India takes over China - on Demographics
Active Stocks or Passive ETFs or Active Asset Allocation via Passive ETFs - Who do you think will be the winner in the coming decade?
Post GFC 'Liquidity beyond fundamentals' influenced asset allocation which led money moving to risk assets thereby chasing momentum winners. As liquidity reverses stance, will era of active investing be back?
(Chart Source: Strategas Securities)
AUM: Algos > Humans
The surge in Chinese household savings is well spoken of. Infact the increase outpaces the rise in savings implied by the government surveys.
Interestingly, large part of these savings were parked in risk free bank deposits and not risker financial products. What happens to China markets if these investors had to turn a little risk averse this year?
(Chart Source: Gavekal)
BOJ - Most important part of the liquidity puzzle
In 1974, inflation was caused by rates that had been too low for too long and by the surge in energy prices caused by Arab oil embargo.
In 2022, the rise in inflation was due to too low rates for too long, post covid logistical issues and commodity price fluctuation due to Ukraine war. This time will inflation normalize without a second wave?
(Source: Stephane Monier)
What if this is just the 'start' of Wage Inflation?
S&P 500 has become less labour intensive now vs the 1990s due to technology. Then it needed 8 employees to generate $1mn of revenue today it needs 2. While I agree to the technology part of this, but one more added reason and much bigger a reason for this is Globalization. From 1990s onwards we saw China's rise as factory of production to the World which caused change in US labour dynamics.
So does that mean if US is getting back to onshoring again and developing internal capacities, will the number of employees to generate $1mn increase to say...5? But, US employment numbers aren't showing any major weakness yet, so where will these additional employees come from?
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