Inflation or deflation: what kind of logic is more close to the truth?

Inflation logic facts or

huanqiulaohucaijing· 2016-11-01 05:32:27

recently saw a lot of the inflation pressure in about China, the reason is that PPI finally from negative to positive, or the real estate regulation has become more and more severe, hot money will flow out of property, the impact of the commodity market, causing inflation. All forecasting articles are good logic to support their views, such as the prediction of inflation or deflation, but also the logic behind the public that goes rational woman and she said, "but right or wrong will eventually be tested, no matter how strong the logic behind. The existence of a lot of logic, the use is not difficult, but what kind of logic should be chosen in order to make the results can be more close to the interpretation of the facts?

forecast - in fact, most people are on the basis of one-sided viewpoint

I always think that the prediction of social economic field is not a science, it is more like an art. Because the influence factors are too many, in theory, we can establish a multiple regression model to predict, the problem is how to determine the weight of the factors and how to fit the effect? Half a million way out of Cheng Yaojin, and have to reinvent the wheel model.

however, modeling consciousness of scholars also belong to the minority, although the coefficient factor in the model is not OK, but at least to think how many influence factors, correlation factor between the numerator and denominator of the way into the right side of the equation. But most of the people like in the forecast on the basis of one-sided viewpoint touched one of the elephant's legs, on the basis of the elephant's legs to speculate the shape of an elephant, and the modeling process at least to all parts of the elephant are taken into account, perhaps due to various parts of the ratio between the uncertain, so that the huge imbalance, but better than the blind that is closer to the real.

back to inflation or deflation of the forecast, I think the first should be to predict the impact of short-term fluctuations in price factors to give the right weight. Because most forecasters are accustomed to the current factor to give too much weight, because people have short-sighted behavior, the recent events of the brain is often far more than the intensity of the stimulus is far better than the historical events. For example, when a passenger plane exploded, almost all airports will soon improve security specifications, but in fact, terrorist activities are always there, why do not go after the accident to upgrade security specifications?

9 month domestic CPI rebounded, related to this, the domestic coal, coke prices rose due to limited production, part of the international agricultural products, non-ferrous metal prices continue to rise since the beginning of the year. But CPI rose in the first quarter of this year was 2.3%, higher than 1.9% in September, many people think that China will be more than 3% of inflation, and will start a new round of economic cycle. But after May, inflation fell, the rise of the cycle that collapse of itself. Also, part of the recent rise in commodity prices, at least so far can not indicate the start of a new round of inflation, and the history of this rebound beyond count.

, of course, does not rule out the possibility of inflation in the future, but if only the price of each commodity rally is seen as a sign of inflation, which is not a technical analysis of the. Since commodity prices peaked in 2011, the global economy is gradually moving towards deflation, this trend has continued for five years, when the inflection point appears not to say, but not you want to appear when you can, after all, the strength of the trend of strong, but most people are accustomed to using a microscope macro, human behavior often short-sighted lead to misjudgment of the inflection point.

macro research should use a telescope to see the future, but can not use the microscope to see the future, with a microscope to see the future, it is easy to wave as a wave. According to IMF statistics, the current global economy of about 85% of the level of inflation is lower than the long-term target, most developed economies are in deflation, China is no exception, the pressure of deflation has not been eliminated. China, as the world's second largest economy, and the global economy is very large, so it is unlikely to be in the global market in the case of deflation out of the independent inflation market. Since 90s, China has seen four times of inflation, inflation and GDP growth rate is highly correlated, and now China's GDP growth is still in a long-term downward channel, therefore, it is difficult to support inflation expectations.

therefore, from the perspective of multi factor macro forecast analysis, long-term data is greater than the short-term data reference, in the logical choice, you should use the telescope to observe the aorta logical deduction process, but should not use the microscope to observe capillary logic.

era of low growth -- only structural changes and structural opportunities

the global economy is in the era of low growth, the UN lowered this year's global GDP growth to 2.4%, and the European economy, Japan's economic growth basically below 2%, Chinese economic growth from 6.9% last year to 6.7% this year, in addition to the India economy in the BRIC countries high growth, the rest are in decline. Since the global economic growth rate down, so the stock market or the property market overall upward trend will be very difficult, as Qianjiang tide, tide comes, presents an overall trend of fluctuations, only after the spring tide, the market shocks.

