A world on the move
The little health scare encountered by Janet Yellen during her speech on 24 September turned the planet upside down. What should we make of it? Was she somatising uncertainty concerning global growth? Or having a physical reaction to the irresolvable brainteaser of the lift-off in interest rates?
Even though the butterfly effect is often proved true in finance (a scare that causes market fears, that causes fears for the FED, that cause fears…), let us put aside Janet Yellen’s wavering health and take a step back. Let’s turn off our screens and take a look at the world from above: while the FED is playing the waiting game, the world itself is still on the move!
But who is going where? Seen from Europe, this question probably sparks thoughts of migrants who are flowing in dreadful circumstances and conditions. In Germany, the impact on the population is already very sharp. Demographers have revised their forecasts and the decline in the German population that was unavoidable yesterday, is now an obsolete truth. Barely five years ago, optimistic forecasts were anticipating 77 million inhabitants by 2030 compared with 80 million at present. This decline has now been stemmed, the German population is set to grow again, and expectations for property construction are already picking up clearly. What was impossible is taking place before our eyes!
Who is going where? Asked in India, the same question sparks a very different answer, in a country struggling to hang onto its elite. Some 14 million Indian people now live outside India, and these are not just anybody. Between 2000 and 2010, the Indian population exiled in the US filed 3,000 patent protection requests, more than any other foreign community in the country.
For the Chinese, the question of mobility is only just beginning: just 3% of the population has a valid passport. However, this 3% counts massively since 35% of global tourism growth stems from China. This is a good opportunity to note that not all the economy has stopped in China.
Finally, for those living in Palo Alto(1), the question of who is going where may seem pointless. Neither Elon Musk, founder of TESLA, nor Sergueï Brink, co-founder of GOOGLE, were born on US territory. In Palo Alto, 45% of the population is “non-native”. Mobility is a norm, and has been for some time now.
The world is moving, therefore, and increasingly fast! In a recent study(2) Goldman Sachs estimated that migrants now represent 3.2% of the global population compared with 2.8% during the last decade. Note that 3.2% of the global population is around four times the population of Russia! Beyond the purely demographical dimension, this acceleration has a multitude of consequences for market economy. Answers are needed as of now in terms of future demand from Chinese tourists, facilitating money transfers between emerging and western markets, housing new arrivals in Germany and Europe. We also need to identify the companies that are set to benefit from this trend and reflect on the impact of people transfer: all of these themes should concern us.
Should interest rates be moved or not moved? Janet Yellen is hesitating and this indecision is set to weigh on the markets in coming weeks. However, the world is on the move, and this fundamental trend is likely to be far more structuring for tomorrow’s markets.
Marc Craquelin
(1) The Mecca of US entrepreneurs in technological innovation
(2) Fortnightly thoughts: “Where is everybody going”.