Markets Weekly July 22

Hello, my friends. Today is July 22nd. My name is Joseph and this is Markets Weekly. This week we're going to talk about three things. First, we're going to go over what we learned from the bank earnings reports this past week. Banks, of course, have a lot of information as to what's happening in the economy, so it's definitely worth a listen. Secondly, we're going to talk about the prospect of inflation re-accelerating later on in the year due to ongoing wage increases. And lastly, let's talk a little bit about this interesting research done on the crypto wealth effect where researchers look at the explosion and crypto wealth and find how it's influencing the real economy.

大家好，我的朋友们。今天是7月22日。我叫约瑟夫，这是《市场周刊》。这周我们将讨论三个问题。首先，我们将回顾一下上周的银行盈利报告中所学到的内容。银行当然有很多有关经济状况的信息，所以值得听一听。其次，我们将讨论由于持续的工资增长，通胀在今年稍后可能会重新加速的前景。最后，让我们稍微谈谈关于加密财富效应的有趣研究，研究人员在其中观察了加密财富的爆发，并发现它如何影响实际经济。

Okay, starting with bank earnings. This past week we had all the mega banks announced their earnings as well as many regional banks. Now, banks have a lot of inside information as to what's going on in the economy. If you're a JPM or Bank of America, for example, you have millions of people who have accounts with you and millions of people who have credit cards with you. So, every day, you're looking at that data and you're getting a really good sense as to the health of the US consumer and the broader US economy.

好的，我们从银行收益开始讲。上周，所有大型银行以及许多区域银行都宣布了他们的收益。现在，银行拥有很多内部信息，了解经济状况。比如，如果你是摩根大通或美国银行，你有数百万人在你那里开立账户，还有数百万人在你那里持有信用卡。所以，你每天都在观察这些数据，对美国消费者和整个美国经济的健康状况有很好的了解。

Now, overall, and this is pretty consensus among all the big banks is that the US consumer is doing fine. So, the growth in spending year over year is moderating, but it seems to be normalizing to the pace that we saw pre-pandemic. So, over the past two years, obviously, people were flush with cash. They were buying a lot of stuff. Today, they're still spending, but they're spending at a moderating pace. So, it's normalizing. And part of that is because of the overall level of inflation has declined. For example, let's look at gasoline. Gasoline prices today are a lot lower than they are last year. So, if you're looking at the amount of money consumers spend on gasoline, well, that's going to be a lot less this year than last year. If we were in a recession, what you would really expect is for consumer spending to be declining as a negative, but it's not declining. It's just growing at a slower pace, a more normalized pace.

现在，总的来说，这在所有大银行之间达成了一致，即美国消费者的状况不错。因此，年度支出增长的速度正在逐渐降低，但似乎正在恢复到疫情前的正常水平。在过去两年中，人们明显有很多现金，在购买很多东西。而现在，他们仍在消费，但速度有所放缓。所以，这是正常化的过程。其中一部分原因是总体通货膨胀水平已经下降。例如，让我们看看汽油价格。今年的汽油价格比去年要低得多。因此，如果你关注消费者在汽油上的花费金额，那么今年的开销将比去年少很多。如果我们处于衰退中，你真正预期的是消费支出下降，而不是增长速度放缓，更趋于正常化。

Now, across the bank earnings, here are some of the things that I thought were most notable. Well, first off is that banks widely report that their loan growth is basically static or maybe marshaling, increasing by, let's say, 1% to 2% annual rates. And this is what you would expect as interest rates go higher. And indeed, it's the intention of the Fed. So, when the Fed raises interest rates, it's trying to stop or slow down bank credit duration. Because when you have more bank loans, what that means is that people have more money to spend and if people have more money to spend, that's more demand in the economy. And that makes the Fed's fight against inflation pretty difficult. When interest rates go higher, two things happen. One, the supply of bank loans declines. This is because banks, seeing that the interest rates are going higher, the economy is slowing. There are more wary of their borrowers having trouble repaying them. So, they are less willing to lend because of higher credit risk. The second thing that happens is, of course, borrowers looking at higher interest rates, they're less interested in borrowing. Say, someone who wanted to buy a home, but now looking at mortgage rates being 7%. Now, a little bit less willing to buy. So, both the supply of credit, bank credit contracts, and the demand for bank credit contracts. So, the overall growth in lending by banks slows down and we see that happening right now. And it's been happening for the past of actually six months since the late last year. So, that channel of monetary policy is working to slow the economy.

