Aug 9 – Aug 15, 2026
English translation of the Korean original, prepared with AI assistance. Korean original
Not investment advice — these are resources for learning and forming your own view.
Deep dive — one theory Economics
A Month of Quiet Inflation and Rising Oil: Which Channel Is the Fed's Rate Policy Flowing Through?
- Origin
- No single originator — the framework was worked out channel by channel in central-bank practice and monetary economics literature, through the debate between Keynesians and monetarists.
- In short
- When a central bank moves rates, inflation and growth do not respond immediately because the policy rate must pass through intermediate channels—market interest rates and lending, stock and property prices, and exchange rates—before it reaches household spending and corporate investment. The theory's central question, then, is not how much rates moved, but which channel is open, how wide, and how long it takes to reach the real economy.
- Limits
- When a channel is blocked, the theory stalls with it: if banks lock down lending as in a financial crisis, or rates hit a floor where they can fall no further, nothing the central bank does reaches the real economy. The same logic explains its impotence against supply-driven inflation—rates can only suppress demand, not reopen a shuttered oil field.
The theory of monetary policy transmission is especially relevant right now because this week's market is facing not the simple question of whether the Fed will raise rates, but which channel is actually open. When softer US inflation data came out, gold stabilized around $4,400, long-dated Treasuries attracted buying, and the dollar index was pushed down—all signs that a shift in rate expectations first moved intermediate channels such as bonds, currencies, and asset prices, rather than the real economy directly. The theory's conditions are met here: financial intermediation linking the policy rate to the real economy is functioning, and its effects are showing up with a lag.
Applied to this week's news, two channels are pulling in opposite directions: cooling inflation is raising expectations of rate cuts, while rising oil prices out of Hormuz are pushing inflation back up. The sharp implication here is that even if the Fed cuts rates to open the demand channel, that channel cannot reach inflation caused by a supply blockage. Rates can dampen consumer spending and corporate investment, but they cannot reopen a closed strait—so a single soft inflation print is not enough to justify optimism about the rate path.
The takeaway for fellow alumni here is to judge central bank policy not by how far rates have moved, but by which channel is open and how long it takes to reach the real economy. Understanding this asymmetry—tools that are effective at cooling demand become powerless against a supply shock—lets you ask which channel a market rally is riding on, even when it cheers a single inflation print. If oil and inflation diverge again next week, this tug-of-war between channels will likely show up first in Treasury volatility.
Source story: Gold Steadies After Tame US Inflation Data Eases Rate-Hike Bets
Cases by layer 6
Oil Gains as Iran Deal Eludes, Stocks Set to Rise: Markets Wrap
Iran refused talks with the United States, stalling negotiations to reopen the Strait of Hormuz, and oil prices stayed on an upward trend as a result. With the odds of an energy price spike rising, inflation expectations climbed again.
This fits the theory's conditions exactly: the unit of analysis is prices and output across the whole economy rather than any single refiner, and the shock comes from the supply side—the risk of a key shipping route being blocked—rather than from rising consumption. Because the Hormuz energy bottleneck cannot be absorbed flexibly and immediately into prices, it is spreading into broader inflationary pressure, a picture quite different from a demand-side boom.
The usual reading of this news is simply that Middle East risk pushed up oil prices. But through the lens of aggregate supply and demand, it becomes clear that this shock has hit the production side, seeding an uncomfortable combination in which output contracts even as prices rise—a case of growth and inflation moving in opposite directions.
Through this lens, the rise in oil prices is not just commodity news—it reads as a supply-side force disrupting the 'soft landing' picture that the same week's softer inflation data had painted. When supply is blocked while demand stays alive, the Fed's room to manage the situation with rates narrows, making the rate cuts the market expects harder to deliver.
Takeaway — Before taking comfort in a single inflation print, it pays to train yourself to distinguish whether that inflation comes from demand or supply. Build into your portfolio-defense logic the fact that supply-driven shocks cannot be resolved by rate policy.
Bloomberg Markets
Japan’s Inflation Paradox Is Creating Winners and Losers
Japan is emerging from long-running deflation, with accelerating price growth triggering political backlash against the government—an 'inflation paradox.' Rising prices are also fueling expectations that the central bank will pivot to tightening, putting upward pressure on long-term rates.
