discussion comments

Make comments on the two posting and add additional comments to it. Add new points of view to it.

First posting:

Business Cycles

COLLAPSE

窗体顶端

The business cycle as pointed out in the conversation tread is function of fluctuation of economy over a period of time.  The characteristic of business cycle is it has recurring pattern of expansion and recession.  Business cycles are measured by downward and upward movement of GDP around its long-term growth or growth rate of GDP.  As demand increases, businesses hire new workers. The increase in consumer income further stimulates demand.

An  example would be during expansion cycle companies that can benefit from growing business such as technology and banking stocks tend to outperform.  This macro factor can be used to determine how to balance and manage risk in the portfolio.

窗体底端

Second posting

Exchange Rate

The exchange rate is most watched macro factor as it can have direct/indirect effect on the international markets.  A fall in a currency is an expansionary monetary policy and can be used as a counter-cyclical measure to stimulate demand, profits, output and jobs when an economy is in recession or slowdown. China has used this tactic to gain upper hand in trade wars.

I found an interesting article  https://www.tutor2u.net/economics/reference/exchange-rates-macroeconomic-effects-of-currency-fluctuations

Economists at Goldman Sachs have estimated that a 1% fall in the exchange rate has the same effect on UK output as a 0.2 percentage-point cut in interest rates. On this basis, the 25% decline in sterling in 2008 was equivalent to a cut in interest rates of between 4 and 5%. Without the depreciation in sterling at this time, the recession in the UK would have been much deeper..