2015 the Shanghai stock market ups and downs, the annual increase of less than 10%, can not be regarded as the trend of the market, but the gem index is from 2013, three years rose 280%, which is the trend of the market. If the gem, small plates together with the board to see, A shares in recent years, the trend is still the main feature of the shock, which is a structural market.

look at the past two years the most popular real estate market, in fact, did not show the overall trend of the market prices, such as 70 large and medium-sized city National Bureau of statistics of new residential sales price, from September 2015 to September 2016 rose more than 5%, only 29 of the city, the other 41 city rose less than 5%; or more than 10% of the city, only 19. According to the China Index Research Institute of statistics, over the past five years, the national average price of 100 cities weighted average increase of only 28%, while the same period M2 or close to 100%, in the name of GDP increased by about 50%. Therefore, the hot property market is also structural, in the past five years, the overall price of the whole country not only run to lose M2, but also run to lose GDP.

low growth era must be a structured era, which is probably the connotation of the supply side of structural reforms, China and Western countries have structural reform needs. Low economic growth corresponds to the low return on investment, low returns will lead to low interest rates. In view of this, in the future there will be no obvious inflation or severe deflation, commodity or financial market is difficult to show the trend of the market, instead, the structural market.

due to changes in economic structure and regional differentiation of industry, and even inflation is also a structural feature, namely CPI factors, tradable goods prices slow, non tradable goods (such as rental service, etc.) the price rose quickly because the trade of global pricing, and non tradable goods are often domestic pricing, domestic pricing is conducive to price increases. If we consider too many short-term factors such as the dollar rate hike, Britain's off Europe, the Chinese property market, such as the purchase price of the impact of capital goods, then there will be too much logic also affect your judgment. As the saying goes, "the road to Jane", so in the choice of logic must be from simple to complicated, and can improve the accuracy of judgment.

up or down - a look at the flow of funds, two see supply and demand changes

investors are most concerned about is the price, but the price of prediction is a problem, because too many factors. If you can accurately predict the ups and downs, then, the market should not exist. Therefore, the analysis of the significance of the market is only to estimate the probability of inflation or fall. As mentioned before, there are many factors that affect the number of corresponding logic. Even if all the logic is used, may still not be the answer. Because we ask for the solution, may itself is a no problem solving.

then, from the road to Jane's point of view: the impact of price fluctuations, nothing more than the inflow or outflow of funds and supply and demand changes. For example, when the property market is hot, the funds will flow to the property market, leading to further price increases. From the characteristics of the national property market rose, or large area mainly into four sections of Yangtze River Delta, Pearl River Delta and Beijing Tianjin Hebei region and the central city cluster, including North Shenzhen three capital inflows, the past three years or so, the maximum, this round of price increases, mainly as a monetary phenomenon. At the same time, Hefei, Wuhan, Zhengzhou, Nanjing and other second tier cities in the new population is also quite impressive, so the inflow of foreign population, making supply and demand changes, it will lead to price increases.

recently, north of Shenzhen three residents deposits no longer increased, that capital inflows stagnated, the early rise of residents loans increased significantly, resident deposits decreased, which may be difficult to continue to rise for future prices. The research on the relationship between supply and demand should distinguish the difference between investment and consumer goods. As is often said, a house can be distinguished between investment demand and rigid demand, consumer demand is just need, the demand is relatively stable; investment demand is often up when the demand increases, when the fall of the time to reduce. So, can not simply think that prices rise because the property market in short supply, once the fall, investment demand dropped, it will be difficult to buy from the current real estate sales.

recently some people optimistic about the stock market, the reason is that the property market cooling, hot money will flow to the stock market. Therefore, to determine the future of the stock market, it is the first to observe the flow of hot money and continuity. From the national day after the volume and price changes in the stock market to see, there is indeed an increase in the amount of the transaction, the two financial scale has also been expanded. In the case of devaluation of the RMB devaluation, the stock market is still able to steadily upward, that there may be incremental funding into the market. Just how much of the funds from the property market, it is difficult to judge, pending further observation.

because of the property market and the stock market is not a single seesaw relationship, foreign exchange, bonds, commodities, and other financial products can also absorb market funds. At present, people swap demand should be first, since the beginning of this year, the RMB against the U.S. dollar, the euro and the yen depreciated by 4.5%, 4.2% and 19.9%, so the swap yield to more than the stock return rate, large amounts of funds to enter the stock market, to earn money effect.

therefore, when the Chinese economy into the capital era, the flow of funds will be diversified, the logic relationship between the stock market and the property market is no longer a single, no longer compared with five years ago or ten years ago. If the property market will be able to calculate the size of the outflow of funds and flow to the different proportions of each capital market, it is more likely to hold the market opportunities. Capital flows and flows are the final performance under the effect of multi factors, and it is also the most convincing basis to determine the price rise.

to sum up, the logic of the choice of more important than the logic of the use of road to Jane, select the one or two most persuasive logic to perform, or to better fit the trend of future changes.

(Li Xunlei, chief economist at Haitong Securities, China's chief economist, vice chairman of the forum)

(Chen Xiaoling editor)

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