Strong labor market is crucial for recovering the economy.

In order to recover the economy damaged by the pandemic, firm labor market needs to be maintained. Unless, unwanted hyperinflation occurs, the Fed would not tighten their monetary policy until the unemployment rate falls pre-pandemic level. However, worries from public indicate that there are some signs of inflation, explained below.

1) Compared to the recession caused by financial crisis in 2008, the recovery will be much faster than then. 

2) Households and companies already have enough cash to spend or expand their business but they are saving it into the asset for later.

However, the Fed chairman insist that it is still way far from strong labor market. He believes providing much support to the economy is less risky than doing too little.

Global Monitor

https://www.globalmonitor.co.kr/view.php?ud=202102110529085201a6a872ef5_41

How were countries democratic during the pandemic?

Economic Intelligent Unit has rated the state of democracy across 167 countries based on five measures - electoral process and pluralism, the functioning of government, political participation, democratic political structure and civil liberties. Only 8.4% of world's population live in a full democratic state while more than 30% live in authoritarian rule. 

Governments of each country has imposed lockdown for countermeasure of pandemic causing downgrades across the countries. The survey has indicated that temporary loss of freedom to prevent the catastrophe affected on the overall score of the rate.

For example, U.S. has downgraded into flawed democracy category while Taiwan has upgraded into full democracy. 

이코노미스트의 자회사인 EIU에서 1년마다 한 번씩 각 나라의 민주주의를 측정하는 레포트를 낸다. 다섯개의 기준으로 민주주의의 정도를 측정하는데 2020년, 약간의 조정이 있었다고 한다. 팬더믹으로 각 나라의 봉쇄 조치의 정도에 따라 점수 평가를 하였는데 거리두기를 강화한 프랑스가 하향 조정 되었고 대만이 상향 조정되었다고 한다. 이번 평가에 따라 대만이 아시아에서 가장 민주적인 나라가 되었다고 한다. 

Economist

https://www.economist.com/graphic-detail/2021/02/02/global-democracy-has-a-very-bad-year

Bitcoin ETFs might launch this year, but nobody knows

 1. What would a Bitcoin ETF look like?

ETFs are known as exchanged-traded products. ETPs trade like stocks and can track any asset class by directly acquiring the securities or replicating the performance through derivatives. Largest Bitcoin ETP is EUR, listed on Stockholm Strock Exchange. The Grayscale Bitcoin Trust (GBTC) is physically backed, meaning it holds Bitcoin.

2. Is there demand for an ETP?

GBTC has surged its assets from $2.8 billion to $27 billion as demand soared. The recently launched BITW has also swelled in size from its December Debuts.

3. Why would investors pay such premiums?

Buying investment trust is easier than purchasing the coins themselves. 

4. Why have regulators shunned a Bitcoin ETF?

Because it is too volatile for regular ordinary investors since liquidity is very insufficient. That is why the approval is now delaying. Furthermore, Ms. Yellen noted concern for terrorist for criminal finance can use such coins, which makes difficult for Bitcoin ETFs to be approved. 

비트코인의 액면가가 일반 개인 투자자들의 매수 부담에 따라 ETF에 대한 론칭 이슈가 대두되고 있다. ETF 보다 하위 개념인 비트코인 ETP가 대용으로 거래가 되고 있는데 이의 시세는 비트코인과 더불어 같이 급상승 하였다고 한다. 하지만 비트코인 자체의 부족한 유동성으로 인해 변동성 또한 빈번하다고 한다. 이에 따라 금융 당국은 비트코인 ETF 거래를 허락하는 데에 소극적이다.

Bloomberg

https://www.bloomberg.com/news/articles/2021-02-10/why-a-u-s-bitcoin-etf-could-be-a-real-thing-in-2021-quicktake

 

Vaccinating to all around the country is better than posing vaccine nationalism

The pandemic will be under control everywhere if all countries are doing their best countermeasures. If not, then the alternative is stay at their own country. (National prisons) 

The recession last year was the worst global contraction recorded since the second world war. The economic damage will likely to remain permanently since the investment of business or companies shrank. Also pre-existing huge debt has added the fragility of the weakness of economy on top of pandemic recession. 

