Macro Roundup

Dennis Overbye, Beyond the Milky Way, a Galactic Wall,"New York Times, July 10, 2020, https://www.nytimes.com/2020/07/10/science/astronomy-galaxies-attractor-universe.html

Beyond the Milky Way, a Galactic Wall

Astronomers have discovered that there is a vast wall across the southern border of the local cosmos.

The South Pole Wall, as it is known, consists of thousands of galaxies — beehives of trillions of stars and dark worlds, as well as dust and gas — aligned in a curtain arcing across at least 700 million light-years of space. It winds behind the dust, gas and stars of our own galaxy, the Milky Way, from the constellation Perseus in the Northern Hemisphere to the constellation Apus in the far south. It is so massive that it perturbs the local expansion of the universe.

But don’t bother trying to see it. The entire conglomeration is behind the Milky Way, in what astronomers quaintly call the zone of avoidance.

An international team of astronomers led by Daniel Pomarède of Paris-Saclay University and R. Brent Tully of the University of Hawaii announced this new addition to the local universe on Friday in a paper in Astrophysical Journal. The paper is festooned with maps and diagrams of blobby and stringy features of our local universe as well as a video tour of the South Pole Wall.

It is the latest installment of an ongoing mission to determine where we are in the universe — to fix our neighborhood among the galaxies and the endless voids — and where we are going.

“The surprise for us is that this structure is as big as the Sloan Great Wall and twice as close, and remained unnoticed, being hidden in an obscured sector of the southern sky,” Dr. Pomarède said in an email.

“The discovery is a wonderful poster child for the power of visualizations in research,” Dr. Tully said.

The new wall joins a host of other cosmographic features: arrangements of galaxies, or a lack of them, that astronomers have come to know and love over the last few decades, with names like the Great Wall, the Sloan Great Wall, the Hercules-Corona Borealis Great Wall and the Bootes Void.

The new paper was based on measurements, performed by Dr. Tully and his colleagues, of the distances of 18,000 galaxies as far away as 600 million light-years. By comparison, the most distant objects we can see — quasars and galaxies that formed shortly after the Big Bang — are about 13 billion light years away.

In the expanding universe, as described in 1929 by the astronomer Edwin Hubble and confirmed for almost a century, distant galaxies are flying away from us as if they were dots on an inflating balloon; the farther they are, the faster they recede from us, according to a relation called the Hubble law.

That motion away from Earth causes their light to be shifted to longer, redder wavelengths and lower frequencies, like retreating ambulance sirens. Astronomers use this “redshift,” which is easily measured, as a proxy for relative distance in the universe. By measuring the galaxy distances independently, the “Cosmicflows” team, as Dr. Pomarède and his colleagues call themselves, was able to distinguish the motion caused by the cosmic expansion from motions caused by gravitational irregularities.

As a result, they found that the galaxies between Earth and the South Pole Wall are sailing away from us slightly faster than they otherwise should be, by about 30 miles per second, drawn outward by the enormous blob of matter in the wall. And galaxies beyond the wall are moving outward more slowly than they otherwise should be, reined in by the gravitational drag of the wall.

One astonishing aspect of the wall is how big it is compared to the volume that the team was surveying: a contiguous filament of light 1.4 billion light-years long, packed into a cloud maybe 600 million in radius. “There is hardly room in the volume for anything bigger!” Dr. Tully said in an email. “We’d have to anticipate that our view of the filament is clipped; that it extends beyond our survey horizon.”

And yet the South Pole Wall is nearby in cosmological terms. “One might wonder how such a large and not-so-distant structure remained unnoticed,” Dr. Pomarède mused in a statement issued by his university.

But in the expanding universe, there is always something more to see.

On the largest scales, cosmologists attest, the universe should be expanding smoothly, and the galaxies should be evenly distributed. But on smaller, more local scales, the universe appears lumpy and gnarled. Astronomers have found that galaxies are gathered, often by the thousands, in giant clouds called clusters and that these are connected to one another in lacy, luminous chains and filaments to form superclusters extending across billions of light-years. In between are vast deserts of darkness called voids.

From all of this has emerged what some astronomers call our “long address”: We live on Earth, which is in the solar system, which is in the Milky Way galaxy. The Milky Way is part of a small cluster of galaxies called the Local Group, which is on the edge of the Virgo cluster, a conglomeration of several thousand galaxies.

