Brands & Monopolies
There is excess supply of almost everything in the world. The only thing that i
remeber from my Economics degree is Supply & Demand, and when supply is
bigger than demand prices fall.
we can see that inflation in the Euro zone ( It's similar
almost everywhere) in approaching zero! Of course if average inflation is
approaching zero there are some parts of Europe already in deflation and other
parts with a bit of it.
Governments in the last 10 years everywhere are running big deficits to make up for this Supply/Demand imbalance. But this intervention has
some limits, when accumulated Government debts to GDP approach some high levels
sometimes lenders don't lend anymore (Greece, etc...)
Since Governments can not keep spending to make up for this
Supply/Demand imbalance central banks ( The FED in United States, BCE in Europe,
and BOJ in Japan) are trying their best to awake the animal spirits and improve
the willingness to spend all over. They do this through buying some securities
in the markets and hope people who sell securities to them to spend or
lend the money they get.
What they achieved is a big rally in stocks everywhere. Who
has bennefit from QE. I guess the people who own stocks the rich people of the
world. The workers are in a desperate situation where what they do is becoming
redundant because of excess supply & automation.
This graph can give you as idea of who is doing well. Luxury
Brands vs Retail for the middle classes.
Source :JPM
This graph in my view shows that in a world with excess
supply you can fight with a lower price (Macy's, Kohl's or JCPenny) or you can
have a brand.
In the world we live on to have a brand it's a big plus because
people want to buy what you produce for what it represents. What you do is still scarce in a oversupply
of everything.
If i have to bet on what is going to happen, my bet goes
like this, weak economy, keep the stimulus on, markets keep going up.
In this environment who
can prosper? I think the Brands and the Monopolies.
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