Markets Weekly September 9, 2023

Hello my friends, today is September 9th, my name is Joseph and this is Markets Weekly. This week we're going to talk about three things. First, we're going to talk a bit about the intersection between politics and central banking looking at Canada where recently a few prominent political leaders in Canada are attacking the Bank of Canada.

大家好，今天是9月9日，我叫约瑟夫，欢迎来到本周市场播报。本周我们将讨论三个话题。首先，我们将谈谈政治与央行之间的交集，关注一下加拿大情况，最近一些著名的政治领导人在加拿大对加拿大央行进行了攻击。

Secondly, staying on the topic of politics, let's talk a little bit about geopolitics and how there seems to be an economic war brewing with the most recent shot fired by China when it banned central government employees from using iPhones. And lastly, let's talk about the Fed. Now, Fed officials have been really clear that they're not going to hike in September, but they're keeping the door open to another hike later on.

其次，谈到政治，让我们稍微聊聊地缘政治，以及最近中国对苹果手机进行禁用中央政府员工的一举，似乎引发了一场经济战争。最后，让我们谈谈美联储。目前，美联储官员已明确表示他们不会在九月份加息，但他们仍保持对今后再次加息的可能性敞开大门。

Okay, starting with Canada. Now, before we begin, I think we need some background information. So, in Canada, house prices are very high relative to income. So when households go and buy a home, they have to take on a lot of mortgage debt. Now, mortgages in Canada functionally reset every few years. So in the US, if you buy a home, the interest rate is locked for 30 years. In Canada, it's usually about five years.

好的，我们从加拿大开始。在我们开始之前，我认为我们需要一些背景信息。在加拿大，房价与收入相比非常高。因此，当家庭购买房屋时，他们必须承担很高的抵押负债。现在，在加拿大，抵押贷款在功能上会每隔几年重设一次。所以在美国，如果你购买一套房子，利率会锁定30年。而在加拿大，通常大约是五年。

So as you recall, over the past few years, interest rates have gone up a lot. So now we have a lot of people in Canada who maybe borrowed one rates for 2% and now are having to renew their mortgage at rates five or 6%. And that obviously is causing a lot of pain. Their mortgage interest expense basically is doubling. So that is all filtering in into the concerns of local politicians.

所以，正如你记得的那样，过去几年来，利率上涨了很多。因此，现在我们在加拿大有很多人可能以2%的利率借款，现在却需要以5%或6%的利率来续签他们的抵押贷款。这显然给他们带来了很多痛苦。他们的房贷利息支出实际上翻了一倍。这一切都渗透到了当地政界人士的担忧中。

This past week, Premier Ford of Ontario, a premier is like a governor, openly called on the Bank of Canada to not hike rates. The premier of BC did the same thing as did the premier of Newfoundland. Also note that Vancouver is in BC and Toronto is in Ontario and Vancouver. Our two cities in Canada have that experience enormous amounts of home price appreciation. So you can imagine that there are a lot of people there with a lot of mortgage debt who are feeling a lot of pain from the Bank of Canada's actions.

在过去一周，安大略省的总理福特公开呼吁加拿大银行不要加息。不列颠哥伦比亚省的总理以及纽芬兰省的总理也采取了相同的行动。值得注意的是，温哥华位于不列颠哥伦比亚省，多伦多位于安大略省。我们在加拿大的这两个城市经历了房价的大幅升值。因此可以想象，那里有很多人面临着巨额抵押贷款的压力，对加拿大银行的行动感到非常痛苦。

So we have prominent politicians in Canada openly telling the Bank of Canada, hey, can you stop hiking rates? And the Bank of Canada did not hike rates last week. Now, to be clear, the economic data in Canada is looking not as great. So it was totally reasonable for them to do that.

所以我们在加拿大有知名的政治家公开告诉加拿大央行：“嘿，你能停止加息吗？”而加拿大央行上周确实没有加息。现在要明确的是，加拿大的经济数据看起来并不那么好。所以他们这样做完全合理。

Now, in addition, after the Bank of Canada's decision, finance minister, Christina Freeland, released a statement saying that, you know, I'm glad the Bank of Canada didn't hike rates, totally affirm central banking independence. By the way, I'm going to work hard to make sure rates go low. So I think what you're seeing now is that more and more people, more and more in Canada are upset with the make of Canada. And they're putting on a lot of political pressure.