Japan's emergence from long deflation, with prices now rising, marks the moment people begin forming new expectations that inflation will continue—making it a rare real-world case of the Phillips curve's expected-inflation dynamics actually playing out. The theory's premise is satisfied because the channel through which labor-market pressure and wage demands feed into prices is reactivating.
The usual reading of this news is a normalization signal—'prices in Japan are finally rising too.' But through the Phillips curve lens, the key point is that once people's inflation expectations reset upward, they get built into wage demands in advance and become hard to reverse—and the political backlash dubbed a 'paradox' turns out to be exactly the pain of that expectation shift.
Through this lens, Japan's rising prices are not a one-off event but a structural shift in which decades of suppressed inflation expectations are turning upward. That naturally explains why expectations of a central bank pivot to tightening are pushing up long-term rates, and why policy uncertainty is amplifying market volatility.
Takeaway — Remember that once inflation expectations turn, they gain their own momentum. Japanese government bonds and yen-related assets are entering a phase where they will react sensitively to the speed of this expectation shift.
Bloomberg Markets
Private Credit Squeezed By Bank Refinancings: Credit Weekly
As high rates persist, heavily indebted companies are increasingly turning back to relatively cheaper bank capital instead of private credit loans. As a result, inflows into the private credit market are slowing, and demand for high-risk debt shows signs of contracting.
Private credit grew rapidly by filling the gap left by cautious banks over the past few years, and now that bank refinancing is reviving, it is being pushed back—a scene that belongs on the clock of creative destruction, since the funding structure is being reshaped rather than sitting in equilibrium. It is a contest over which way money moves between the old channel and the new one.
The usual reading of this news is a short-term supply-demand story—'private credit got pushed back temporarily because of rates.' But through the lens of creative destruction, what emerges is that this very cycle—banks and private credit repeatedly destroying each other's gaps and trading the lead in financial intermediation—is how the credit market grows, and that the cycle changes direction depending on the rate environment.
Through this lens, the retreat of private credit is not an industry in decline but a normal phase of the cycle in which capital reallocates to the cheaper channel as the rate environment shifts. As banks reclaim ground, private credit is pushed back toward the lower-quality borrowers banks won't touch, and its risk profile deepens accordingly.
Takeaway — Investors exposed to private credit need to keep asking which channel is cheaper right now. Don't miss the fact that when the cycle's direction changes, the risk profile of the assets that remain changes with it.
Bloomberg Markets
China Earnings to Test Rotation From AI to Internet Stocks
With major Chinese tech companies due to report earnings this week, the market is watching for signs of capital rotating out of AI infrastructure stocks and into the broader internet services sector. Depending on the results, investor sentiment is likely to swing between pure growth momentum and hopes of a consumption recovery.
Here the unit of analysis is not an individual company but a comparison of structural attractiveness between two industries—AI infrastructure and internet services—which naturally calls up Porter's Five Forces. Entry barriers, substitutes, and competitive intensity are configured differently in the two sectors, and that structural difference is what determines which side keeps fatter margins.
The usual reading of this news is a supply-demand shift—'money is rotating from AI into internet stocks.' But through the Five Forces lens, behind the rotation lies a difference in how durable each industry's structure makes its profits, revealing that what investors are really weighing is which sector's structure protects the fatter margin.
Through this lens, these earnings reports are more than individual scorecards—they read as the market regrading the structural profitability of two industries. If AI infrastructure's margins thin under heavy capital spending and intensifying competition while internet services can defend structural profits by leaning on a consumption recovery, the rotation of capital becomes a structurally grounded move rather than mere sentiment.
Takeaway — When watching sector rotation, look not only at where the money is going but also at whether that industry's structure protects its profits. Chinese tech earnings will serve as a touchstone for comparing the structures of these two industries.
Bloomberg Markets
Nvidia discloses $21bn stake in SpaceX
Nvidia disclosed a $21 billion stake in SpaceX, an announcement that came after Elon Musk struck a data-center construction agreement. In the same week, Nvidia decided to scale back its plans to guarantee OpenAI's data centers.
