Global Macro

TST Global Macro Systems

A Visual Collaboration System for Global Macro Professionals

TST Global Macro Systems enables you to rank the world’s largest economies by relative risk/reward under multiple scenarios based on interconnected political, social, economic, and financial factors.

The example below compares China’s ranking under 2 scenarios as of June 2011:

China soft landing

TST Global Macro Model Framework

The graphic below shows the model framework used to rank the countries by relative risk/reward in the example on this page.

GlobalMacroModelStructure

Catalysts Assumptions – Soft Vs Hard Landing

TST Global Macro ranks the 7 largest countries by relative risk/reward using the model structure above:

  • Brazil
  • China
  • EU
  • India
  • Japan
  • Russia
  • US

One of the most important assumptions for each scenario is the catalyst and its degree of impact on the rankings. The assumption for the Soft Landing Scenario is that 400-600 million people will move into the middle class and the impact will be very positive.

The assumption for the Hard Landing Scenario is that the empty cities in China will ultimately prove the whole Chinese economy to be Jim Chanos calls “the mother of all bubbles”. The photo at top right is a group of high rises in the empty city of Ordos in Northern China, – called a ghost city because so few people live there.

Ordos – Empty High Rises

Ordos High Rises

China Catalysts Best

Multiple Risks & Assumptions – Hard Landing

The user’s judgment in the Multi-Risk example at right is that the 3 most common risks to the 7 countries under the Hard Landing Scenario are:

  • Asset Bubble
  • Middle East Turmoil
  • Inflation

The judgments incorporate causation. E.g., what is the relative impact of an asset bubble in one country on that country as well as other countries? If China has an asset bubble and it bursts, what is the impact on Brazil? Also, will Brazil then be a bubble? The same type of causal interconnections apply for Middle East Turmoil and Inflation.

The user employs one-letter abbreviations for the 3 risks in order to fit the whole model on 1 page. The user believes that Japan has “None” of the risks; China has Asset Bubble and Inflation Risk A&I“; and Russia “All” of the risks.

China - Multi-Risk Analysis

Additional Examples of Factors

The Meteoric Growth of China Vs Innovation of US Companies & People (Apple/John Ivie)

Global Macro Collage

Impact of Food Inflation on Investing in India

Hindu Women

Hindu women protesting food inflation (India’s population projected to exceed China’s by 2020)

Geopolitical & Economic Impact of Oil
Yergin

Risk/Reward Impact of Middle East

The impact of oil on geopolitics & vice-versa
Sunni/Shia Divide Impact on Geopolitics & Global Economy
Yemen

The geopolitical morass of the Middle East and the impact of Middle East on

great power shifts on China, US, EU, Russia, Iran, and Saudi Arabia

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