputs. Now productivity, looking at Eurozone compared to the US, is really different. Now productivity in the US has continued to grow in Europe really not so much. The biggest difference is technology. Europe kind of missed the technological revolution we had in during the tech boom. And it seems like it's about to miss out on the AI tech boom. There's some really interesting work by research at MIT looking at the amount of new companies started over the past 50 years that have a market cap of greater than 10 billion. Now on the left hand side, you can see these are the companies that fit that profile in the US. On the right hand side, these are companies that fit that profile in Euroland. So you can see that Europe really is not innovating as much as the US and that's hurting their productivity, which makes it very difficult for them to pay off their promises using an expanding pie. So going back to the situation in France and soon other Euro countries, how are you going to pay all your promises if you can't print and you can't tax and you can't grow? So this is a very, very, very difficult situation and there are no easy answers. And that suggests a very, very pessimistic outlook for Euroland in the coming years.

另一种履行这些承诺的方法是促进经济增长。而在欧元区，这方面一直存在很多问题。我们都知道，欧元区的增长一直较低，主要原因是生产率低。生产率指的是用同样数量的投入创造出更多商品和服务的能力。从生产率来看，欧元区和美国的情况有很大差异。美国的生产率一直在增长，而欧洲基本没有太大变化。最大的区别就在于技术。欧洲在科技热潮期间没能赶上技术革命，现在似乎又要错过人工智能技术的热潮。麻省理工学院的研究对过去50年新成立且市值超过100亿的公司进行了有趣的研究。在左边，你可以看到符合这种情况的美国公司；在右边，是符合这种情况的欧元区公司。可以看出，欧洲的创新远不如美国，这损害了他们的生产率，使得他们很难通过扩大经济来履行承诺。再回到法国以及很快其它欧元国家的情况，你要如何在不能印钞、不能加税、又无法实现增长的情况下，支付所有承诺呢？这确实是一个非常困难的局面，且没有简单的解决方案。这表明未来几年对欧元区来说，前景非常不乐观。

Now we see the Euro has depreciated steadily over the past few months. Now we're at around 1.05 and it looks like the ECB is going to continue to cut rates. Potentially the Jumbo 50 basis might cut in December. And so that looks like it's going to continue when there are really no easy solutions. I think it's not sure how they're going to get out of this. Okay.

现在我们看到欧元在过去几个月中一直在稳步贬值。目前汇率大约在1.05左右，而且欧洲央行似乎还会继续降息。可能在12月份还会有一次大幅度的降息，可能达到50个基点。因此，看起来这种情况会持续下去，而没有什么简单的解决办法。我认为目前还不清楚他们将如何摆脱这一困境。好的。

The last thing that I want to talk about is the most recent labor market data. So right now the Fed is really in focus about what's happening in the labor market. As we discussed before, a chair Powell doesn't feel as concerned about inflation anymore. He's really focused on labor. So how is the labor market doing? This past week, we got the latest in non-form payrolls report and it's painting a bit of a mixed picture. Now as usual, let's go for this by looking at the details. Well, first off, on the headline basis, the amount of number of jobs created was higher than expected. So that's good. But looking below though, you get kind of a mixed sense. Now average hourly earnings, 0.4 month-of-a-month higher than expected. But here's the thing, the unemployment rate ticked higher to 4.2%.

我最后想谈的就是最近的劳动力市场数据。目前，美联储非常关注劳动力市场的状况。正如我们之前讨论的，主席鲍威尔对通胀的担忧减轻了，他现在非常注重劳动力市场。那么，劳动力市场情况如何呢？上周发布的非农就业报告显示了一个有些复杂的情况。首先，从总体上看，新增就业岗位数高于预期，这是个好消息。但深入分析后，情况有些复杂。平均小时收入比预期高出0.4%，这是一个积极信号。但问题是，失业率上升到了4.2%。

And if you really go up to the third decimal place, it was actually very, very close, rounding to 4.3%. And something of interest is also the labor force participation rate declined a bit. So you have fewer people looking for jobs. So all in all, this is kind of painting a picture where the labor market is very clearly weakening. You got fewer people participating. And then you have fewer people looking for jobs. The unemployment rate is rising. So I think the market took a look at this and was marginally, marginally pricing and a little bit more of a probability of cuts.

如果你精确到小数点后三位，其实结果非常接近，四舍五入后是4.3%。有趣的是，劳动参与率也有所下降，也就是找工作的人变少了。总的来说，这种情况表明劳动力市场明显在走弱。参与劳动的人减少，找工作的人也减少，失业率在上升。所以，我认为市场因此稍微考虑了一下，给降息的可能性加了一点点权重。

And I think that is the right solution. But we can also look at other survey data to get a sense of what's happening in the labor market. Looking at the common Fed-age book data, for example, where the various regional Fed survey are wide web contracts to get a sense of where they are, they're coming up with a conclusion that the labor market is kind of muddling through. There's not a lot of hiring and there's not a lot of firing. So it's kind of a stagnant position right now, which I think would be consistent with what we see.

我认为这是一个正确的解决方案。但我们也可以查看其他调查数据，以了解劳动力市场的情况。例如，查看常见的美联储经济状况报告数据，通过这些由多个地区的美联储调查汇总的数据，我们可以了解各地的经济状况。目前，他们得出的结论是，劳动力市场有些停滞不前：没有太多的招聘，也没有太多的裁员。所以现在的情况有点停滞不前，这与我们所见的情况一致。

And they're just kind of loop-worm job growth data. Now looking at other survey data, like the ISM services, you'll find that, yes, on average, because the employment component of the ISM services is above 50, that on the margins, there is some growth in employment, but it's not super strong. That is to say, only small amount of companies are reporting that they are increasing their employment on net. So overall, I think it makes a lot of sense for the Fed to be more mindful of the labor market. And we could simply be in a slow patch right now as we have the data could be lagging.

它们只是一些缓慢增长的就业数据。现在来看其他调查数据，比如ISM服务业指数，你会发现，平均来看，因为ISM服务业的就业成分指数高于50，这表明就业在边际上有一些增长，但并不是很强劲。也就是说，只有少数公司报告说它们的净就业在增加。所以总体来说，我认为美联储更加关注劳动力市场是很有意义的。而且由于数据可能存在滞后性，我们现在可能正处于经济增长缓慢的时期。

After all, we have this election, positive market sentiment, perhaps the market is leading, and maybe that will translate to more job growth. But I'm thinking that the labor market is probably going to weaken faster than the market expects, in large part, looking at what's happening in other countries that have surges in migration. I think that's what I will write about in my post this week. Okay, so next week, we're going to have a whole bunch of central bank meetings. And soon, we will have the Fed. And then it's really going to be the holiday season. And at that time, I will offer my markets outlook for 2025.

毕竟，我们有这次选举，积极的市场情绪，市场可能在引领，或许这会转化为更多的就业增长。但我认为劳动力市场可能会比市场预期更快疲软，主要是因为观察到那些移民激增的国家正在发生的情况。我想我本周的文章会写这个话题。好的，下周我们将迎来一系列的央行会议。不久之后，美国联邦储备委员会也会召开会议，然后真正的假日季就要来了。到那时，我会提供我对2025年市场的展望。

All right, talk to you all soon.

好的，马上再聊。