现在，此外，在加拿大银行做出决定后，财政部长Christina Freeland发布了一份声明，称自己很高兴加拿大银行没有加息，充分肯定了央行的独立性。顺便说一下，我将努力确保利率保持低位。所以我认为，现在你看到的是越来越多的加拿大人对加拿大银行的做法感到不满。他们正在施加很大的政治压力。

Now, the same thing happened in the US in the 1970s. In the 1970s, there's a lot of inflation in the US and feature at the time Arthur Burns was under a lot of pressure to not hike rates too much. Arthur Burns later said that he could have high-grates a lot any time he wanted and put an end to all this inflation. But he was also under a lot of political pressure, not to cause a lot of economic pain. And so he was constrained. He couldn't do what needs to be done.

现在，同样的事情在1970年代美国发生了。在1970年代，美国出现了很高的通货膨胀率，当时央行行长亚瑟·伯恩斯面临着很大的压力，不敢过度提高利率。后来亚瑟·伯恩斯表示，如果他愿意，他可以随时提高利率，从而结束所有的通货膨胀问题。但他也面临着很大的政治压力，不希望造成经济上的大幅痛苦。因此他受到了限制，不能做出必需的行动。

In school, we think that we're taught that central banks are independent technocrats that do what needs to be done. But in practice, of course, they operate under political constraints. The saying is that central banks are independent within the central government, but not of the government. So whereas the central bank has more flexibility than government agencies, it still ultimately has to be responsive to public concerns.

在学校里，我们认为中央银行是独立的技术专家，会做必要的事情。然而实际操作上，他们当然也受到政治限制。有一句话说中央银行在中央政府内是独立的，但不是独立于政府。因此，尽管中央银行比政府机构更具灵活性，但它仍然必须对公众的关切做出回应。

Now, Canada, because of its mortgage structure, is feeling the pinch first. But I expect this to play out in many other countries as well. For example, in the UK and in Australia, they also have mortgages that have to be reset every few years. And I think more and more of their people are feeling a lot of pain. So I would be on a lookout going forward for more political pressure on the Bank of England, the Bank of Australia, and some degree on the European Central Bank to ease up a bit.

现在，由于其抵押贷款结构的原因，加拿大首先感到了压力。但我预计这种情况也会在许多其他国家发生。例如，在英国和澳大利亚，他们也有几年需要重新调整的抵押贷款。我认为，他们越来越多的人都感到了很大的痛苦。因此，我认为未来可能会对英格兰银行、澳大利亚银行和欧洲中央银行加大政治压力，要求它们放松一点。

Now, this is going to put a constraint on what the central banks can do. But we won't really see that in the US, because in the US so far, despite all the rate hikes, the economy is still doing pretty well. And most households are insulated from it. But I think going forward, we're just going to have to take politics more to account when we look at central bank actions across the world.

现在，这将对央行的行动产生限制。但在美国，我们实际上看不到这一点，因为尽管利率上涨，但美国经济仍然表现良好。而且，大多数家庭不会受到影响。但我认为，今后我们在考虑全球央行行动时，需要更多地考虑政治因素。

Okay, the next topic we'll talk about are geopolitical concerns. So, in the market, in the world, the largest actors are political actors, central banks, central governments, for example. And these guys are not purely profit driven. They care about being elected, they care about strategy, they care about a whole bunch of other stuff that a private corporation doesn't care about. So, when we think about what's happening in the world, we obviously have to pay attention to what these political actors are doing. And of course, after all, they set the rules in many ways.

