The world’s largest economy remained in a precarious position in the second quarter, a government report is projected to show, adding to mounting recessionary angst just as the Federal Reserve leans in harder against inflation. US gross domestic product -- the sum of goods and services produced -- is forecast to have risen an annualized 0.5% during the April-June period, according to the median estimate in a Bloomberg survey of economists. Following the 1.6% rate of decline in the prior quarter, the economy’s first-half performance would be the worst of the pandemic recovery. Their challenge in tightening policy is to avoid overdoing it and nudging the economy into a downturn. A number of economists, in addition to the Atlanta Fed’s GDPNow estimate, forecast a second quarterly decline in GDP that would fit the technical definition of a recession. 

함의: 미국 2분기 경제성장률은 연환산 0.5%로 예상되며, 1분기 1.6% 성장에 이어 대확산 이후 최악의 지표로 기술적 경기침체에 해당함.

In the past two weeks, Peter Brotman found himself evaluating two multimillion-dollar car collections offered for private sale. Each collection—one with more than a dozen significant Porsches, the other featuring a cache of heavy hitter Ferraris—represents a massive potential transaction on an ultra-rare group of cars that were so undercover that until recently, even Brotman himself wasn’t sure they existed. But if you ask the Philadelphia- and Los Angeles-based specialist whether he worries that the sales’ timing coincide with some precipitous drops in the stock market, he’ll smile. “These are not people who make decisions based on the stock market,” he says. Proverbial wisdom dictates that as market values tank, many investors seek the perceived stability of such commodities as gold. But many of the world’s wealthiest choose instead to sink money into tangibles, including cars. “Historically, when markets are down, that tends to be when money starts to flow into alternative assets, such as collector cars,” says Michael Caimano, a car specialist with RM Sotheby’s. “People see the disappointing performance of the stock market as a reason—or an excuse—to pour more money into cars,” wrote John Wiley, a Hagerty spokesperson, last month. There are levels to this mentality, though. Values are starting to plateau for the sub-million-dollar vintage sports cars that enjoyed a sales bonanza during the novel coronavirus pandemic, when records for both pricing and volume were set on such online platforms as Bring a Trailer and Market by Bonhams. But people shopping for blue chip items such as 1950s Ferraris, Mercedes-Benz Gullwings, and race cars from Jaguar and Porsche exist blissfully outside that field. They are simply not susceptible to market volatility. “In cars under a quarter of a million dollars, that's starting to correct a little bit. The COVID bump, if you will, has come off a little bit,” says Stephen Serio, a Boston-based broker of rare European vehicles. “But the markets don't mean a thing to anybody that can stroke a check for a $5 million or $10 million car.”

함의: 역사적으로 불황에 접어들 때 시장 하락에 전혀 영향을 받지 않는 막대한 부를 소유한 사람들은 희소한 가치를 지닌 올드카 수집에 더 많은 돈을 투입함.

This 1937 Mercedes-Benz 540 K Special Roadster—to be offered by RM Sotheby’s in Monterey, Calif., in August—is expected to be worth up to $12 million. 

The pandemic has put unprecedented strain on global supply chains -– and also on the workers who’ve kept those systems running under tough conditions. It looks like many of them have had enough. A surge in strikes and other labor protests is threatening industries all over the world, and especially the ones that involve moving goods, people and energy around. From railway and port workers in the US to natural-gas fields in Australia and truck drivers in Peru, employees are demanding a better deal as inflation eats into their wages. Precisely because their work is so crucial to the world economy right now –- with supply chains still fragile and job markets tight –- those workers have leverage at the bargaining table. Any disruptions caused by labor disputes could add to the shortages and soaring prices that threaten to trigger recessions.

함의: 인플레이션이 잠식해버린 임금으로 인해 더 나은 조건을 요구하는 노동자들의 파업과 시위가 증가하고 있으며, 이런 일련의 움직임이 침체를 더 가속화 시킬 수 있음.

