The downward trend of the high level of the US economy is basically established. In the context of the Fed's rapid interest rate increase and contraction, the US physical consumption will gradually decline, while the growth of service consumption is difficult to significantly exceed expectations. On the whole, the trend of the gradual decline of the US economy at a high level has been basically established.
There is a high probability that the United States will be in a high inflation range in 22 years. This round of inflation is caused by the mismatch between the strong demand side and the tight supply side under the background of excessive money. In the short term, the Fed's monetary policy shift will curb aggregate demand, but has limited impact on supply side problems. The three main problems affecting the supply chain - capacity shortage, transportation capacity shortage and labor supply shortage are difficult to be effectively alleviated in the short term. The continuous unrest in Russia and Ukraine has exacerbated the tension in the supply chain. In the context of the disturbance of the above factors, we believe that inflation may peak and fall due to the base, but in essence, the resilience of high inflation is still strong at present, and it is difficult for inflation to return to the acceptable range of the Federal Reserve in 22 years.
The US economy may be entering a stagflation like state. After that, the US economy may decline, which depends on the wisdom and ability of the decision-making level of the Federal Reserve. Taking the history of the great stagflation in the United States in the 1970s as a lesson, the Fed's monetary policy has been tightened sharply and for a long time, which can completely reverse people's expectations of high inflation in the future. But this will bring high short-term social costs. If the Fed's tightening cycle is fast and lasts for a long time, the economy may fall into recession, and the recession time point may appear as soon as 23 years.
The dynamics of US monetary policy and its impact on the economy are the determinants of the future direction of asset allocation. Stagflation is expected to be in the early stage of fermentation. At this stage, the physical assets represented by investment commodities have relatively good excess returns, at least the relative excess returns are relatively certain. When the Federal Reserve adopts a substantial and long-term tightening policy, inflation really establishes the signal of turning down, which will be the best time for profit taking of physical assets.
Risk tips: changes in the global epidemic exceeded expectations, the situation in Russia and Ukraine exceeded expectations, and changes in the international situation exceeded expectations.
