Hello everyone. In the United States, there have been some signs of a slowing economy, and the timing of interest rate cuts may be delayed. Many of you may have doubts. So, how should we invest? We have invited an expert in this field to have a discussion. Today, we have invited Writer Shin Yeon-gi. Hello, could you please introduce yourself briefly? Hello, I'm Shin Yeon-gi. It's a bit difficult to pronounce. Even now, many people mispronounce it as Yeon-gi or Yon-gi. In fact, my parents wanted me to be a pillar of the country, so they had me study Chinese characters. Now, I act and sometimes ignore the two laws and call myself an actor. Even if I'm not a pillar of the country, I wanted to play a significant role in finance, so I wanted to try something big in the financial industry.

I've been in the industry for about 20 years, and actually, just last year, after leaving Shinhan Bank, I stepped into a new area called token securities. I am now working hard in this field. So, talking about bonds is good, and recently, I have been participating a lot in financial discussions related to token securities and blockchain. Today, this gathering has been quite informative and I hope it was beneficial. Thank you very much. Also, you have published a book this time, right? Rich dads don't only teach stock investments; they solely focus on teaching us about managing assets and not just stocks, stocks, stocks. In fact, stocks are not everything, not the main course. From that perspective, besides stock investments, we should also consider various other assets. Yes, especially the 14 investment strategies are here.

Yes, yes, yes. Could you please explain a bit for our subscribers? Thank you. Would that be possible? Yes. Actually, I published three books before. Last year, I published three books as part of the New Manager series, focusing on bond economics indicators and financial indicators. I incorporated a lot of what I had been working on during that time, so it was more accessible to job seekers and those currently working in the bond or other capital markets. I aimed to make it helpful for them. However, as I continued to write, I mixed in a conversational tone, thinking it would be easy to understand, but there were more opinions that it was difficult than I expected. So, this time, I tried to make it easier and more accessible for the general public.

How about writing a personal finance book that people can follow? In fact, there are so many stock experts in Korea and there are many books as well. So, I tried stocks once, but I felt more comfortable with bonds and recently, there has been a spotlight on alternative investments like pieces of art and online platforms. I wanted to introduce these somewhat new types of investments. That's why I decided to publish this book. There are about 14 different types included. So, I wrote about these 14 types. Lastly, you know, we usually have a habit of investing money when we have it, but I thought it would be good to encourage the habit of planning ahead. Therefore, at the end, I included an example of an investment plan. Anyway, I tried to include those insights and various things in the book.

Let me ask you about various strategies. First, how about briefly diagnosing the U.S. economy? Yes, if you look at the U.S. economic growth rate, it has been relatively stable quarter by quarter compared to the previous year. However, it showed a significant drop in the first quarter with a growth rate of 1.6%. Also, the second estimate, which is closer to the final figure, has been revised down to 1.3%. Therefore, there are questions arising whether the U.S. economy is heading towards a recession. Moreover, with inflation not under control, there are concerns about stagflation. Many are raising such doubts. How do you assess the U.S. economy? Personally, as someone who has been in bonds for a long time, I may have some expectations of an economic downturn.

So, I need to make some money, but honestly, I'm not expecting such a strong economic downturn at the moment. Personally, I have about three expectations, at least for this year. The Biden administration is injecting a lot of money, so I think the liquidity is somewhat supporting the capital market and sustaining the economy. So, in a way, I think that after the coronavirus in 2020, the continuous supply of liquidity, which is a different monetary policy from the traditional perspective, is still ongoing. Yes, I raised the benchmark interest rate last year, but there is also a gradual reduction in what we commonly refer to as the balance sheet, and after the Silicon Valley bankruptcy in March last year, there was a regional bank crisis.