来看一下银行业的收益，下面是我觉得最值得注意的几点。首先是银行普遍报告称，他们的贷款增长基本上是静止的，或者可能是有所加强，年增长率大约在1%到2%之间。这是符合预期的，因为随着利率上升，这也是美联储的意图。当美联储提高利率时，它试图阻止或减缓银行信贷的持续时间。因为当有更多的银行贷款时，这意味着人们有更多的钱可以花费，而如果人们有更多的钱可以花费，这意味着经济中的需求增加。这让美联储对抗通胀变得更加困难。当利率上升时，会发生两件事。首先，银行贷款的供应减少。这是因为银行看到利率上升，经济在减缓，他们对借款人有还款困难更加担心。因此，他们不太愿意提供贷款，因为信用风险增加。第二件事是，当然，借款人面对较高的利率时，他们对借贷不太感兴趣。比如，有人想买房，但现在看到抵押贷款利率为7%，可能就不那么愿意购买了。因此，总体上，银行贷款增长放缓，我们现在看到这种情况正在发生。实际上，自去年年底以来的大约六个月以来，这一货币政策渠道一直在起到减缓经济增长的作用。

The second thing that I thought was noteworthy was that banks widely report that credit quality is good. So, when banks make a loan, they want to make sure that the loan is paid back. If there is some stress in their credit portfolio, what they would see is they wouldn't have a higher charge-offs and they would have higher allowances for losses. Now, both don't numbers are inching up higher for a wide range of reporting banks, but they're also rising from very low levels. So, again, what we're seeing is a normalization of credit quality to levels that were prevailing before 2020. So, overall, credit quality remains quite strong. Just it's normalizing off very, very, very benign levels to levels that prevailing before 2020 when actually credit clinicians were still very good.

我认为值得注意的第二件事是银行普遍报告称信用质量良好。因此，当银行发放贷款时，他们希望确保贷款能够被偿还。如果他们的信贷组合有一些压力，他们将会看到坏账率不会增加，而损失准备金会增加。目前，很多银行的这两个数字都在逐渐上升，但它们也是从非常低的水平上升。因此，我们所看到的是信用质量在趋于2020年之前的水平上的正常化。总体而言，信用质量仍然非常强劲，只是从非常非常非常宽松的水平回到了2020年之前信用危机仍然很好的水平。

Now, let's zoom out a little bit and think about what we've been seeing over the past several months. So, in March, there was a big panic in the banking sector and a lot of people were worried that we would have banking crises that would have a significant impact on the economy. And if you were following me back then, I told you then that that really is not in the cards and it's hard to see. And this latest crop of bank earnings, two quarters afterwards, continues to affirm that view. And, of course, the Fed has also been looking at their data and seeing the same thing. What happened in March does not seem to have had a big impact on the behavior of banks. We see tightening credit conditions, but that's what we would expect in a rate-hiking cycle. Anyway, one thing to note is that there seems to be a different impact on high-interest rates for the big banks and the smaller banks, where the smaller banks are having their profitability impact and a bit more due to rising deposit rates. And I write about that in my weekly piece on Monday.

现在，让我们放大一点，思考一下过去几个月我们所见到的情况。因此在3月份，银行业出现了一场大恐慌，很多人担心我们会面临银行危机，对经济产生重大影响。如果你当时有关注我的话，我告诉过你这种情况并不会发生，很难看到。而最新的银行收益也进一步确认了这种观点。当然，美联储也一直在观察他们的数据，得出了同样的结论。三月份发生的事情似乎并没有对银行的行为产生大的影响。我们看到信贷条件在收紧，但这是预料之中的加息周期。无论如何，一个需要注意的事情是，高利率对大银行和小银行似乎有不同的影响，小银行的盈利能力受到上升的存款利率的冲击更大。我将在本周一的周刊中详细介绍这个问题。

