Macro Analysis

Macroeconomic Analysis

Overview

Interprets macroeconomic data and central-bank policy, identifies the current economic-cycle stage, and derives major-asset allocation direction. Covers the three major economies of China (PBOC), the United States (Fed), and Europe (ECB).

Core Indicator System

Growth Indicators

Inflation Indicators

Rates and FX

Four-Stage Economic Cycle Model

Merrill Lynch Clock Framework

        GDP↑ + CPI↓           GDP↑ + CPI↑
        ┌─────────┐           ┌─────────┐
        │ Recovery │ ────→    │ Overheat│
        │          │           │         │
        └────┬────┘           └────┬────┘
             ↑                     │
             │                     ↓
        ┌────┴────┐           ┌────┴────┐
        │Recession│ ←────     │Stagflat │
        │         │           │         │
        └─────────┘           └─────────┘
        GDP↓ + CPI↓           GDP↓ + CPI↑

Asset Performance by Stage

China-Specific Adjustments

• Real-estate cycle: property sales / investment is a core variable in China's economy, and the policy response during downturns determines the turning point
• Infrastructure offset: when property is weak, infrastructure often strengthens (countercyclical adjustment), so track the pace of special-bond issuance
• Export orientation: external demand (US PMI / Eurozone PMI) affects manufacturing conditions
• Policy-driven market: tone-setting from Politburo meetings / the Central Economic Work Conference matters more than the data itself

Central Bank Policy Analysis Framework

Federal Reserve (Fed)

Sequence to watch: FOMC statement → dot plot → Powell speech → meeting minutes

Fed decision function: core PCE > 2.5% → tightening bias; unemployment > 4.5% → easing bias; when the two conflict, focus on which deviation is larger

People's Bank of China (PBOC)

Toolbox:

European Central Bank (ECB)

Core variables: HICP (harmonized CPI), Eurozone PMI, Germany-France yield spread Special feature: large divergence among member economies, creating a "one size fits all" problem

Analysis Framework

Step 1: Data Collection and Current-State Description

Collect core indicators from the latest 3 months:
- China: PMI, CPI, PPI, M2, aggregate financing, LPR
- United States: nonfarm payrolls, CPI, core PCE, ISM PMI, Fed rate
- Global: oil, copper, US dollar index (DXY), VIX

Step 2: Cycle Positioning

Decision criteria:
1. GDP trend: accelerating / decelerating / topping / bottoming
2. Inflation trend: rising / falling / topping / bottoming
3. Policy direction: easing / neutral / tightening / turning
4. Composite stage: recovery / overheat / stagflation / recession
5. Cycle position: early / mid / late

Step 3: Policy Impact Assessment

1. Recent policy events (last 30 days)
2. Interpretation of policy intent (support growth / control inflation / contain risk)
3. Transmission paths to each asset class
4. Lag estimation (6-12 months for monetary policy, 3-6 months for fiscal policy)

Step 4: Asset Allocation Tilt

Based on cycle position and policy direction:
- Overweight / neutral / underweight: China A-shares / Hong Kong stocks / US equities / bonds / commodities / cash
- Style tilt: growth vs value, large cap vs small cap
- Sector preference: cyclical / defensive / growth

Output Format

## Macro Environment Assessment

### Snapshot of Core Data
| Indicator | Latest | Previous | Trend |
|------|--------|------|------|
| China PMI | 50.2 | 49.8 | ↑ |
| ... | ... | ... | ... |

### Economic Cycle Positioning
- **Current stage**: early recovery / mid-overheat / late stagflation / mid-recession
- **Core logic**: explain the basis in 2-3 sentences
- **Estimated remaining duration**: expected to last another X months

### Central Bank Policy Analysis
- **PBOC**: easing bias, likely another 25bp RRR cut in Q2
- **Fed**: hiking pause, watch the June dot plot
- **Policy conflicts**: whether there are conflicting policy signals worth attention

### Major Asset Allocation Tilt
| Asset | Recommendation | Logic |
|------|------|------|
| China A-shares | Overweight | Policy bottom confirmed + loose liquidity |
| Bonds | Neutral | Limited room for rates to fall further |
| Commodities | Underweight | Weak demand |
| Cash | Underweight | High opportunity cost |

### Risk Warnings
- Risk 1: ...
- Risk 2: ...

Notes

1. Data timeliness: macro data is released with lags; PMI is the timeliest (start of month), GDP is the most delayed (quarter-end + 15 days) 2. Do not predict precisely: macro analysis provides directional judgment, not exact levels or timing 3. Focus on marginal change: direction and speed of change matter more than absolute levels 4. China-specific feature: policy intent > economic data, and major meeting tone-setting has the highest priority 5. Global linkage: the US dollar / US Treasury yields are global pricing anchors, and Fed policy affects global liquidity 6. Avoid hindsight bias: analyze based on the information available at the time, not by reverse-engineering from future data