In terms of this, the Fed is quite promptly supplying liquidity in my view, which somewhat supports the market to a certain extent, so it is not a situation where an economic downturn is naturally coming. I feel like we are somewhat postponing the timing of an economic recession. Stocks are being evaluated quite highly, which is true. In fact, just last March, if there hadn't been many measures, there could have been a steep drop. However, recently, the profit margins of companies are not that bad, and thanks to new technologies like AI, there are areas where productivity is increasing. Although it is true that inflation is somewhat worrisome at the moment, I am somewhat less concerned about the possibility of an economic recession when considering whether the fundamentals of companies are good. Lastly, this is somewhat fundamental.

If we look at it in parts, recently, information is coming in quite fast. So, the speed of reacting in real-time according to this information is quite fast. Eventually, the economic recession that has been expected to occur has a bit of a setback. We anticipated an economic recession at this time, but in reality, rather than the possibility of an economic recession, there is a bit of a setback due to being more focused on the brighter side and then being a bit complacent. However, at present, for example, the Fed has the information power to use insurance interest rates as a monetary policy to prevent an economic recession at any time, of course, it happened once in the 90s. When we look at it this way, it seems that at least this year, the economic recession won't come as deeply as in the past. That's right. Then from three perspectives, the first is to prevent an economic recession through liquidity.

The second is that the fundamentals of companies' performances are also good. The third is that due to the information power, there is enough proactive response ability, so they do not let the economy fall into a recession. Therefore, even if a recession comes, they do not push it back, so there seems to be such an influence. This is how the strength of the U.S. economy is diagnosed from these three perspectives. Well, as you mentioned earlier, although not this year, there are signs of economic slowdown, which may be postponed to next year or later due to the presidential election. You are saying that it may come after the presidential election. I see it that way too. However, the extent of the economic downturn is much shallower than in the past. It can be seen as closer to a soft landing. They are leading towards a soft landing. I hold such a view.

The signs showing a soft landing related to a soft landing are more likely to be seen not immediately, but around next year, after the presidential election. From that perspective, regardless, although you mentioned bonds first, for those who are interested in investing in overseas bonds, it is true that some expect a slowdown in the U.S. economy. From the standpoint of those who have such expectations, the analysis that the economy will not recover immediately can sound more objective. I dare not make judgments, but from that perspective, it naturally sounds like considering shifting to overseas bonds. You are probably familiar with what is commonly dealt with in overseas bonds, but if you could kindly explain it more easily, I would appreciate it. Many people are now well aware of overseas bonds.

I started to know. In fact, I have been working as an overseas bond manager for a long time. Normally, when we say FMC, managers like us used to start work at 3 a.m. and finish around 2:30 a.m. We restored FMC at that time because no one was watching, so we either watched it on YouTube or went to the website of the FRB, the Federal Reserve Board, to actually watch it in real-time. Since there was no interpreter, we listened in English, quickly summarized it, and wrote down the details with the statement that came out. I remember reporting it above. But recently, various newspapers and YouTube channels provide interpretation very kindly, even talking about future prospects, so it has become an era like that. So, actually, many people are more interested in overseas bonds than before, and in reality.

Now, individuals who live directly are also emerging. But now, I think most of the bonds we encounter are mostly U.S. government bonds. So, I think that U.S. government bonds are like the backbone, and Korean government bonds are considered to be at a similar level. But in reality, there are many types. For example, high-grade bonds issued by companies like Apple and Microsoft have been raised to investment grade by rating agencies like Moody's. However, there are also speculative grade bonds like those of Tesla or Netflix, which are slightly split. Furthermore, looking at the past, in 2008, the subprime mortgage crisis occurred, which led to products based on mortgages like MBS. Additionally, there are structured products that package loans, which I once dealt with.

There are various types of bonds created by time. Going further, I am not satisfied with the interest rates of bonds, so there are many types of things like convertible bonds. So, rather than knowing all these types, I think investing in funds related to these types, such as ETFs, could be a form of investment technique. Alright, then I asked about the consensus on the U.S. economy, what are your expectations? You've helped us understand, so now let's try to link the macroeconomic cycle and foreign bonds. Indeed, the field of foreign bonds is closely related to domestic political situations, macroeconomics, and interest rates, so interest rates are ultimately determined by the macroeconomic situation.