Now, let's talk about the second thing. And that is the prospect of inflation re-accelerating later on in the year. So, the framework that I use when I look at inflation is, inflation is prices rising, right? Let's say prices rising 5%, 6%, 7%. Now, usually, you would expect that if prices rise 5%, 6%, while people would not want to buy it anymore, right? Higher prices list demand, and so prices would have to come down. So, inflation can persist at relatively high levels when people can continue to afford higher price increases. Now, people can afford higher price increases if, for example, they're able to borrow money. Let's say mortgage risk is really low, but that's really not the case anymore. They can also continue to afford higher prices if they continue to have higher wealth. So, let's say the stock market continues to rise. They can sell their Nvidia stock and use that to finance higher consumption. And that seems to be still the case. The last way and the more common way that people can afford higher prices is if their wages continue to increase. So, let's say prices increase 5% overall year over year, but your wages are increasing also 5% overall year over year. So, you can still afford these higher prices. So, that's part of the reason why that the Fed is really intent on getting softness in the labor market as a strategy to get inflation under control. From their perspective, as long as wages continue to increase, say 5%, 6% year over year, then it's really hard for inflation to go back down to 2%. Now, they're struggling though against Titanic macroeconomic forces that we're beginning to see surface today.

现在，让我们来谈谈第二件事。那就是通胀在年底再次加速的前景。所以，我在看待通胀时使用的框架是，通胀意味着物价上涨，对吗？让我们假设物价上涨了5％，6％，7％。通常情况下，你会期望如果物价上涨了5％，6％，人们就不愿意购买了，对吗？更高的价格会降低需求，所以价格必须下降。因此，当人们能够继续承担更高的价格增长时，通胀可以持续保持相对较高的水平。例如，如果人们能够借钱，他们就能负担得起更高的价格增长。假设抵押风险非常低，但现在情况并非如此。他们还可以继续承担更高的价格，如果他们继续拥有更高的财富。假设股市继续上涨，他们可以卖掉他们的Nvidia股票，并用来进行更高的消费。这似乎仍然是事实。人们负担得起更高的价格的最后一种更常见的方式是他们的工资继续增加。所以，假设物价整体上年同比增长了5％，但你的工资也同比增长了5％，那么你仍然能够负担得起这些更高的价格。这就是为什么美联储非常努力地在努力调整劳动力市场，以控制通胀的原因之一。从他们的角度来看，只要工资继续增长，比如年同比增长5％，6％，那么通胀要回到2％就会非常困难。然而，他们正在与我们现在开始看到的庞大的宏观经济力量作斗争。

So, what do I mean by Titanic macroeconomic forces? These are the forces of demographics. So, zoom out. People had larger families for whole of history and starting in the 80s. They had smaller families, and we're seeing the results today. The prime working age population of the United States basically has been static since 2016. So, if your workforce isn't growing as much as it used to, then obviously, you're going to have less supply of labor, and that's going to lead to some structural labor scarcity, especially as the boomers are retiring. So, we've been seeing that play out over the past few years, and we're continuing to see it play out now. So, if you look in the news, there's been a lot of activity for strikes. So, we have UPS, who employs about 300,000 people on strike. We have a whole bunch of actors and writers in Hollywood on strike. Most recently, we had labor disputes with airlines that ended without, let's say, in the case of United, airline pilots getting raises of 30 to 40% over four years. So, we're seeing, because of these structural demographic factors, a big shift in bargaining power towards labor. And this is actually, I think, a good thing, because if you zoom out a little bit more, you see over the past few decades, even as we've become wealthier and wealthier as a country, the gains haven't been evenly distributed. Labor's share of national income has gradually declined, in large part, due to globalization. So, the entry of China into the global workforce through the World Trade Organization basically increases the supply of labor by a few hundred million laborers. So, obviously, if you increase the amount of workers in the economy, to that extent, labor prices are going to decline, and thus, the wages and labor's share of national income.