好的，我们接下来要谈论的是地缘政治的关切。在市场中，全球最重要的参与者是政治参与者，比如央行、中央政府等等。这些人并不仅仅是出于利润的驱动。他们关心选举，关心战略，关心很多私人公司并不关心的其他事情。所以当我们思考世界上正在发生的事情时，我们显然需要关注这些政治参与者正在做什么。当然，在很多方面，正是他们制定了规则。

Now, what we've seen over the past few years is that there seems to be an economic war brewing across many domains. For example, let's look at oil. Now, over the past couple of years, the White House has been releasing a lot of oil out of its strategic petroleum reserve to basically push oil prices down. Inflation was high and they wanted to get inflation lower. And they saw that Russia was earning a lot of money from their oil sales and they didn't want Russia to earn lots of money. So, it was a political decision. And in response, we had OPEC, basically, led by Saudi Arabia and others to voluntarily cut production to try to boost oil prices higher. Again, they're acting under their considerations as well. So, there seems to be a little bit of an economic war going on in this domain. But of course, the economic war is much broader than oil.

现在，过去几年我们所看到的是，在许多领域中似乎正在酝酿一场经济战争。例如，让我们来看看石油。过去几年中，白宫一直在从战略石油储备中大量释放石油，以将油价推低。通胀率很高，他们希望将通胀率降低。而且他们发现俄罗斯从石油销售中赚了很多钱，他们不想俄罗斯赚取大量资金。因此，这是一种政治决策。作为回应，我们看到了欧佩克，基本上是由沙特阿拉伯和其他国家自愿削减产量，试图将油价推高。同样，他们也是出于他们自己的考虑行动的。所以，在这个领域似乎正在发生一场轻微的经济战争。当然，经济战争远不止石油领域。

Specifically, there's an economic war brewing between China and the US. The US has very overtly tried to prevent China from obtaining key technology. There's of course, a semi-kind dumpro ban for the highest bleeding-edge tech to go to China. And China has also retaliated by preventing the expert of some rare earths. Now, this has been brewing and this is happening across many domains. And of course, it seemingly began under the Trump administration where President Trump was very open and using tariffs to try to achieve his political and economic interests.

具体而言，中美之间正酝酿着经济战争。美国非常明显地试图阻止中国获取关键技术。当然，对于最先进的技术，美国实行了半禁运，不让其流向中国。而中国也以限制某些稀土的出口作为回击。现在，这种情况正在不同领域中酝酿着。而且，很明显，这似乎是始于特朗普政府时期，特朗普总统非常公开地使用关税来追求他的政治和经济利益。

Now, this past week, we had some new developments where China now is banning central government officials from using iPhones. And that hurt the soft price of Apple because it suggests that maybe, maybe this economic war is spilling over into consumer electronics and Apple is highly dependent on China, both as a market for its products, but also because a lot of iPhones and other things are manufactured in China. So, when we think about economic wars, obviously, it's common sense to think about supply chains and companies that are heavily dependent upon markets that are not super friendly. But I think it's also useful to think about just what kind of tools other countries have to retaliate against the US.

现在，我们在过去的一周中有了一些新的发展，中国现在禁止中央政府官员使用iPhone。这伤害了苹果的股价，因为这意味着可能这场经济战争已经波及到消费电子产品领域，而且苹果对中国非常依赖，既是其产品的市场，同时也因为许多iPhone和其他产品都是在中国制造的。所以，当我们谈论经济战争时，显然，有一些常识是考虑到供应链和那些对不友好市场严重依赖的公司。但我认为也很有意义去思考其他国家有哪些工具来对抗美国。

Now, what's very obvious to me when I think about this, it is, of course, China's huge holdings of Treasury Securities. So, China has over $3 trillion in foreign reserves and it's reportedly, although, of course, the exact compensation is not clear, reportedly a lot of it is held in Treasuries and Agency MBS. And, of course, I'm sure that China is aware with what happened with Russia's foreign reserves when there was a war between Russia and Ukraine. So, if you think about things from a Chinese perspective, obviously, they're going to have to reduce their exposure to US Treasuries as much as possible. It's not easy, but it's something they have to be done, especially since, you know, we all see going forward that there may be conflict that revolves around Taiwan.