Because the interest rate affects the rate of return, we are now approaching this with some relevance. If you could explain this part specifically, it would be more helpful. As the professor mentioned, I believe that all prices in every financial market start with interest rates. So, how these interest rates move or what factors affect these interest rates are quite important. Also, I think geopolitical factors are also significant factors that influence these interest rates. So, nowadays, with many inflation issues arising, we become quite interested in how inflation affects interest rates. For example, when prices rise, interest rates rise, and when interest rates rise, loans decrease, leading to a decrease in corporate investments.

There is a growing interest in the effects of such trends on the decrease in margins for companies. Consequently, bonds whose prices are determined by interest rates, especially global bonds, are receiving considerable attention. When we look at the macroeconomy and international situations, understanding and studying the price trends of global bonds, especially safe assets represented by U.S. Treasury bonds, could be very helpful. Now, after defining bonds, let's talk about the U.S. economy. Even if the U.S. economy is experiencing a soft landing, before a full-blown economic downturn, at this stage, it could be considered an opportune time for bond investments.

Yes, that's right. When you just talk about the answer, you say it like this. Since last year, I've been saying that bonds should be bought every time the interest rates go up. So, it's not about setting an absolute level, but at the current point, since the end of last year, I've been consistently saying to buy steadily if the level is around 4.25 or higher. Whether it's institutions or individuals, there may not be many securities firms that can directly access buying government bonds, but ultimately, looking at it precisely, if it's 4.25 or higher based on a 10-year benchmark, you can buy it sufficiently. I looked at it this way because the standard of 4.25 is somewhat based on the real interest rate level, considering the term premium. In the end, when the real interest rate reaches the neutral interest rate level of 2.75, and considering the term premium, which is usually about 150 basis points, when it reaches around 150 basis points for a 10-year period, it comes out to 4.2. So, that's why.

If it's over 4.25, there is room for us to pay capital gains when it drops sufficiently. I said something like this. It went to 4.6, then to 4.4, and recently, we are forming a range from the mid-4s to around 4.6. I think this level of carrying is sufficient for income and I believe it is a level where we can obtain capital gains in the future. I think the current level is appropriate. From the perspective of the economic cycle, of course, as I mentioned, there is a feeling that the economic downturn is slightly delayed. Currently, the economic cycle is clearly transitioning from the late expansion phase to the early downturn phase, somewhat like being on a plateau after climbing a mountain. So, ultimately, how will it unfold? From the perspective of safe assets, we should increase duration.

In the end, now we can expect a slight decrease in bond interest rates. On the other hand, in the case of corporate bonds, narrowing the duration can widen the spread. So, the spread between the overall corporate yield and the government bond rate can widen. This part, especially for corporate bonds, known as high-yield bonds, by reducing the duration, eventually, we can expect some income. Combining these two strategies was highly recommended. So, ultimately, yes, but increasing the duration of safe assets and reducing the duration of risky assets, I would like to suggest this approach. Yes, you explained it very well. However, I have been reviewing international organization economic outlook reports, and the views of international organizations are not different. Even the IMF is looking at it, for example, the U.S. economy in 2024.

The growth rate has been revised upward to the upper 2% range, and on the contrary, the 25-year growth rate is expected to come back down to around 1%. So, even if the U.S. economic growth rate is in the 1% to 2% range, it's not considered substantial. Therefore, even if we call this a soft landing, it could still be seen as an economic downturn. Since it's around 2%, it seems like the economic recession you mentioned is being pushed back. I think that view is quite appropriate. So, even here, now in the book, you are talking about strategies and not just saying buy or sell. You are encouraging everyone to make their own judgments. Yes, that's right. Therefore, prepare your investment strategy on your own. You have written this book with a perspective on bond investments, foreign bond investments, and asset management strategies. So, you need to have some criteria in mind to move forward with this picture.