那么，我所说的泰坦尼克级宏观经济力量是指什么呢？这些力量来自人口统计数据。所以，我们要放大视角。历史上整个时期，以及从80年代开始，人们家庭规模逐渐减小，今天我们正在看到这些结果。美国的主要劳动年龄人口自2016年以来基本保持稳定。因此，如果你的劳动力增长没有像过去那样多，那么显然劳动力供应就会减少，这将导致一些结构性劳动力短缺，尤其是婴儿潮一代的退休。因此，过去几年我们一直看到这种情况的出现，而且现在仍在继续。所以，如果你看新闻，就会发现有很多罢工活动。比如说，联合包裹服务公司（UPS）有大约30万员工正在罢工。好莱坞的许多演员和编剧也在罢工。最近，航空公司也发生了劳资纠纷，最终以像联合航空公司的情况，航空飞行员在四年内获得了30%至40%的加薪而结束。因此，由于这些结构性的人口统计因素，我们看到了劳动力讨价还价能力的大幅转变。我认为这实际上是件好事，因为如果我们放大视角一点看，几十年来，即使我们国家越来越富有，收益并没有平均分配。劳动力在国民收入中的份额逐渐下降，这在很大程度上是由于全球化造成的。中国加入世界贸易组织，基本上增加了几亿劳动力的供应。显然，如果你增加经济中的工人数量，劳动力价格就会下降，因此工资和劳动力在国民收入中的份额也会下降。

But we're seeing that revert through demographics. And if that continues to play out, then that's a very different world. One, of course, is that wages will continue to grow since we're running out of people, and that makes inflation, I think, difficult to solve, since workers like to consume a larger share of their wages. If you give a rich person a lot of money, then you want to go and buy assets, so you get asset inflation, which is what we've been getting the past few decades.

但是我们通过人口统计数据看到了这一逆转现象。如果这种趋势继续下去，那将是一个非常不同的世界。首先，工资将继续增长，因为人口不足，这使得解决通胀问题变得困难，因为工人倾向于将工资的较大部分用于消费。如果你给一个富人很多钱，那么他们会去购买资产，这就导致了资产通胀，而这正是过去几十年间我们一直在面对的情况。

But if you give a lot of money to someone who is not as wealthy, maybe middle class, maybe blue-collar people, then they're going to spend more of it. That manifests in higher demand for goods and services, and that's more an inflationary. An interesting corollary to this is, of course, the problems of the past may not be the same problems we have in the economy in the future. So, in the past, the common problem was high unemployment. We would have economic downturns, where a lot of people would be out of work. Now, if we're heading into a world where labor is structurally scarce, that unemployment is not going to be as big a problem as it was in the past. We're going to have a persistent tailwind where people who want work will be able to find it. So, I think that's a good thing. I think we're just in the early innings of this big process.

但是，如果你给一个不那么富有的人很多钱，也许是中产阶级，也许是蓝领工人，那么他们会花更多的钱。这会导致对商品和服务的需求增加，这就更容易产生通货膨胀。有趣的是，过去的问题可能不会是我们未来经济所面临的问题。所以，在过去，普遍问题是高失业率。我们会遭遇经济衰退，很多人会失业。现在，如果我们正在进入一个劳动力结构稀缺的世界，失业将不再是像过去那样大的问题。想要工作的人将能够找到工作。所以，我认为这是一件好事。我认为我们只是这个重大过程的早期阶段。

Now, this labor problem is international. So, we see the same problem happening in the UK, for example, as well, and of course, in continental Europe. So, labor process are probably going to stay high for the foreseeable future, and that's going to change a lot of things.

现在，这个劳动问题是国际性的。所以，我们也可以在英国等地看到同样的问题发生，当然，在欧洲大陆也是如此。因此，劳动力成本可能会在可预见的未来保持高企，这将带来许多变化。

Now, the last thing that I want to talk about is the crypto wealth boom. So, as we all know, crypto prices have risen significantly over the past few years. Now, they're down Bitcoin, the price of Bitcoin, for example, is down from its highs, seen a couple years ago, but it's still significantly at $30,000, significantly higher than it was pre-pandemic. The interesting thing about this is that Bitcoin and all these other cryptocurrencies, they're decentralized. So, there's not actually a lot of good data on this. When the Fed is compiling reports on household wealth, for example, it doesn't include any of that crypto wealth. And overall, the crypto market cap is in excess of a trillion dollars. It's not only the United States, but a trillion dollars is a big chunk of money, and that's all absent from official data. And of course, if we suddenly have people becoming really wealthy off of crypto, that's going to have real economic impacts as well. Otherwise, known as the wealth effect, people have more money, more wealth, they go and monetize it and spend it on goods and services or other assets. It's kind of like winning the lottery.

