FOMC보다 더 중요한 경고, 늦게 알면 위험하다 (캐시우드)

0:00 Yes, hello. This is Eric. As of the date of filming, next week is the FOMC. Many people are paying considerable attention to the September FOMC . Because Powell showed his dovey demeanor in Jackson, there is a lot of focus on whether the interest rate will be lowered in September, and also, the famous FMC is not important. I've been introducing this story today with the somewhat provocative statement that lowering interest rates or whatever will no longer have a significant impact on the economy. Today's protagonist is Cashwood. Well, he's a famous person who has been introduced several times on my channel . He is a famous person to the extent that anyone who invests in Korea knows him, and whenever I bring up this Cash Wood, he is now a controversial figure. Is Cashwood really a person worthy of mention? There is a counterargument that the

0:48 performance has not been very good since 2022, but it is true that the performance has not been good. Nevertheless, the reason I often bring in Ja Cashwood is because Cashwood has seen good macros . Even during periods of poor performance, I was able to read the macro trends quite well. For example, there were concerns that inflation would persist for a long time at the time, but this was not the case. He was very good at predicting that it would end in the short term, and predicting the Fed's interest rate hike quite quickly, and he was very good at predicting various obstacles. But the reason why Cashwood's performance has been poor is simply that it is a classic example of good research not leading to good investment. Now, in the process of transitioning to trading, I made a lot of mistakes. For example,

1:33 there were some trading mistakes, such as selling all of Nvidia before it soared. And even though Cashwood's investment team itself is good at following the market flow, Cashwood is someone who mainly focuses on small and mid-cap growth stocks. But in 2023 and 2024, it was not small and medium-sized growth stocks, but only large-cap stocks that rose, so the obstacle flow did not fit well with Cash Dae's investment philosophy. Anyway, to summarize, although I was not good at trading, I am someone who has a good view of macro, so I think it is worth talking about macro . Here's what we'll cover today : Whether or not interest rates will be lowered is a matter of great interest in this market, but will the economy improve just by lowering interest rates? The economy is going strong regardless of interest rates. I'm seeing it starting to get better. And isn't this thing Powell always worried about inflation? Oh, I'm

2:19 worried that lowering interest rates will cancel out inflation, but they 're saying that lowering interest rates at this point will have no effect on prices at all. And with gold now above $3,600 and heading towards $3,700, he defended his opinion on whether this strength in value actually indicates weakness in stocks. There are two main reasons why Cashiod believes interest rates do not have such a large impact on the economy . The first is the concept I introduced last time . Cashwood says we are already in a recession and are in the final stages of it . That cashew has been in a recession since we raised rates in 2022, and we've been talking about a cyclical recession, not a traditional recession. He

3:15 said that we have been experiencing a cyclical recession, where rather than the entire economy weakening, each sector weakens first, like dominoes that start at the front and fall over time until the last one falls . However, Cass argued that a cyclical recession is not a single economic downturn, but rather a sequential weakening, so that the areas that have not yet weakened and the areas that have weakened have detailed effects, so that when viewed as a whole, the economy appears to be doing well . That is why, now that the recession is in its final stages, lowering interest rates here will not lead to a rebound in the economy. Because the recession is almost over, that's the first reason, and the second is the most powerful factor. Cassidy believes that the so-called deflationary phenomenon that is showing signs of stagnation now is all due to AI . So, because of technological innovation, supply is rapidly increasing compared to demand, prices are falling, and jobs are being replaced by AI, so even though the

4:01 indicators alone may not look good due to these factors, this deflation is occurring due to technological innovation, so I said that this can be seen as a healthy deflation . And the pace of technological advancement will accelerate even further in the future, and isn't Trump working on deregulation in the second half of the year ? By implementing policies such as allowing companies to deduct 100% of their R&D expenses for the first year and by easing other regulations, we have created incentives for more active technology investment and more active technology development. That is why, since the technological power will be more resilient, I don't think that lowering interest rates will have any particular effect on the economy in a situation where the economy is changing like this due to technological power . So, as you said, looking at economic indicators, you're

4:47 now seeing signs of a cyclical recession and AI-induced deflation . The last US second-quarter GDP figures were released, and they came out well. It grew by 3.3%, but if you look at the details, it's not so good . This graph breaks down the US GDP by detail . Among them, the areas I have highlighted in red are government spending, inventory changes, and net exports. The reason why GDP in the second quarter was better than in the first quarter is that, first of all, the tariff shock occurred suddenly in the first quarter, and at that time, the US's net exports deteriorated significantly. To some extent, since the market has started to accept the tariffs, trade sentiment has improved and the net exports indicator has reversed. And because they were