现在，当我考虑到这个问题时，显然，中国持有的美国国债是非常明显的。所以，中国拥有超过3万亿美元的外汇储备，据报道，尽管确切的补偿金额不清楚，但据报道，其中很大一部分持有的是美国国债和机构抵押贷款支持证券。当然，我相信中国也意识到了俄罗斯与乌克兰之间发生战争时俄罗斯的外汇储备情况。所以，从中国的角度考虑，显然他们必须尽量减少对美国国债的暴露。这并不容易，但这是必须做的事情，特别是因为我们都能看到未来可能围绕台湾发生冲突。

Now, just for some background history, before the Russian-Ukraine war started, Russia was very clear that, you know, Ukraine cannot join NATO. That's a red line for them. Now, China is very clear that Taiwan is a red line for them. They think that Taiwan is part of China. And it's also very clear that Western leaders have been approaching Taiwan, some of them thinking that, hey, Taiwan is an independent country. And, of course, Washington has over the past couple of years sent a lot of prominent politicians over to China to basically hug their leaders. So, going forward, it's very clear that this is something that is going not going away and it is going to play out in the coming months or years.

现在，只是为了一些背景历史，俄乌战争开始之前，俄罗斯非常明确地表示，乌克兰不能加入北约，这对他们来说是底线。现在，中国非常明确地表示，台湾是他们的底线。他们认为台湾是中国的一部分。同时，西方领导人也非常明确地接触台湾，其中一些人认为，嘿，台湾是一个独立的国家。当然，过去几年中，华盛顿派遣了许多知名政治家去中国，基本上是为了拥抱他们的领导人。因此，前进时，很明显这是一件不会消失的事情，并且将在未来几个月或几年中发展。

Now, if you are China, you're going to have to prepare yourself for that. And you don't want to be caught flat-footed the same way that Russia was. And I think Russia was surprised by the strong reaction that the US and the European powers had. So, when you're thinking about Treasury yields going forward, it's not just supplying, it's not just inflation expectations or the potential of changing the inflation target. But you also have to think about these geopolitical concerns.

现在，如果你是中国，你就得为此做好准备。你不想像俄罗斯那样措手不及。我认为俄罗斯对美国和欧洲大国的强烈反应感到惊讶。所以，当你考虑未来的国债收益率时，不仅仅要考虑供应问题，也要考虑通胀预期或改变通胀目标的潜力。同时你还必须考虑这些地缘政治上的担忧。

And I wonder, and I don't know if that's true, if this is another factor between the relentless bond-to-bearer market that's played out over the past few weeks, to be totally clear, there's a chart floating out showing that China has sold a lot of surgeries. Now, that's not true because that chart is based on market values and there's a tremendous bear market in Treasury's last year. So, of course, a lot of that is just simply decreases in market valuation.

我很好奇，也不知道这是否属实，这是否是过去几周中持续出现的债券市场与持有人之间无情的纽带的另一个因素。明确地说，有一张图显示中国已经大量抛售国债。但这不是真实情况，因为该图是基于市场价值计算的，而去年国债市场遭遇了巨大的熊市。因此，其中很大一部分只是市场估值的下降。

Now, the last thing we'll talk about is what's happening with the Fed. So, this past week, we had some good species from a couple prominent Fed members. We had Governor Waller give an interview with CNBC and we had President Williams of the New York Fed give an interview with Bloomberg. Now, Governor Waller was a well-known hawk and who has done a really good job over the past cycle is very open in saying that he's happy with what he's seeing with the data and he strongly suggests that we don't have to do anything right now, we can just wait and see for more data. Let's listen to what he actually said. Yeah, thanks Steve for having me on. Yeah, that was a hell of a good week of data we got last week and the key thing out of it is it's going to allow us to proceed carefully as Chair Powell said to Jackson Hole. There's nothing that is saying we need to do anything imminent anytime soon so we can just sit there, wait for the data, see if things continue. The biggest thing is just inflation. We got two good reports in a row, can wait and see what a third one looks like and see whether this low inflation is a trend or it was just an outlier fluke.