China issued strong private warnings to the US government about a planned trip to Taiwan by House Speaker Nancy Pelosi, which included a possible military response, the Financial Times reported. The warnings were much stronger than those made previously when China wasn’t pleased with US policies and actions related to Taipei, the paper said, citing unidentified people familiar with the issue. China’s foreign ministry earlier this week officially vowed to take a “resolute and strong” response to any Taiwan visit by Pelosi, which was reported to be next month. Her trip would be the first by a House speaker to Taipei since 1997. Pelosi’s office didn’t respond to a request from the Financial Times for comment about whether she might abandon her trip. Beijing routinely responds angrily to countries that deal directly with Taiwan, which China claims as part of its territory. President Joe Biden also raised doubts about whether the visit would go ahead, saying Wednesday that the military thinks it’s “not a good idea right now.”

함의: 1997년 이후 미국 하원 의장의 대만 첫 방문이 다음 달로 예정, 중국은 군사적 대응을 포함할 수 있다며 강력한 반발을 했음.

Vladimir Putin’s invasion of Ukraine has reached the five-month mark. Outrage was swift after Moscow struck Odesa’s seaport on Saturday, less than 24 hours after signing an agreement to guarantee the safe transit of Ukrainian grain exports. In its first response, Russia said the strike had targeted “military infrastructure.” The US said the cruise-missile strike “casts serious doubt” on Russia’s commitment to the accord it co-signed, a deal that was brokered by Turkey and the UN after two months of talks. UK Foreign Secretary Liz Truss said the “appalling” strike showed the need for “a better way” of getting grain out of Ukraine. 

함의: 두 달간의 노력 끝에 맺은 협정을 24시간도 되지 않아 깬 러시아의 회신은, 군사 시설만 타겟으로 했다는 것임.

Relief, but still not clearly out of the FCI loop. For much of this year, the key dynamic in markets has been the relentless tightening in financial conditions – delivered either through higher rates as the market focused on the inflation overshoot, or through lower equities/wider spreads as recession risks built, and sometimes both. Periods of relief in growth or financial conditions have essentially sowed the seeds of their own demise, given the ongoing challenge of bringing inflation lower. While that basic picture has not changed much, market focus over the past six weeks shifted more squarely from inflation to growth risk as we previewed in our last Market Views: cyclical equities and currencies have moved lower, the Dollar has surged stronger and market inflation pricing has dropped sharply along with lower oil prices. As a result, the near-term asymmetry has shifted towards pricing relief from imminent recession risk, a process that has already begun over the last week. The recent drop in energy prices, and signs that some broader goods price relief may lie ahead, are providing welcome positive news on the supply side at least for now. Although we think the market has swung too hard towards imminent recession fears, we think relief from those fears will eventually set the stage for a return to higher yields and commodity prices. To move out of the FCI loop that has defined the last six months and achieve a sustained trough in risk assets will probably require more convincing evidence of a peak in underlying inflation that allows the market to be confident about the limits of the Fed hiking cycle.

보고서: 투자자들의 우려는 물가 공포에서 성장 공포로 가파르게 이동했고, 금융환경지표가 악화 상태에서 벗어나려면, 적어도 인플레이션 완화에 따른 중앙은행의 감속이 확인되어야 할 것임. (Goldman Sachs - Relief, but no green light)

"The best preparation for tomorrow is doing your best today."

- H Jackson Brown Jr

Treasury Secretary Janet Yellen expressed confidence in the Federal Reserve’s fight against inflation and said she doesn’t see any sign that the US economy is in a broad recession. “We’re likely to see some slowing of job creation,” Yellen said on NBC’s “Meet the Press” on Sunday. “I don’t think that that’s a recession. A recession is broad-based weakness in the economy. We’re not seeing that now.”. With US consumer prices rising at the fastest rate in four decades, a growing number of analysts say it will take a recession and higher joblessness to ease price pressures significantly. The Federal Reserve raised rates in June by the most since 1994 and is expected to approve another 75 basis-point hike this week. Inflation is “way too high,” Yellen said, while renewing the Biden administration’s argument that it’s also high in many other advanced economies. “The Fed is charged with putting in place policies that will bring inflation down,” said Yellen, a former Fed chair. “And I expect them to be successful.”

함의: 옐런은 고용 창출이 다소 둔화 될 수 있으나 전방위적 부진이라 할 수 있는 경기침체의 신호는 보이지 않으며, 중앙은행은 물가를 통제해야 하고 그럴 수 있길 바란다고 함.