5:33 worried that they would be hit by the tariffs in the first quarter, they built up a lot of inventory in advance, which had a negative impact on the index. But in the second quarter, the inventory that had been built up in the first quarter was digested again, which had an impact on the index again . And when Cashwood talked about this recession, I used the domino analogy, and he said that one of the last dominoes was government spending . But if you look at it, you can see that government spending has been continuously worsening since the first quarter . So, what I'm trying to say through this indicator is that if you just say that GDP grew by 3.3%, it looks good, but if you look closely, the factors that suddenly shocked us in the first quarter have just reversed, and the government spending, which was the last domino that led to economic growth, is continuing to weaken, so I

6:22 think you can interpret it as showing that we are now entering the final stages of a cyclical recession. And the second is that this market has been a major shock recently . Now that the non-farm payrolls figures have been adjusted, have n't they actually come out with figures showing that jobs have actually decreased? But now, as I said in the Cashwood video I introduced last time, Cashwood already talked about this . Unemployment is a lie. I said that if this adjustment were made, it could actually result in fewer jobs, and that is exactly what happened, as Cashwood said . So, Cashwood says this: Well, as I said before, this is an expected process, and if you look at these detailed indicators, labor relations and temporary employment are getting worse significantly. And also, the average unemployment period is now 24.5 weeks, which is 5 weeks, but if you look at the five years from 2020 until now, the

7:08 average unemployment period was 32 weeks during the period when COVID-19 was at its worst, and excluding that, it is the highest level in the past five years. And historically, the average unemployment period during an economic recession is 20 weeks. But now it's 24.5 weeks, so the rate is higher than average. So, looking at these detailed indicators, we're saying that there's a possibility that non-farm payrolls will be revised downward further in the future . And more importantly, this deterioration in employment is not due to weak economic fundamentals, but rather to AI. In some ways, it can be seen as a healthy employment phenomenon . Cashden says that we can now see the impact of AI on employment by looking at the indicators. First, this graph is the labor force participation rate indicator. If you look at it, the labor rate has been falling continuously since 2023, right? They

8:07 say that because of AI, companies are no longer hiring and recruiting, people are not actively seeking jobs, and so more and more people are no longer willing to participate in the labor market, which is why the labor force participation rate is falling. And when we look at employment by industry, we see that the impact of AI is even more evident . First of all, there was a significant decline in technology jobs, and then there was also a decline in financial services jobs. Not to mention technology, financial services are also being significantly impacted by AI and blockchain, so it is said that this has led to a replacement of human resources and a decrease in employment in financial services. And then there are the business services jobs. There are parts like human resources management and business support, and they are saying that the temporary employment of business services, that is, the employment of temporary workers rather than regular workers, has decreased significantly . So, since AI is now taking over these tasks, there is no longer a need to hire temporary workers, or contract workers, to handle these tasks as in the past

8:54 . Because AI does everything now. So, looking at employment by industry, we can see that the phenomenon of AI replacing jobs is already clearly visible . If things turn out like this, many people will start to worry. Oh, so now human jobs are being replaced by AI? I worry that we are now entering an era where people are losing their jobs due to AI, but in the case of Cashwood, all technologies have had the effect of increasing jobs in the long run. In this era, we have not only AI but also blockchain and multi-body analysis . In short, biotechnology is at a turning point. And there are also other huge innovations in energy storage and robotics. So, these technological innovations will come together to open up markets we never imagined . So,

9:41 in the long term, we expect that this technological innovation will lead to an increase in jobs, as new jobs will be created that did not exist before . So, in the long run, I think the current employment situation can be seen as a healthy employment situation . yes. If we accept Cassidy's view that interest rates will no longer have any impact on economic growth, then what about prices? The same argument is made regarding prices . Isn't the most important factor in determining prices money ? So, when the M2 money supply, which is a representative indicator of a country's money supply, increases, we say that the M2 money supply leads the CPI by about 1 year and 6 months . So what people are worried about now is that the money supply is increasing . Compared to the previous year, it has increased by about 4 to 5%,