If the writer is already drawing a picture, it may be good, but if you could tell our readers how to draw this picture, every central bank has its goals, so stabilizing prices, promoting economic growth, and stabilizing the financial market are the three main pillars. Similarly, when we look at the financial market, there are three main aspects: growth, employment, and prices. It seems necessary to see how these three things are intertwined. It would be easier to draw a picture with this. In fact, for example, when COVID-19 broke out in 2020, if we look from 2021 until now, prices have actually risen the most, right? Ultimately, if prices rise, the central bank will eventually raise the benchmark interest rate to achieve price stability.

Raising interest rates is actually seen as having two reasons. As I mentioned earlier, one part is to stabilize prices, and the other part is to cool down parts of the economy that are overheated in terms of growth. In any case, in the case of the United States, both of these reasons applied. Ultimately, when interest rates are raised to control inflation, the role of deliberately slowing down the economy is now taken on by the Federal Reserve. So, investors see it this way: Ah, the Fed is slowing down the economy, so the value of companies will decrease. Then, there is a high possibility that investors will significantly reduce their positions in stocks, and instead, if the economy slows down, the phenomenon of preferring safe assets, as we learned in the past, will occur, so interest rates will decrease. However, one slightly different aspect from the traditional past is that central banks are now taking unconventional approaches.

The point is to approach monetary policy. So, even if the base interest rate goes up, looking at recent fiscal policies such as the Silicon Valley incident last year, money is still being eased. Therefore, a somewhat contradictory phenomenon is currently occurring. Although the interest rate has been raised to a considerable extent, it was raised quite rapidly, right? From zero interest rates to the current 5.25% - 5.2% to 5.5%, this base interest rate is actually the highest in nearly 10 years in our country, at 3.5%. Nevertheless, the employment situation is quite good, and the economic growth rate is in the late 2% range, unlike the U.S., which saw 5% in the third quarter of last year. When you look at it this way, it seems strange. This is why I continue to invest in stocks. However, ultimately, if it becomes too overheated and rises too much, it will fall.

Because timing is important, we need to pay attention to these aspects. Ultimately, due to inflation, if such a tight monetary policy is implemented, growth will slow down and employment will also be affected. When these cycles are intertwined, we can somewhat draw a big picture of the current situation. This big picture suggests that we should increase our allocation to bond investments and reduce the allocation to stock investments. This seems to be the direction we should take. Providing guidance on how to design our portfolio strategy will be helpful to you all. Moreover, understanding the global economic cycle as our author mentioned, and contemplating how to allocate assets within that cycle, will be beneficial for those of you who are pondering about such strategies.

It seems like I'm going to ask you a question now. In the future, will the NASDAQ stock market crash? Will the stock prices drop? Could there be enough shock to impact the global economy?

미국 경기침체 이렇게 온다. 채권시장 이상반응 포착. [경읽남과 토론합시다] | 신년기 작가 1편

경제를 "빠르고 쉽게" 들려드리는 경제 읽어주는 남자, 김광석입니다.

경제전망, 경제동향, 경제 트렌드, 산업 동향, 경제/산업 이슈, 기업 정보, 주식 및 부동산 투자 정보 등을 여러분과 공유하도록 하겠습니다.

'경제 읽어주는 남자TV' 채널은 크게 4가지 시리즈로 구성되어 있습니다.
[경읽남] : 매주 하나씩 경제공부 하세요~ (월 저녁 6시)
[책인싸] : '책'을 통해 '핵인싸'를 만나, '인싸이트'를 얻는다. (수, 금 저녁 6시)
[즉시분석] : 경제 속보를 심층분석한다. (수시)
[클로즈업] : 경제를 더 가까이.... 여러분께서 궁금해 하시는 경제이슈를, 더 가까이 다가가 말씀드릴게요~ (수시)
[경읽남과토론합시다] : 일방적인 인터뷰가 아닌 쌍방의 대담 형식의 토론(수시)


∥∥∥∥∥∥∥∥∥∥∥∥∥∥∥∥∥∥∥∥∥∥∥∥∥∥

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