In 2014, Dr. Tully suggested that these features were all connected, as part of a giant conglomeration he called Laniakea — Hawaiian for “open skies” or “immense heaven.” It consists of 100,000 galaxies spread across 500 million light-years.

All this lumpiness has distorted the expansion of the universe. In 1986, a group of astronomers who called themselves the Seven Samurai announced that the galaxies in a huge swath of the sky in the direction of the constellation Centaurus were flying away much faster than the Hubble law predicted, as if being pulled toward something — something the astronomers called the Great Attractor. It was the beginning of something big.

“We now see the Great Attractor as the downtown region of the supercluster that we live in — an overall entity that our team has called the Laniakea Supercluster,” Dr. Tully said. All the different parts of this supercluster are tugging on us, he added.

As a result, the Great Attractor and its relatives are shedding light on another enduring cosmic mystery — namely, where we are headed.

Astronomers discovered in 1965 that space is suffused with microwave radiation, a bath of heat — with a temperature of 2.7 degrees Kelvin, or minus 455 degrees Fahrenheit — left over from the birth of the universe 14 billion years ago. Subsequent observations revealed that this bath is not uniform: It is slightly warmer in one direction, suggesting that we — Earth, our galaxy and the Local Group — are moving through the microwaves, like a goldfish in a fishbowl, at about 400 miles per second in the approximate direction of Centaurus, but aiming far beyond.

“A major goal in cosmology is to explain this motion,” Dr. Tully said in a series of emails. In theory, the motion arises from the lumpy distribution of matter that grew out of tiny ripples in the density of the early universe.

“The Great Attractor is certainly an important part of the cause of our motion,” Dr. Tully said. “The South Pole Wall also contributes but, again, only in part,” he added, listing more local galaxy clusters and voids. “Every hill and valley in the density distribution makes itself felt.”

Most of that is stuff that we cannot see directly. According to the prevailing theory of a confoundingly preposterous universe, the cosmos contains about five times as much invisible dark matter as luminous atomic matter.

Nobody knows exactly what dark matter is made of, but according to cosmologists it provides the gravitational scaffolding for the luminous structures in the universe — galaxies, galaxy clusters, superclusters, voids and chains like the South Pole Wall, all connected by spidery filaments in what’s known as the cosmic web. The visible universe of stars and galaxies, cosmologists like to say, is like snow on mountaintops or lights on dark, distant Christmas trees.

But by following the lights and how they are moving, astronomers like Dr. Tully and his cosmographers have now been able to probe the shadows on which they sit: galumphing clouds of mass whose gravity shapes the destiny of the visible cosmos, arranging it into shapes and neighborhoods, walls, valleys and voids.

“It’s just dark matter having its way,” Dr. Tully said.

“We are like swimmers attempting to swim upstream but being carried downstream faster.”

“…The South Pole Wall, as it is known, consists of thousands of galaxies — beehives of trillions of stars and dark worlds, as well as dust and gas — aligned in a curtain arcing across at least 700 million light-years of space. It winds behind the dust, gas and stars of our own galaxy, the Milky Way, from the constellation Perseus in the Northern Hemisphere to the constellation Apus in the far south. It is so massive that it perturbs the local expansion of the universe. But don’t bother trying to see it. The entire conglomeration is behind the Milky Way, in what astronomers quaintly call the zone of avoidance….”