10:26 but if you look at Cashwood, it seems like an environment where prices can become more elastic as the money supply increases again, but there is something else that is just as important as the money supply. This is what we are talking about, the velocity of money circulation . So, what I'm saying is that while the amount of money is important, the speed at which money circulates, the speed of this handover, is also important . In this graph, the green line is the M2 money circulation speed. Purple is the labor force participation rate. So, Cashiod is saying that the most powerful indicator that can explain this velocity of money is the labor force participation rate . But as you can see, the labor force participation rate has been steadily declining since 2000. The velocity of money circulation has also been steadily declining. So, when you look at the momentum of Cash, it

11:13 has been a continuous downward trend since 2000, but in 2020, it was shocked by the coronavirus and fell sharply, but it rebounded a bit, but recently, it has been falling again. Velocity of money circulation. What I am saying is that it can be seen that it will continue to decline following the long-term trend . If, then, it is the labor force participation rate that determines the velocity of money circulation, then there is no clear reason why the labor force participation rate is trending downward in the long term . Well, various guesses are being put forward. Well, because of the six-year-old family, two people in a couple's job have to take care of the oil, so there is a transition effect to single-person households, and there is also the issue of immigrants, and it is called the gray market. So, there are a lot of jobs that are not included in statistics, but are jobs that are strictly classified as jobs by regulations, even though they are working and earning income

12:00 . There are various speculations, but no clear reason. But what is certain is that it continues to trend downward, and as we saw earlier, is n't AI having a huge impact on employment? That's why, looking at the current situation, the labor wage rate will continue to decline, and if the labor wage rate declines, the velocity of money circulation will also inevitably decline, which means that even if the amount of money increases, money will not circulate as much, so there is no factor that will stimulate prices, according to Cashwood. In addition, when looking at the current psychology, I said that people are not very willing to spend money. This graph is an index that shows the uncertainty of this economic policy . The front is now an index created by scoring sentiment through news articles. If you look at this, people's uncertainty about border policy has increased significantly compared to the past.

12:47 This means that because the economy is uncertain going forward, people won't open their wallets much, and if they don't open their wallets, the speed at which money circulates will naturally slow down. This adds to the argument that, in addition to the labor force participation rate discussed earlier, there are additional incentives for the velocity of money not to rise . And looking at the movement of prices at this point, they're saying there's no sign of prices rising. This graph is an indicator that Cased himself created called Truflation. So, it's an index that I created by selecting items that are closely related to the cost of living among the CPI and gathering product groups and service groups that can track price fluctuations on a daily basis . Looking at this, there is no sign of prices rebounding. So, since the results of tracking the true inflation indicator

13:33 every day show no signs of rising prices, we cannot say that this is stimulating inflation . And the housing market is also expected to play a part in the deflation . This graph shows the number of contracts for sale of houses. But if you look at it, the number of contracts concluded is actually lower now than during the financial crisis in 2008 and 2009. In some ways, the real estate market is worse than the financial crisis, but if you look at new home sales, existing home sales, and housing inventory, the situation is quite bad. Even when looking at various real estate indicators. That's why I 'm saying that the fact that real estate-related indicators are so bad means that housing costs will fall in the future, and that this can be seen as a strong deflationary factor rather than inflation. So,

14:19 when looking at all these things, Cashid sees that going forward, prices will not rise, but rather the CPI could go into negative territory . So, even if interest rates are lowered here, there is no concern that prices will soar and inflation will return . So, I've been following Cashew's argument that interest rates don't affect economic growth or prices . So then what happens next? Cass Use is going to get a lot better in the future. We anticipate that economic growth from the end of this year until the mid-term of next year, around November, will exceed people's expectations and grow quite explosively . Anyway, the graph shows new capital orders . Now, if you look at it, aren't new capital orders on the rise recently ? However, as for why new capitalist questions are increasing while the economic data we looked at earlier shows falling prices and indicators related to economic growth,

15:09 Cass said that this increase is due to technological innovation. So now that companies need to invest in AI, they are placing a lot of orders for capital . Just looking at this, we can see that companies are now actively investing in AI, so we believe that technological innovation will drive economic growth in the future . So what happens now? Cash estimates that GDP could grow by up to 7% as productivity increases . In this graph, the green line represents labor productivity. Purple is GDP growth rate. Looking at past patterns, this shaded area was a recession area. But when the recession came out, labor productivity rose by an average of about 5%. So, productivity increased by about 5%, and with that increased productivity,