现在，最后一件我想谈谈的是加密财富繁荣。众所周知，加密货币价格在过去几年里大幅上涨。现在，虽然从几年前的高点下跌了一些，但比如比特币的价格仍然显著达到了3万美元，比疫情前高出很多。有趣的是，比特币和其他加密货币都是去中心化的。因此，在这方面实际上没有太多可靠的数据。例如，当美联储编制家庭财富报告时，并不包括任何加密财富。而整个加密市值已经超过了1万亿美元。这不仅仅是美国，1万亿美元是一大笔钱，但在官方数据中却是缺失的。当然，如果我们突然有人通过加密财富变得非常富有，这也会对经济产生真实影响。这被称为财富效应，人们有更多的钱财，他们会花费在货物、服务或其他资产上。就像中彩票一样。

Now, we haven't had good data on this crypto impact on the real economy until now. So, a team of researchers basically got access to a confidential data set that has the bank account data of about 60 million people in the US. And they were able to track these transactions from these bank accounts, trying to pinpoint just how often do people participate in crypto based upon their transactions, sending money to let's say Coinbase or other crypto exchanges, Coinbase by far the largest, and seeing withdrawals from Coinbase to kind of have it sense us to who's participating in the crypto market and what do they do with their crypto gains.

现在，我们对加密货币对实体经济的影响一直没有很好的数据。因此，一支研究团队最近获得了一份保密数据集，其中包含约6000万美国人的银行账户数据。他们能够跟踪这些银行账户的交易情况，试图确定人们通过其交易参与加密货币的频率，比如向Coinbase或其他加密货币交易所发送资金，而Coinbase是迄今为止最大的交易所，并观察从Coinbase提取资金的情况，以此来了解谁参与了加密货币市场以及他们如何处理自己的加密货币收益。

And what they found was pretty interesting. Overall, people who dabble in crypto, they tend to be a higher income people. And they tend to think of crypto as just as part of a broader portfolio of assets. So, when they have huge crypto gains, they usually sell out of some of that crypto and rebalance into other assets, say stocks or real estate. One finding, so, be real mind, this is a finding economic findings. So, with a greater salt, but still interesting, is that they find that the wealth effect from crypto gains actually has a higher marginal propensity to consume than equity markets. So, they're estimating the marginal propensity to consume for crypto wealth to be able to say about 8%. So, if you have 8% in crypto gains, sorry, if you have $100 in crypto gains, maybe you spend about $8 of that on consumption. So, if you're thinking of someone with a trillion dollars in crypto gains overall, not all of that is in the US, that's some impact, some boost on the real economy. Another really interesting they found for context, the estimated wealth effect on by stocks is about 2% to 4%. So, it's much smaller than the crypto wealth effect on consumption.

他们发现的结果非常有趣。总体而言，涉足加密货币的人往往是高收入人群。他们通常将加密货币视为更广泛资产组合的一部分。因此，当他们获得巨额加密货币收益时，他们通常会出售部分加密货币，并重新配置到其他资产中，比如股票或房地产。其中一个经济学发现可能需要谨慎对待，但仍然很有趣，即他们发现与股票市场相比，加密货币收益所带来的财富效应实际上具有更高的消费边际倾向。他们估计加密货币财富的边际消费倾向大约为8%。因此，如果你在加密货币上获得了100美元的收益，那么你可能会将其中约8美元用于消费。所以，如果你考虑的是整体上获得了1万亿美元加密货币收益的人，尽管不是全部都在美国，但这对实体经济产生了一些影响和推动。另一个非常有趣的发现是，为了提供背景信息，预计股票带来的财富效应约为2%到4%，因此远小于加密货币对消费的财富效应。

The second thing they did, which was pretty interesting, is that they looked at the location. So, they have some location of data based on these accounts as to where all these crypto wealth, these people who benefited from the crypto wealth boom live and try to find a relationship between that and housing prices. What they found was it seems like people areas that had a lot of crypto wealth seem to also experience higher house price appreciation.