Nvidia's seemingly contradictory moves—scaling back large guarantees to OpenAI on one hand while taking a stake in SpaceX on the other—read as a real-options judgment: placing small bets across multiple paths and buying the right to expand or retreat later, while uncertainty over future AI and data-center demand remains unresolved. The conditions fit because the structure preserves flexibility rather than committing to one large, irreversible investment all at once.
The usual reading of this news is an expansion story—'the leading AI stock has reached even into a space company.' But through the lens of real options, placing the reduced guarantees alongside the new stake side by side reveals a consistent strategy: the greater the uncertainty, the more Nvidia is buying up the rights to multiple options rather than committing to any single one.
Through this lens, scaling back the guarantees is not a retreat from AI demand but a choice to preserve flexibility by reducing hard-to-reverse commitments. Because the right to wait becomes more valuable as uncertainty grows, Nvidia is effectively reallocating its exposure into a form—like an equity stake—that it can scale up or wind down later, instead of a fixed guarantee.
Takeaway — When evaluating large capital allocations, look not just at how much was committed but at what form that commitment took and how much flexibility it preserved. In a period of high uncertainty, flexibility is not a cost—it is an asset with real value.
Financial Times
Reddit stock jumps on inclusion in S&P 500
Reddit's stock surged on news of its inclusion in the S&P 500. The index addition is boosting the stock's liquidity and drawing institutional investor interest.
Reddit fits the classic structure in which the value of posts and communities to other users grows as the user base grows, and the conditions for network effects are satisfied because its vast trove of accumulated conversation data, now in demand for AI training, is raising both switching costs and scarcity. That it is already a community platform past critical mass also fits this lens.
The usual reading of this news is a supply-demand event—'the stock rose on positive index-inclusion news.' But through the lens of network effects, the market's decision to recognize this stock as having sustainable value worthy of the index rests on a moat built by users and data pulling each other in, and the index inclusion turns out to be the institutional confirmation of that structural value.
Through this lens, the surge on index inclusion is not a one-off event but a signal that the network value built by its user base and data has crossed the threshold of recognition by mainstream capital markets. Worth noting alongside this, though, is the theory's own limit: the effect can reverse if users can move freely between communities or if congestion degrades the experience.
Takeaway — When valuing platform companies, look first at the robustness of the network and its switching costs, not the growth-rate figures. An event like index inclusion only confirms that structure—it does not create it.
CNBC Markets
Other signals this week 18
- Trump family-backed crypto firm World Liberty gets conditional bank charter approval CNBC Markets
- Gold Steadies as Traders Weigh Fed Rate Path and Mideast Tension Bloomberg Markets
- Blackstone, La Caisse to Buy 25% of Air Canada’s Aeroplan Loyalty Program WSJ Markets
- Gold Touches $4,400 as Traders Turn Focus to US Inflation Data Bloomberg Markets
- Iran replaces top security official at crucial moment in talks over Strait of Hormuz Financial Times
- Iran Demands U.S. Withdrawal to Open Hormuz WSJ Markets
- Wall Street Week | Rerouting Global Trade, Private Equity Tested, Realizing Cuba’s Potential Bloomberg Markets
- Origin Profit Beats Estimates on Australian EV, Battery Uptake Bloomberg Markets
- China's Real Estate Market Races to Defuse a $148 Billion Time Bomb Bloomberg Markets
- CNBC's The China Connection newsletter: 'Spider-Man' and 'The Odyssey' come courting the massive filmgoer market CNBC Markets
- Westpac CEO Flags Moderating Housing Market, Profit Edges Up Bloomberg Markets
- Cerebras Swings to Second-Quarter Loss, Lifts Full-Year Outlook WSJ Markets
- Verizon mobile service down for thousands of customers in the U.S., Downdetector shows CNBC Markets
- Nvidia Downsizes Plans for $250 Billion Guarantee of OpenAI Data Center WSJ Markets
- Trump Media Reports More Than 10 Sign-Ups to Real-Time Truth Social Feed WSJ Markets
Based on 176 items over 7 days