We need to understand the market with systematic thinking. After the "huge earthquake" in the market, investors look for the main line in fear. Investors like to judge the "whether" based on a single macro fundamental event, so as to understand the style of the market or industry configuration. For example: steady growth can successfully buy value, while credit expansion fails to buy growth; Or is it the escalation of the conflict between Russia and Ukraine to buy gold, the marginal easing of the conflict and the recovery of risk appetite to buy growth. This non systematic thinking has brought the tangle of style rotation in the stabilization stage of the market, but the increasingly clear main line has surfaced. Inflation trading is becoming the main line. The real cyclical market has never been based on steady growth; The real cyclical market does not take the supply-demand gap brought by sanctions against Russia as the underlying logic. Geographical conflicts only strengthen the trend, not the root of logic.
One of the underlying logic of the real cyclical market is the resonance between "green inflation" and "population reversal". "Green inflation" means that the whole society allocates limited resources to renewable energy with lower short-term efficiency for long-term sustainable development. This behavior leads to a significant reduction in energy supply efficiency, which can not be solved by liberalizing energy consumption and power restriction, because it can only increase energy consumption. Behind the "population reversal" is the decline of the working population, and it is not an unattainable future: the current decline of labor participation rate, rising wages and high price level in the United States have shown the whole picture of the story of "labor driving inflation"; The reduction of the working population in resource countries is also pushing up the commodity price center from the perspective of supply. When the world is facing the decline of potential output level, the real space source of the "steady growth" policy is China's better regulation and control ability on the two major issues and the short-term low inflation level. The difference in real interest rates between China and the United States gives us more room to exchange the rise of inflation for the recovery of demand, which means that the elasticity of inflation may be much stronger than the economic demand itself in the future.
Behind the real cyclical market is also physical assets vs credit currency. If the above-mentioned perspective only understands inflation from the perspective of supply and demand, there are further conditions for inflation, that is, the positive feedback mechanism of inflation expectation. Under the reversal of the trend of green inflation and population growth, the central bank, which is good at dealing with the fluctuation of short currency and credit cycle, began to find it difficult to give consideration to the medium and long-term supply impact and economic growth. In fact, in the era of "big inflation" in the United States in the 1970s, people also like to attribute the rise in prices to the oil crisis, and believe that the price level will fall sharply after the conflict is over. The fact is that the impact of energy supply is often alleviated during this period, but inflation is difficult to fall back, The widespread and unstoppable rise in real asset prices at that time explained the meaning of inflation: concerns about the value of credit money. At present, the price of gold measured in multi-national currencies has reached a high since June 2021 when the margin of monetary policy of various countries is not loose, and the price of gold denominated in yen has reached a record high. At the same time, the current real price of mainstream commodities denominated in gold is at a historical low, which implies that although the relationship between supply and demand is important, it is not the core contradiction in the next stage. The credit currency system of major countries in the world is being impacted. As the opposite of credit currency, physical assets are ushering in an important allocation moment. It is noteworthy that the evolution of the conflict between Russia and Ukraine means that the currencies of major countries such as the US dollar and the euro are facing a decline in the convertibility of more major physical assets (energy, metals and Shenzhen Agricultural Products Group Co.Ltd(000061) ), which will further exacerbate the impact of the credit currency system. In fact, this is difficult to solve with the decline of the so-called "uncertainty risk of geographical conflict".