他们做的第二件有趣的事情是研究了地点。因此，他们根据这些账户中的一些位置信息，找到了加密财富受益者所居住的地方，并尝试找出与房价之间的关系。他们发现似乎加密财富较多的地区也经历了更高的房价增值。

So, you can think of it as someone who basically won the jackpot in crypto, selling out some of that money and taking it to buy a house. Now, again, it's really hard to know just how big the macroeconomic impact of this is, but it makes sense, right? It's like someone winning the lottery, they suddenly have a lot of money, and there's far enough to know that this stuff goes up a lot, it could go down a lot.

所以，你可以把它想象成一个人在加密货币中赢得了巨额奖金，然后卖掉一部分钱用来买房。现在，再次强调，真的很难知道这对宏观经济的影响有多大，但这是有道理的，对吧？就像有人中了彩票，他们突然有了很多钱，而且足够明智的人会知道这东西会大幅上涨，也可能大幅下跌。

So, maybe I should diversify it a little bit out of this and buy real estate instead. So, that seems to be the case. So, this is actually, I think part of a broader discussion on impact, on wealth, on the real economy. So, there's this wealth effect from crypto, but broadly speaking, obviously, the even bigger asset class is stocks, and there's many more people participating in the stock market.

那么，或许我应该稍微分散一下，不再投资加密货币，而是购买房地产。所以，这似乎是情况如此。所以，我认为这实际上是一个更广泛的讨论，涉及到影响、财富和实体经济。所以，加密货币带来了财富效应，但总体来说，股票是更大的资产类别，有更多的人参与股票市场。

And what we've seen over the past few months is a tremendous, tremendous rally in stocks, particularly tech stocks. So, a lot of people have a lot more money to spend, and that, again, is going to keep, I think, consumption, inflation, and asset price inflation, let's say, the spillover between the stock market and real estate market to be supported.

而在过去几个月中，我们看到股票市场，尤其是科技股市场出现了一次巨大的，巨大的上涨。因此，很多人有更多的钱可以花费，而这个情况会继续支持消费、通货膨胀以及资产价格的上涨，也就是股市和房地产市场之间的溢出效应。

So, from my perspective, as long as I see wage gains pretty strong and wealth remaining pretty supported, it's hard for me to see inflation coming down, see all these people continuing to have significant asset price information, appreciation, they can sell that by house or buy more goods and services, by fancy cars, and so forth.

所以，就我来看，只要工资增长保持较强势，财富也保持较高支撑力度，我很难看到通胀会下降，会有很多人持续获得重要资产价格信息，获得资产升值，这些人可以通过出售房产或购买更多商品和服务，如豪车等。

So, I think, for inflation to come down, the Fed really needs to engineer a significant haircut in asset prices, which we may eventually see. Things are taking a stumble now, but it's always hard to know.

所以我认为，为了控制通胀，美联储真正需要将资产价格做出显著的调整，这可能会在未来出现。目前情况不容乐观，但我们很难预测。

All right, so that's all I prepared for today. If you're liking what you see, please remember to like, subscribe. If you're interested in hearing more about my market commentary and having a better understanding of the financial system, check out my blog at FedGuy.com, my published weekly analysis on the markets. And if you're interested in learning more about understanding, markets in general, I recommend my course, Markets 101. You can find it at centralbanking101.com. It is basically the same course that I would teach the junior traders on the Fed's trading desk.

好的，今天我准备的就这些。如果你喜欢我所展示的内容，请记得点赞和订阅。如果你对听取更多关于市场评述并对金融系统有更好理解感兴趣，请访问我的博客FedGuy.com，那里有我在市场上每周发布的分析。如果你对了解市场有兴趣，我推荐我的课程《Markets 101》。你可以在centralbanking101.com找到它。这基本上就是我将会教联邦储备的交易台初级交易员的同一门课程。

All right, that's all for today. Thanks so much.

好的，今天就这些了。非常感谢。