现在，我们最后要谈论的是联邦储备系统正在发生的事情。所以，上周我们得到了一些重要的联邦储备系统成员的观点。我们有沃勒州长在CNBC上的访谈，还有纽约联邦储备系统的威廉姆斯总裁在彭博社的访谈。现在，沃勒州长是一个众所周知的鹰派，并且在过去的周期中表现出色，他公开表示对当前数据感到满意，并强烈建议我们现在不需要采取任何行动，我们可以等待更多数据来观察。让我们听听他实际说了什么。是的，谢谢史蒂夫邀请我来。是的，上周我们得到了一系列非常不错的数据，关键是这将让我们可以像鲍威尔主席在杰克逊霍尔会议上所说的那样小心谨慎地前进。没有任何迫使我们立即采取行动的迹象，所以我们可以坐在那里，等待数据的出现，看看情况是否持续。最重要的是通胀问题。我们连续得到了两份良好的报告，可以等待第三份报告的出现，看看这种低通胀是一种趋势，还是只是一个偶然事件。

Okay, at the same time we have President Williams who also gave an interview and President Williams is also pretty happy with what he's seeing but he's also seeing that the economic data has come in a lot stronger than his expectations. Now, the New York Fed themselves unleashed, unveiled this past week, a new GDP now cast and their GDP now cast is showing that economic growth is accelerating and also comfortably above trend. Now, this must be very confusing to Williams because he was thinking that they would high-grade a lot and then growth with slow and inflation will come down, unemployment would go up. Now, that hasn't happened and so this is what he's thinking about now. Now, there's a second test of there's kind of the are we restrictive and the second is are we sufficiently restrictive to really make sure that we're bringing inflation sustainably down to 2% and getting the job done. So, I think it's pretty clear we're restrictive. Still an open question as we go forward and how we got sufficiently restricted to achieve that.

好的，与此同时，我们还有威廉姆斯总统在采访中表示他对目前的情况也相当满意，但他也意识到经济数据要好于他的预期。现在，纽约联邦储备系统发布了一份新的GDP现在预测，显示经济增长正在加速，并且远远高于趋势水平。这对威廉姆斯来说肯定很困惑，因为他曾认为他们会大幅提高利率，导致经济增长放缓，通胀下降，失业率上升。现在，这种情况没有出现，所以他现在正在思考这个问题。现在，有两个测试，第一个是我们是否处于紧缩状态，第二个是我们是否足够紧缩，以确保通胀持续降至2％，并完成我们的任务。所以，我认为我们很明显是处于紧缩状态的，而如何足够紧缩以实现这一目标，这仍然是一个未知的问题，需要我们继续观察。

So, of course, he's open to more rate hikes because it looks like things are not evolving to what he thought they would. If growth continues to accelerate, then we can have another hike and that's my expectation as well. I think we'll probably have one more hike later on in the year simply because the economy is so resistant and the Fed from a risk management perspective would rather hike a bit more to make sure inflation is under control because if, for example, the hike is too much, they can easily, easily cut rates to ease things a bit. So, from their perspective, I think it makes a lot more sense to hike one more time.

当然，他对继续加息持开放态度，因为事情似乎并不如他预期的那样发展。如果经济增长继续加速，那么我们可以再次加息，这也是我的预期。我认为，今年晚些时候可能还会有一次加息，仅仅是因为现在的经济非常有韧性，而作为风险管理的角度来看，美联储宁愿多加一点利率，以确保通胀得到控制，因为如果加息过多，他们可以轻松地削减利率来缓解一些问题。所以，从他们的角度来看，加息一次更具意义。

Okay, so that's all I've prepared for today. If you're interested in hearing more of my thoughts on the markets, check out my blog at FedGuy.com or if you're learning more about the markets, check out my online courses at CentralBanking101.com and, of course, remember to like and subscribe. Talk to you all next week.

好的，这就是我今天准备的全部内容。如果你对听取我关于市场的更多想法感兴趣，可查看我在FedGuy.com上的博客；而且，如果你想了解更多关于市场的知识，可以查看我在CentralBanking101.com上的在线课程。当然，别忘了点赞和订阅。下周再聊。