15:55 economic growth increased. That's the pattern that we saw. Even now, Cash believes that we are at the end of an economic recession, so we will now enter a period where productivity will rebound, and with that rebound, the economy will grow explosively from the end of this year until next year . So, what we're saying is that if the U.S. economy improves beyond expectations, this rather unexpected phenomenon will occur . Right now, Trump is imposing tariffs to correct the trade deficit. But rather, as the U.S. economy grows significantly, this demand increases, but now the U.S. cannot produce all the goods it needs domestically. In that case, even if tariffs are imposed, imports of imported goods will inevitably increase . If that happens, we will inevitably

16:40 see the trade deficit worsening . But on the other hand, if you think about it now, we thought that companies that export a lot to the U.S. would be hit hard by the tariffs. However, if US demand increases in this way and US import demand increases despite tariffs, it could be seen as a positive factor for countries and companies that have a high proportion of US exports. And finally, we talked about gold, which has been a hot topic recently . This graph, in purple, compares the price of this metal with its industrial name . This is an indicator I have introduced several times. So, if this indicator is low, it can be seen as people feeling uneasy about the economy because the price of gold is high compared to industrial metals . Conversely, if the price of industrial metals is high compared to gold, it can be seen as people feeling confident about the economy. So, we can interpret the indicator like this:

17:31 the price of gold against industrial metals, which are purple, is at its lowest level in nearly 30 years . The reason is, as you all know, that gold is rising so much while the other industrial metals are not . So, Keith Wood interprets the reason why people see the price of gold as so high compared to the precious metal is because of the great fear of deflation . So, I'm saying that when I think about the global economy, I feel a little uneasy about China. In the case of China, the real estate cycle, which has a significant impact on the Chinese economy, has not yet turned into an upward cycle, and investment now accounts for about 40% of China's GDP. It's a pretty big proportion, but when Cashwood looks at it, this 40% of the investment goes to new technologies like nuclear power,

18:16 but there's also the impression that a significant portion of the money is being spent on useless things . So if China continues to show poor performance, it could really have a negative impact on the global economy . This is considered a risk factor. So, if you send it at the gold price, Cass also agrees to some extent. So some people interpret this kind of strength as a warning sign for stocks . This graph compares the price of gold with the S&P 500 stock index . The 1,000 won part circled in red is from the 1970s. And that's what it represents now. But if you look at it, doesn't it look similar? So there are people who argue that stocks will be weak like in the 70s, but Cass disagrees. Because now, although industrial metals are weaker than gold,

19:03 copper alone is doing quite well . Although there has been a recent sharp decline, copper is still hitting new highs, and the fact that copper is hitting new highs is an indicator that this industry, especially cutting-edge industries, are growing very actively, so I am saying that I do not see this stock price, which is currently being led by tech companies, as dangerous . And when you actually look at the performance, there are some aspects of the companies' performance that are quite good. And, in addition to gold, if you compare oil prices with stock prices, you'll see a different picture . This graph compares the SP 500 with oil prices. In the 1970s, didn't stocks show weakness due to inflation caused by soaring oil prices ? But now, while oil prices are calm, stock prices are

19:49 showing strength. So, Cass sees it as not indicating a bear market for gold like it did in the 1970s, because it's showing a different picture from the 1970s . yes. That was Cass's story. To summarize today's content, it is as follows. Ultimately, the market is looking at interest rates now, and Cash Woods is saying no . So, I think there is a gap between reality and market perception . Cassud believes that the recession is almost over and that the economy will only improve going forward, and the market expects that the direction of the economy will change significantly depending on the Fed's monetary policy. If so, assuming Cassud is correct, if a gap arises between the market's perception and reality, wouldn't this be a significant trading opportunity ? So, how can we determine whether there is a gap

20:35 between market perception and reality after the FMC, and to what extent ? Cashwood now talks about looking at the spread between short-term and long-term interest rates. Usually, the average of the difference between the long-term and short-term interest rates, which is the difference between the 10-year and 2-year interest rates, is around 150b. But now it 's 50bp. It's well below average, and being below average means the market now sees the risks of a recession as much stronger than inflation . So even if interest rates are lowered, the difference in market capitalization will not go from 50b to 150b. Then, we can interpret this as meaning that the market is still concerned about an economic downturn . That means the market will not give a high multiple to stocks or assets related to economic growth because it is worried about an economic downturn,

21:21 so it will lower the price a lot. But the reality is that if the competition grows, So, there is a possibility that the price will jump significantly when a surprise comes out . This means that if you take a long position on assets that represent the positive economic conditions, such as economic growth and the technology industry, there is an opportunity to see trading profits if a surprise occurs contrary to market expectations . Yes, that's all for today. Then I'll see you again in the next video. thank you