updated draft paper from Caballero and Farhi arguing that capital inflows can depress domestic demand via FX effects (putting pressure on exchange rates)“…In a global liquidity trap, global output needs to decline, but the exchange rate affects the distribution of recessions across countries. This creates fertile grounds for zero-sum beggar-thy-neighbor devaluations achieved by direct interventions in exchange rate markets, stimulating output and improving the current account in one country at the expense of others. These sorts of beggar-thy-neighbor policies can lead to “currency wars” when countries are at the ZLB. By the same token, this indeterminacy implies that countries have an incentive to engage in “trade wars”: Countries may hike tariffs to divert global demand away from foreign goods and toward domestic goods..”
"...World interest rates and global imbalances go hand in hand: Countries with large safe asset shortages run Current Account surpluses and push the world interest rate down. At the ZLB, the global asset market remains in disequilibrium when output is at its potential: the resulting global (safe) asset shortage cannot be resolved by lower world interest rates. It is instead alleviated by a world recession, which is propagated by global imbalances: Current Account surplus countries push world output down, exerting a negative effect on the world economy....The ZLB (Zero Lower Bound) emerges as a natural tipping point. Away from the ZLB, real interest rates clear global asset markets: A shock that creates an asset shortage (excess demand for assets) at the prevailing real interest rate results in an endogenous reduction in global real interest rates that restores equilibrium in global asset markets. At the ZLB, real interest rates cannot play their equilibrating role and global output must adjust to clear asset markets: Global output endogenously declines, reducing income and therefore net global asset demand and restoring equilibrium in global asset markets. Moreover, the role of capital flows changes at the ZLB. Away from the ZLB, current account surpluses propagate low interest rates from the origin country to the rest of the world. At the ZLB, current account surpluses propagate recessions. We characterize global imbalances at the ZLB with a Metzler diagram in quantities that connects the size of the global recession and net foreign asset positions (and current accounts) to the recessions that would prevail in each country under financial autarky. This is analogous to the case away from the ZLB, where the world equilibrium real interest rate and net foreign asset (and current account) positions are connected to the equilibrium real interest rate that would prevail in each country under autarky. Our analysis shows that, other things equal, when a country’s autarky recession is more (less) severe than the global recession, that country is also a net creditor (debtor) and runs current account surpluses (deficits) in the financially integrated environment, effectively exporting its recession abroad.In turn, a country experiences a more (less) severe autarky recession than the average recession when its autarky asset shortage is more (less) severe than the global asset shortage. In this environment, a large country with a severe autarky liquidity trap recession can pull the world economy into a global liquidity trap recession...Safe asset shortages also push the global economy into a global downturn, a global safety trap. This depresses the return on safe assets relative to risky ones as risk premia increase. Reserve currency countries can be pushed into a safety trap earlier, or experience a larger recession. Finally, recessions propagate through the safe component of the financial account. Net Safe Asset issuers experience a disproportionate share of the global recession…”

Economist Staff, "Housing was the business cycle,"The Economist, July 18, 2020, https://www.economist.com/finance-and-economics/2020/07/18/housing-was-the-business-cycle

New Alan Taylor suggests demographics are responsible for the rising ERP (he uses Damodaran’s EPR data as well):

“… global equity risk premium has risen by 2.5 percentage points since the year 2000. Similar trends can be observed in the United States, with an equity premium in 2015 that is between two and five percentage points higher than it was in the late 1990s (pre-tech bubble crisis)…..Aging households, the boomers, are responsible for a savings glut which has helped to drive down real interest rates on safe assets, but they have relatively lower shares of their portfolio in equity. As a result, the shifting population weight moving toward these households does not have the same effect on equity returns that it has been shown to have on risk free assets…Summing up, Figure 12 shows that between 1990 and 2017 our model can account for: roughly all of the fall and rise in the ERP “low” amplitude estimate (Damodaran); roughly half of the fall and rise in the ERP “mid” amplitude estimate (our estimate using the E/P ratio and 1-year yields); or roughly one third of the fall and rise in the ERP “high” amplitude estimate (Duarte and Rosa). Looking to the future, the model predicts a continued fall in the risk free rate to -278 bps by 2050 with the ERP roughly stable at 498 bps. The expected return to equity therefore continues to fall to just 220 bps as demographic shifts continue to relentlessly boost the demand for all assets, but especially safe assets….”

More Taylor:“…Population aging has been linked to global declines in real interest rates. A similar trend is seen for equity risk premia, which are on the rise. An existing literature can explain part of the declining trend in safe rates using demographics, but has no mechanism to speak to trends in relative returns on different assets. We calibrate a heterogeneous agent life-cycle model with equity markets and aggregate risk,and we show that aging demographics can simultaneously account for both the majority of a downward trend in the risk free rate, while also increasing the return premium attached to risky assets. This is because the life-cycle savings dynamics that have been well documented exert less pressure on risky assets as older households shift away from risk. Under reasonable calibrations we find declines in the safe rate that are considerably larger than most existing estimates between the years 1990 and 2017. We are also able to account for most of the rise in the equity risk premium. Projecting forward to 2050 we show that persistent demographic forces will continue push the risk free rate further into negative territory, while the equity risk premium remains elevated….”

Though it was worth reading hand and hand with Rognlie work on aging and global imbalances: