Stop slogan, back to the research: No new period, only Juglar cycle

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Lead: article takes you understand Juglar cycle!

Source | Guolei Hong outlook cafe, ID: glmacro Edit | Poker investor, please indicate the source

Introduction
: Why have not I comment

first, from the perspective of understanding DuPont dismantling “Juglar cycle” of the old and the new cycle of struggle, it is actually three factors of the long-period hit bottom.

Second, the slogan of talk about the “new period” is a misleading concept, Juglar cycle is “a new round of cycle” rather than their own new and old.

Third, the well-known technology to counter the “new cycle” is a logical confusion, intended just a mean reversion cycle.

Fourth, a Juglar cycle of three benefit chain: raw materials upstream, midstream manufacturing, exporting and shipping peripheral, elastic attention cycle of change.

Fifth, each round of Juglar cycle contains two to three inventory cycle, the impact of the first phase of the inventory down to the same is happening.

Sixth, understand Juglar cycle from the middle, not the economic cycle and asset prices as simplistic correspondence, rose is the Juglar cycle, fell burst cycle is not objective.

Conclusion: the slogan of a well-known and macro analysis of two traps: Also on the macroeconomic research of our ideal.

text:

A friend asked me why there have been no comment on the “old and the new cycle of the dispute”, is actually very simple, old and new, in my opinion
dispute cycles have conceptualized, extreme tendency dispute with the seller will often lose cool, so research objectivity is lost, so that investment and research circles of the growing financial media.

Obviously, the “new period” is a lack of academic rigor words, is a suitable media but not for the vocabulary of investment research; but equally, “new cycle” consistent Peoples rebuttal, then misses
seven inches.
Cycle is just a mean-reversion phenomenon, it does not bear the economic reborn task; there is some logic to confuse trend and cyclical, structural and cyclical suspect.

In fact, there is nothing “new cycle”, the exact concept is that we put forward to the beginning of the “Juglar cycle.”
“Production cycle” was approximately correct, but it does not seem to be complete because one bottom Juglar cycle, not only the capacity variations, but includes the name of growth, capacity utilization and micro leverage, constituting a three
dismantling wheel cycle ROE and capital expenditure cycle.

a Juglar cycle does not mean that the economy will start straight up, from experience, the last round Juglar cycle includes two to three of the inventory cycle, that is, six large inventory rise and fall; the same
, a Juglar cycle will start a profound impact on upstream raw materials, midstream manufacturing, exporting and shipping of the three peripheral chain, asset prices this year proved the preliminary judge us for the first three of the chain of elastic recovery.
But this is a mid-tempo, with short-term ups and downs to set Juglar cycle, a new cycle is up, down a burst cycle is, in the long period is contrary to the intention.

Let me explain six aspects to this question will, for you Fang reference.
All logic and judgment comes from our previous research report has been released.
For ease of reading, we only logical column, not the column chart.

slogan is mortal, and eternal calm and serious research.
And we encourage each other.

First, from the perspective of understanding DuPont dismantling “Juglar cycle”, it is actually three factors of the long-period hit bottom.
As we determine the beginning of the year 1999 – Year 2008 is a Juglar cycle; 2009–2016 years is another round of Juglar cycle.
So, a Juglar cycle bottom, touch what is?
Any macroscopic phenomena, are derived from the microscopic processes behind it.

First bottoming nominal growth.
The first quarter of 2016 nominal GDP growth rate of only 7.1% in the second quarter, 7.3%, 7.8% in the third quarter.
Annual report at the end of 2016, “to name, deserved,” we predict return to high nominal growth in 2017 will be the biggest feature of the Chinese economy, vigorously data later verified this process, in the fourth quarter to 9.6
2017 first quarter to 11.8, up 11.4 throughout the first half.

changes in nominal growth rate is the root of all economic phenomena change.
Whether the stock market is concerned about corporate profits, interest rates or bond interest, it is essentially determined by the nominal growth rate of the economy.

If we pick dismantling nominal growth from the perspective of the volume and price, is the recovery of three parts: the added value (not including export value), export value, the price (PPI
, PPIRM, CPI).

nominal growth rebound in corporate profit margins bring restoration, and this is the basis for a new round of Juglar cycle (capex cycle) started.

followed turnover (capacity utilization) of the bottom.
More than a Juglar cycle as control, the textile industry in 1998 production target to lead to social redundant capacity clearing stage, the traditional industry capacity utilization rate of 31.1% from a low level to pick up sharply, driven by recovery in corporate cash flow, and then continue
driven by capital spending upward.
A similar situation, 2014– deflation adjustment in 2015, global commodity bottomed out in early 2016, three incidents supply-side reform period since the end of 2016 affect each other, co-led the round bottomed asset turnover.

is the turning point of change more than the steel industry.
In this regard, CITIC Construction Investment Fund Wang Qi articles always have exciting data, the entire company listed non-financial fixed assets turnover appeared for the first time in five years to improve and promote the ROE synchronization rebound.
Asset turnover here is actually capacity utilization.

is again bottomed micro leverage.
Comes to leverage, pessimistic atmosphere seems to come up, there is often the subject of well-known tendency.
But in fact, as we: pointed out, “China’s macro and micro economic differentiation leverage”, the leverage has many indicators point to a different macro and micro lever, even with microscopic or macroscopic leverage, there will differentiate different caliber.
And part of the reason for the differentiation is the high caliber leverage more financial resources to flow to the resource-based state-owned enterprises, non-industrial enterprises, financial enterprises.

In the Juglar cycle down cycle, a higher degree of market most of the companies have been de-leveraging.
As the asset-liability ratio of industrial enterprises leverage one of the micro indicators sign, since 2010 after the shock has been down, bottom features experience more obvious.
And we use a perfect correspondence between the equity market and micro leverage, backward demonstrate the effectiveness of asset-liability ratio of industrial enterprises this indicator.

nominal growth rate of the bottom, asset turnover of bottoming, bottoming microscopic leverage brought together to repair the shock of ROE.
We look at the manufacturing sector listed companies ROE and ROIC, which from the beginning of 2016 the trend has been bottoming out.
The ROE and ROIC on the experience ahead of the manufacturing investment.

This is a “Juglar cycle,” the essence of the process.
In essence, the body is adjusting the micro-economic profitability in place, and the reply from the bottom to the mean equilibrium position.

Second, the slogan of talk about the “new period” is a misleading concept, Juglar cycle is “a new round of cycle” rather than their own new and old.
Understanding this process, we know that the concept of inappropriate “new cycle.”
Cycle itself is not new and the old, is like the cycle of the four seasons, we will not second arrival of spring called “new season.”

2016 the intersection of Q3 open Juglar cycle are “new round” cycle, that is, with the nominal growth rate bottomed out, asset turnover, leverage microscopic three clues picked up on a capital expenditure
the main depreciation period ended, a new round of capital spending cycle is initiated.
We can see that the device class business orders pick up, manufacturing investment bottomed out, and can occur both as a production equipment, machinery and electronic equipment and other indicators of export delivery value of the investment cycle validation 5000 industrial enterprises, production and sales of construction machinery, machine tools, etc.
obvious reaction.

This is the Juglar cycle.
If we generally use the “new cycle” of such a media term, we do not even know how long it will be new; only recognize a Juglar cycle, we can have the history and experience rising slope period as a reference.
For each round of Juglar cycle experience about the case of the inventory cycle includes two before we can have a clear understanding.

Third, the well-known technology to counter the “new cycle” is a logical confusion, intended just a mean reversion cycle.
Most refute “new cycle” of the article, is caught up in a new logical confusion.
The so-called long-term economic slowdown does not change, no change in the economic structure, or those who pull the industry and other assertion is confusing the trend and cyclical, structural and cyclical.

and Periodic trends are different.
In the end of March report “three cycles superimposed Detailed framework,” we have pointed out, to discuss economic growth, you first need to distinguish between the trend of the economy (trend) and periodic (cycle).
Trend (trend) reflects the change in the potential growth rate in the long cycle; cyclically (cycle), ie the change in trend Volatility, either a rising or falling trend, there will be a cycle.
So we count the time, sometimes with some technical methods to work stripping the trend and cyclical.

Our trend growth in OECD countries, for example, that in 60– once more than 6 percent in the 1970s, and now basically only 1-2% of the.
Behind this change is population growth and other factors long period of change.
“Economic growth down” is a big trend right, but not included in the process cycle it?
Obviously not.
Over the past 50 years, including more than five of Juglar cycle and more than a dozen rounds of the inventory cycle.

and structural periodicity is also different.
Let’s start with the structural itself.

First, the structure of the economy is a gradual process, “there is no fundamental change in China’s economic structure” is a false notion.
To Chinese tertiary industry contribution to GDP, for example, it has grown from 30% 90 years 40% 00 years 50% in the mid 10’s, up to the current nearly 60%.
Expenditure under Capital Formation Act (the so-called investment-driven) contribution to GDP, has from 00–56% 10 year average, down to the last six years the average of 46%.

Secondly, “or those who pull the industry” is a false proposition.
For China’s current stage of development, the real estate, infrastructure, exports are the three engines is reasonable.
Even the next decade, the proportion of three in the economic development of a significant decline in its position would still be difficult to replace the other chain.

again, even iron and steel, coal, cement and other industries, in fact, what is not a sunset industry in the strict sense, they are just upstream of the relatively bulky.
After shrinking supply and environmental transformation, these industries will remain China’s industrialization and global industrialization and infrastructure to provide the most basic capacity.
They and mouse, entertainment, sophisticated, like, different positions in the industry chain differentiation only.
Capacity to remove them is not per se, but to rationalize the distribution of the feed end.
The current supply contraction speed, adjust this part of the production capacity is not a long process, a lot of industry capacity clearing may occur at any time.
You can not adjust capacity to conceptualize.

Broadly speaking, “Chinese economy is not clearing” is also not desirable.
What is clearing?
Clearing economics sense is to achieve a balanced supply and demand, supply and demand are not directly measurable, in terms of display measure, the price index of supply and demand is a sign of clearing.
Complete clearing price revaluation is not regulated in the background.
This is not to say that there are economic problems, there was a problem, and that is not clearing.
If so, they are violating the clearing falsifiability, it has become a universal explanation of the concept.

We talk about structural and cyclical relationship.
Structural gradient and gradient periodicity is two parallel processes.
Analogy, like a person experiences repeated every day at sunrise, noon, sunset and night, which is periodically; in the process, he slowly growing understanding of life is increasing, which is a structural
.
Two variations of different drive, not to say that there is no significant structural adjustment, there will be no new round of cycle start.

is a mean period intention reply (mean reversion).
All experience is mean reversion phenomenon can capture rational basis.

“Juglar cycle” mean on this macro phenomenon is a combination of a series of micro-reply process, shrink from the demand to leverage adjustment, bottoming out from the micro to leverage capital turnover rate of recovery from the capital
turnover rose to repair ROE and ROIC, ROE repair from capital expenditure to rise, demand rebounded from capital expenditures to pass along the chain, from requirements to pass raw material repricing.
It was a cold and objective process without any well-known of color.

Fourth, a Juglar cycle of three benefit chain: raw materials upstream, midstream manufacturing, exporting and shipping peripheral, elastic attention cycle of change.
A Juglar cycle up, which benefit the industry?
Logically, mainly three chain: raw materials upstream, midstream manufacturing, export and shipping peripherals.
They are benefiting from capacity expansion, capital expenditure to rise and demand-side resonance.

The first upstream prove resilient material.

vigorous start in early 2016 commodity bottoming process is the first pilot round of Juglar cycle.
It is precisely because the market effectively, the upstream raw material spontaneously to reflect a Juglar cycle starts.
2017 May-August restocking of raw materials is an additional pulse, because the economy experienced a stock peaked, still super toughness, which further proves the existence of Juglar cycle.
Revaluation upstream raw material further added at Juglar cycle and supplying the expected contraction expected.

The second is to prove their resilience midstream manufacturing.
Reaction field of construction machinery in 2017 is the first wave of the middle reaches of the manufacturing sector, because the replacement logic devices behave more laws in this area.
From the point of view of experience law, the second wave of big probability of occurrence in the second round in the inventory cycle in the second half of 2018 may turn round Juglar cycle, the drive will be additional capital expenditure.

The third chain is export and shipping.
The chain has initially proven themselves resilient restoration in Juglar cycle started in the capital markets, including Hong Kong, including.
Since the second half of 2016, the export value for the impact of China’s industrial added value is increasingly significant.
From a long period of export and shipping features high flexibility and experience, the current process may be just a beginning.
2015–2016 years is the bottom round of global trade cycle, 2017 is the first year of restoration, in 2018 the industry chain will continue to rise repair.

Fifth, each round of Juglar cycle contains two to three inventory cycle, is also to be concerned about the impact of the first phase of the inventory decline is happening.
From past experience, Juglar cycle length is generally 7 – 10 years, which contains 2-3 ring inventory cycle.

from a cross-reference of 2000– Juglar cycle 2008 view (which is the period of the rise of 2000-2006), the second round of the inventory cycle (rising period November 2002 to November 2004
month, after two quarters of passive rise) will be stronger than the first round of efforts, fundamentals-driven features more obvious, it will promote economic prosperity into the high point of the current round of Juglar cycle.

Juglar cycle round the first round of the inventory cycle rose from early 2016 to early Q3 2017 Q2, the current high probability in the beginning inventory downstream segment (May was the first month downtrend).
From the CRB, the base and the down-paced look at the PPI, PPI It is possible that bottomed out at around the end of 2018 Q1, so the inventory cycle will bottom out in the beginning of the end of Q2 2018 Q3.
Q3 2018, the Chinese economy may open a new round of the inventory cycle, that is, the current round of the second round of the inventory cycle Juglar cycle, will drive capital spending will be stronger traces.

in the current downlink period in which the first round of the inventory cycle, there will be a moderate economic slowdown (slow downward from the inventory cycle, mild departure from the supporting Juglar cycle).
We estimate that in 2017 Q3, Q4, 2018 Nian Q1, will be in the high probability of a moderate slowdown.

Sixth, understand Juglar cycle from the middle, not the economic cycle and asset prices as simplistic correspondence, rose is the Juglar cycle, fell burst cycle is not objective.
We understand what Juglar cycle, Juglar cycle what characteristics, Juglar cycle, including what stage we will be able to further understand:

First of all, understand the Juglar cycle from the mid-meaning, do not suffer too much
Short-term fluctuations in economic data, disturbance.
Which is not to say good-month data is Juglar cycle, which is the difference between the monthly data falsification Juglar cycle, we need to focus on some of the core medium-term trend indicators.

Second, understand the Juglar cycle from fundamental sense, it is an objective understanding of the relationship and asset pricing.
In this round of Juglar cycle, we have clearly seen some start-related asset pricing logic and Juglar cycle changes, such as fluctuations in raw material inventory elasticity narrowed relative continuity of the asset classes the opportunity to cycle, cyclical stocks uncertainty discount
the decline and so on.
But the economic logic does not mean asset pricing logic to the stock market, it also will suffer, affecting cash interest rate policy factors, market factors periphery, is expected to be affected by fluctuations (the dog with the owner of the classic metaphor), so we want
long cyclical effects and short-term fluctuations in stock distinguish, not a rose is a Juglar cycle, a fall is the “cycle burst.”

slogans and well known of the two traps macroscopic analysis: Also on the macroeconomic research of our ideal.
At the end of an experience to “lose research, we will also be more macro reports homeless” we have pointed out, “a lament Eizo, dared not country” (known of) and the “three-step
Hansha, Red star Shines me to fight “(slogans) are now two errors macroeconomic analysis.

If the known characteristics of the sentence is summed Borges said, “the world always to go out,” this type of analysis is often based on multi ought to ignore the real probability; structural basis
, ignoring cyclical; based on the trend of ignoring marginal.
Marginal pricing and cyclical fluctuations often is a basic law of capital markets, the Arctic will have seasons.

is characterized by uniform slogans, a consistent, repeated again and then repeatedly forming seller strengthen the memory tag.
The investment research itself is destined to face a lot of non-continuous unstable situation, the face of outliers, the face of adjustments and amendments to the pre-judgment.
If the slogan first, the selection of study type of screening is often that choose to support only their own conclusions favorable evidence, empirical regularity and integrity of the study show there is no way to get at this time of the study from virtually lost
the significance of investment judgment.

and slogans are just two of the known traps macroscopic analysis.
In the “old and the new cycle of struggle” on the other, we neither agree on a slogan, not to oppose the recognition of well-known slogan.
Mutations not found in nature, and the rule is a data cycle of ice present.
We macroeconomic research ideal, or to be treated as an experiment, like data and reasonable assumptions, carefully verify.
We may not be able to do yourself, but still hope that the efforts in this direction.
Media age has done too much interference seller of investment research, and we are convinced that only classical studies will create value.
Research intentions rather than by mouth.

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