The only way to limit long-term economic downturn is to carry out virus under control. Vaccination to all people around the world are the key to solve it since global network of production and trade bind countries together. Even if vaccine is inoculated among only advanced countries, it does not settle cross-border travel for any purpose. Vaccine nationalism is not the triumph of pandemic; global distribution is the winning of this pandemic war.

팬데믹을 극복하기 위해서는 모든 나라들이 바이러스를 잘 통제를 하는 것 밖에 없다. 몇 개의 선진국들이 바이러스 문제를 해결을 한다고 해서 글로벌 전염병이 해결되는 것은 아니다. 이는 각 나라의 교류를 이행해주는 무역, 여행 등의 글로벌 네트워크에 디커플링을 하는 것이다. 백신 내셔널리즘을 주장하는 것이 아닌 전세계가 바이러스 통제에 고민을 해야 비로소 전 세계 경제의 회복속도가 빨라질 수 있다. 

Financial Times

https://www.ft.com/content/a14399fc-49c0-4e29-8354-54f9a0b9a895

Fed's Powell won't change its easy monetary stance despite uptick of BER

The Fed will stimulate economy through low policy rate and hefty asset purchases. It is unlikely to withdraw policy support by raising rates or tapering its bond purchases in the near future. Fed emphasized for more fiscal assistance for the economy as monetary policy alone is not enough to bolster labor market to its lowest unemployment rate. 

U.S. economy shrank 3.5% last year, the worst contraction just after World War II. The unemployment recorded worst during pandemic. While Fed officials don't expect the unemployment rate to near its pre-pandemic level until 2023. 

The Fed took unconventional steps last March to cut its short term interest rate to near zero and launched an array of emergency lending programs and implemented large-scale purchases of Treasury securities and mortgage bonds $80 billion and $40 billion respectively. However, Jerome Powell put most importance on fiscal policy as essential tool in order to recover the damaged economy. 

The Fed won't hike its interest for temporary uptick of inflation. The central bank won't change its policies unless they see persistent inflation rate of over 2% for some time. The chairman of the Fed said providing too much support to an economy is more preferable than doing too little until unemployment damage recovers to the pre-pandemic level. 

이중책무(Dual Mandate)를 목표로 하고 있는 연준은 고용이 팬더믹 이전 수준까지 회복을 해야 작년에 이행되었던 비전통적인 통화정책에 조금씩 테이퍼를 가할 수 있을 것이라고 WSJ에서 보도하였다. 현재는 2% 평균 인플레이션 목표제보다는 고용 회복에 신경을 더 쓰는 모양이다. 연준은 그들이 구사하는 통화정책에 더하여 강력한 재정정책 (Policy Mix 혹은 Monetary Financing of Government)이 수반되어야 경제의 회복속도가 증가할 수 있다고 주장을 한다. 

Wall Street Journal

https://www.wsj.com/articles/feds-powell-signals-easy-money-policies-to-remain-in-place-for-a-while-11612983601

How TSMC influential to its national economy

The demand of semiconductor has made TSMC the most precious chip-maker in the world. It is now under construction for the world's most advanced 3-nanometer chip production plant. The company says it is willing to pay lucrative premiums to the workers of construction during Lunar new year holiday. TSMC is also building research and data center in northern city.  

Construction workers across Taiwan are attracted to TSMC's sites as it pays much higher wages than elsewhere. It is strong pillar of Taiwan's economy and the center of the tech ecosystem. TSMC boosts capital expenditure by $25 billion to $28 billion, bringing workers from abroad to home amid U.S. China trade tensions. 

Taiwan's private and public sector investment is robust and economic growth beat Japan, South Korea and Taiwan, even outpacing China for first time in 30 years. (1/3 of Taiwanese stock market) Taiwan's semiconductor industry, the world's second-largest by revenue after the U.S. TSMC revenue accounts 15% of gross domestic product. 