The won looks set to extend declines from its recent 13-year low as South Korea’s trade balance worsens and foreign investors pull money out of the nation’s stock market. Repeated interest-rate hikes by the Bank of Korea haven’t been enough to stem the rot, with the won dropping about 9% this year as global investors shift into dollar assets. It’s among Asia’s worst performers as investors increasingly focus on the trade deficit, which reached record $10 billion in the six months through June. Bank of America Corp. strategists including Claudio Piron see the currency weakening around another 3% from present levels to 1,350 per US dollar by year-end. Citigroup Inc. economist Jin-Wook Kim projects an even faster depreciation to 1,350 within three months.

함의: 무역수지 적자와 외국인 자금이탈로 13년래 최저로 절하 된 달러 대비 원화가치에 대해 BofA는 연말까지, Citi는 3개월래 1,350원으로 추가 절하 될 것으로 봄.

Investors are skeptical that the Federal Reserve can tame the worst inflation in four decades without driving the economy into a recession. That’s bad news for Americans, who face the prospect of a downturn as their bills for food, rent and fuel swell. But to bond investors hit by deep losses this year, it may mean any further pain will be short-lived, as a recession will spark the US central bank to cut rates next year. That’s according to the results of the latest MLIV Pulse survey. Over 60% of 1,343 respondents in the survey said there’s a low or zero probability that the US central bank can rein in consumer-price pressures without causing an economic contraction. The survey was conducted July 18-22 and included retail and professional investors.

함의: 설문 조사에 따르면, 중앙은행이 경기수축 없이 인플레이션을 통제할 수 있을 확률은 매우 낮거나 아예 없다고 응답한 비율이 60%에 달함.

The most educated generation in China’s history was supposed to blaze a trail towards a more innovative and technologically advanced economy. Instead, about 15 million young people are estimated to be jobless, and many are lowering their ambitions. A perfect storm of factors has propelled unemployment among 16- to 24-year-old urbanites to a record 19.3%, more than twice the comparable rate in the US. The government’s hardline coronavirus strategy has led to layoffs, while its regulatory crackdown on real estate and education companies has hit the private sector. At the same time, a record number of college and vocational school graduates—some 12 million—are entering the job market this summer. This highly educated cohort has intensified a mismatch between available roles and jobseekers’ expectations. The result is an increasingly disillusioned young population losing faith in private companies and willing to accept lower pay in the state sector. If the trend continues, growth in the world’s second-largest economy stands to suffer. The sheer number of jobless under-25s amounts to a 2% to 3% reduction in China’s workforce, and fewer workers means lower gross domestic product. Unemployment and underemployment also continue to impact salaries for years—a 2020 review of studies reported a 3.5% reduction in wages among those who had experienced unemployment five years earlier.

함의: 역사적 수준의 고학력 젊은이가 이례적 실업을 겪으며 민간기업에서의 도전을 회피하고 더 낮은 임금의 정부 소유 기업으로 진입하려 하면서 중국 노동시장의 불균형과 성장동력 훼손이 우려 됨.

"Boys, be ambitious!"

AUD/JPY looks too high in the face of a slowing global economy. OECD’s leading indicator has been a useful indicator in the past 15 years not only for the group’s economies but also for Aussie-yen, which is sensitive to ups and downs of investor risk sentiment. Signals from the gauge that growth momentum had either started to ease or pick up roughly coincided with changes in the direction of AUD/JPY in 2007, 2009, 2011, 2012, 2015, 2016 and late 2017. But this time around, the pair has been rising despite a steady decline in the leading indicator since July last year. Australia was the biggest provider of coal and gas for Japan in the fiscal year ended March 31 as Japan relied on them for electricity generation. This resource demand may continue to help AUD/JPY defy downward pressures on global growth for a little while, but a growth slowdown should eventually reduce commodity prices, cut Japan’s import bills and drive down AUD/JPY.

함의: 오즈는 투자자의 위험에 대한 선호/회피 지표로 훌륭했고, OECD 선행지수와 궤를 같이 했지만, 일본의 에너지가 전력에만 의존하며 생긴 수요에 의해 성장 둔화에도 불구 강세로 왜곡 된 폭이 큼.