Trump'S Unexpected Win Led To Rising Inflation Expectations And Another Easing Of Opportunities Next Year.

What is the logic of the current round of inflation? Can the global policy focus shift from money to finance? Can we really stimulate inflation rebound? We may start from the three major economies of the United States, Europe and Japan to analyze the logic and feasibility of the re inflation.

In recent years, the central banks of the developed economies have acted on a small 2% inflation target. They struggled without success. After Trump was elected president of the United States this month, the market changed overnight, inflation expectations were rapidly warming, and the yields of treasury bonds soared sharply.

China: commodity prices are looking for the top, prices are rising and falling.

Stocks are picking up and commodity prices are looking for the top.

The short term stabilization of the current economic cycle is mainly reflected in the inventory cycle. At present, inventory of downstream property, passenger cars and household appliances has picked up.

If real estate sales and power generation growth continue to decline, they will soon be converted into passive replenishment stocks.

On the whole, the inventory cycle is coming to an end, and the supply and demand of commodities are gradually reversed, which means that the price of goods is near the top.

Inflation is short and long, and money is short and loose.

We believe that the current stagflation is a short-term phenomenon. Inflation has been in the middle and late stages, and inflation will fall again in the 1 quarter of 17, when inflation meets.

Correspondingly, the current currency is only tightening in the short term. With the economic inflation coming down after the 2 quarter of 17, there will be another loose opportunity.

U.S.A:

Enthusiasm is hard to enforce.

Trump won the accident and inflation expectations were heating up.

After winning Trump, the us long bond yields jumped 48BP in just 10 trading days, and stocks and commodities rose.

If Trump's policies can be implemented, it will indeed enhance short-term inflation.

For example, infrastructure investment and tax reduction can create economic demand. Trade protection and immigration policies will enhance the production cost of goods and services, and will boost short-term inflation.

Implementation is difficult and long-term efficiency is decreasing.

At present, the US fiscal space is relatively limited, and the budget and debt ceiling are restricted by Congress. Therefore, when Trump takes office to implement fiscal stimulus, we must first solve the problem of debt ceiling.

In the long run, the implementation of trade protection and immigration policies may lead to a decline in economic efficiency and a drag on inflation.

Therefore, the future implementation effect can not be as optimistic as the current market reaction.

Eurozone: instability is increasing, and finance is powerless.

The margin of inflation has improved but instability has increased.

Since the second half of 16 years, the recovery of oil prices has led to the improvement of the euro area's marginal inflation, but it is still at a low level.

The EU instability will increase in the future. Following the departure of Britain, the referendum on Italy's constitutional amendment has also failed. It is doubtful that Optima will be dominant in France, Holland and Germany next year's election. Political instability will drag the recovery and inflation up.

Relaxed effect is limited, financial strength is weak.

Monetary easing has limited stimulus to Europe, and negative interest rates make banking worse. So will Europe turn to fiscal stimulus?

The euro zone government debt rate has reached 92%, of which Greece is 176%, Italy is 135%, Portugal and Spain are over 100%.

The space is limited.

In addition, the EU requires that the deficit rate of Member States should not exceed 3%, and the government debt ratio will not exceed 60%. It is also very difficult to implement positive fiscal policies to stimulate the economy.

Japan: persistent deflation dilemma and weak monetary finance.

The flow trap continues and deflation is perplexed for a long time.

Since the 90s of last century, inflation in Japan has been almost half below zero and deflation has long been plagued by deflation.

After Japan's bubble economy, the balance sheet of enterprises and residents declined, and the banking industry was hit hard, and the bubble "sequela" continued.

Meanwhile, Japan's 15-64 year old population has fallen from 70% at the high point to 60% at present, which has also dragged down long-term economic growth.

Lack of power and limited financial space.

After the launch of QQE in 13 years, Japan's basic currency has increased by 2 times, but 86% of them have been returned to the central bank account again by commercial banks.

In the past five years, credit in Japanese construction, accommodation, wholesale and other industries has shrunk, and manufacturing and catering industries have grown by less than 3%. Japan has long been trapped in a liquidity trap, and monetary stimulus has no effect.

The Japanese government's debt rate is the highest in the major economies, and 24.4% of the central government expenditure is spent on debt repayment every year, with limited financial space.

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