TSMC is a chip supplier for tech giants like Apple, Google, Nvidia and so on. It makes chips for iPhone, Google's data centers, Nintendo and Sony game consoles, automakers such as Ford, Honda, Daimler and fighter jets. It supplied chips for Huawei's high-end smartphones and telecom equipment before the U.S. changed its export control rules to cut off the Chinese tech champion's supplies.

Semiconductors are no longer just components but strategic resources all major economies must secure. "Chips are really at the center of the global supply chain. But it also means it will receive all kinds of political and economic pressure from major economies."

팬더믹 확산에 따라 전 세계적으로 반도체 수요가 급증하고 있다. 각 나라의 봉쇄조치로 인하여 자택에 머무는 시간이 많아짐에 따라 데이터센터와 콘솔 게임기, 그리고 넷플릭스 등 인터넷 서비스 이용량이 많아져 반도체의 인기는 식지가 않았다. 반도체를 설계하는 기업들은 경쟁이 심화가 되는 반면, 비메모리 반도체를 생산하는 업체는 매우 한정적이라 TSMC가 현재 생산에 차질이 있는 모양이다. 이번에 증설되는 3나노 공장라인은 TSMC가 전세계 수요에 맞게 공급을 맞추기 위함으로 본다. 이에 따라 대만의 경제가 최근 몇년 사이에 아시아에서 가장 성장이 빨랐다고 닛케이에서 보도하였다. 

Nikkei Asia

https://asia.nikkei.com/Spotlight/Asia-Insight/Taiwan-s-economy-feels-heat-as-TSMC-feeds-global-chip-boom

Biden Administration is still reviewing about the trade policy that Mr.Trump implemented

The Biden Administration indicated that new frame of trade will pursue "worker focused" approach. This means the underlying direction of trade will focus on recovering American manufacture economy by promoting American export. It is still unclear how they will implement this policy specifically, but it is predictable that the trade will be based on environment-friendly factors and American workers. Also, Mr.Biden also has to come up with decision about legacy of higher trade barriers and large tariffs on foreign products, including goods from China. On Feb 1, Mr.Biden reinstated tariffs on aluminum imported from United Arab Emirates, which can be a clue to the future decision. 

바이든 정권의 도래함에 따른 글로벌 무역의 방향성이 궁금해진다. 전 대통령인 트럼프 줭권의 보호무역주의 정책을 유지할 것인지도 주목해봐야 할 문제인듯 하다. 하지만 유추를 해보자면, 바이든은 자국의 노동자를 위한 프레임을 구상했을 것이다. 트럼프와 같은 극단적이고 자극적인 정책을 추구하지는 않을 것이지만 주변국과의 강화된 동맹 기반의 방향성을 장려할 가능성이 매우 높을 것이다. 

New York times

https://www.nytimes.com/2021/02/08/business/economy/biden-trade.html

Fake Inflation

Rising break-even inflation rate, an index of inflation expectation, can be regarded as temporary phenomenon due to the elements such as base effect from pandemic, fake(?) CPI updates from Eurozone, steep backwardation of oil price by cutting supply, surge in freight rates due to lack of container, and rise of U.S. housing rents. However, break-even rate is far from its fundamental value. It can skyrocket as Gamestop and AMC did recently by investors' mere bets. 

기대 인플레이션이 최근 2%를 넘나들고 있다. 글로벌모니터에 따르면 세인트루이스 연준의장 제임스 불라드는 '연준의 새 프레임워크' 평균 인플레이션 목표제가 먹히고 있다고 언급을 하였고 이러한 현상은 언제든 환영이라고 말했다. 이러한 기대 인플레이션 상승은 여러 요소들에 기인하는데 이는 결코 지속 가능하지 않는 단기적인 현상에 머물수도 있다고 한다. 이는 펀더멘털에 의해 움직이는 것이 아닌 오직 투자자의 베팅에 의해서만 좌우되기 때문이다. 

Global Monitor

https://www.globalmonitor.co.kr/view.php?ud=2021020405300331841a6a872ef5_41