Hello everyone, I am the rich man.
Last night's US stocks, today's Hong Kong stocks , both rebounded violently, especially Hong Kong stocks soared by 6% today.
The main reason for the sharp rebound of US stocks overnight is that the United States ISM manufacturing index in September was far lower than expected, with the September index of 50.9, approaching the watershed of manufacturing activity of 50, hitting a new low in two years.
Manufacturing Index , inflation rate and unemployment rate are the three most important goals and observation indexes of US monetary policy . Historically, when the manufacturing index is in a clear downward channel, the interest rate hike cycle of the Federal Reserve will come to an end, especially when the manufacturing index is close to or even below 50, the Federal Reserve will enter a rate cut cycle.
Under this strong expectation, the 10-year Treasury yield fell sharply to its lowest point since September 22. At the same time, US stocks also rebounded strongly. US stock investors began to bet that the Federal Reserve would end the rate hike of earlier. For Hong Kong stocks, which are already at the bottom of the "historical level" and are affected by the US dollar interest rate hike, there will naturally be a bigger rebound.
However, Bian Fujun is preparing to express two views on this.
1. The Federal Reserve is likely to stop hiking interest rates in the short term. It may be as early as the first half of next year
As mentioned earlier, there are three core indicators that determine the Federal Reserve's monetary policy, the manufacturing index, inflation rate and unemployment rate. The manufacturing index is just one of them. Although historically, when the manufacturing index is in a clear downward channel, the Federal Reserve will enter the end of interest rate hikes, because this means that the economy is about to begin to decline, this single indicator is not enough and it still needs to be considered in combination with the other two core indicators.
In the absence of a financial crisis, the Fed's first goal is to lower inflation, at least not let inflation be higher than , the nominal interest rate , otherwise there will be endless troubles. As of August, the inflation rate of the United States was still as high as 8.1%, and the core CPI was still rising. There are both problems with the US supply chain and the surge in energy prices caused by the Russian-Ukrainian war. These two factors cannot be subsided in the short term. Under the current high inflation rate, it is difficult for the Federal Reserve to stop hikes unless a very serious financial crisis breaks out in Europe and the United States again.
Although it has undergone continuous "violent" interest rate hikes, the current US federal benchmark interest rate has just reached 3.25%. Compared with the inflation rate above 8%, the Federal Reserve still has a long way to go unless inflation can drop significantly in the short term, which seems difficult at the moment. In addition, the unemployment rate is still at a historical low of 3.7%. Although it is a little rising, it will still give the Fed room and motivation to continue hike interest rates before it rises sharply.
In this regard, the Fed will still maintain its previous judgment. The Fed will most likely raise interest rates by 1% before the end of the year. The Fed will not stop hike rates until inflation has not yet fallen below interest rates (at least relatively close), and the unemployment rate has not risen sharply continuously.
2. Due to the first point, it is likely that now is not the best time for to buy the bottom . However, Hong Kong stocks are different. Gradually buying in batches is very high in the long run
If U.S. inflation will not miraculously decline before the end of the year, the Fed's rate hike pace will be difficult to stop. Historically, the US stock market is likely to fall in the three months before the rate hikes stopped. Thanks to Ruizhi Ruijian's friend for a picture. You can clearly see that buying US stocks is not a good idea before the interest rate hike ends.
But why do we have to buy US stocks:), Hong Kong stocks with much more certainty than US stocks are our goal.
Although the Fed will most likely continue to raise interest rates and Hong Kong stocks will also be affected, unlike US stocks, Hong Kong stocks have reached a historically undervalued area, and it is really hard to have too much downward space. Now is the best time to gradually build positions.
There are two possibilities for Hong Kong stocks. One is that it will fluctuate in this area for a long time and slowly builds the bottom. There is even some bottoming out . The other is that when things are extreme, they will rebound first, and then fluctuate to build the bottom.
Obviously, no matter what the situation is, as long as you don’t have to rush it at one time, divide the funds into several parts, and every time you fall, buy the part in the next level, and build positions in batches, you can almost be invincible.
Now is the best time for value investors to sow Hong Kong stocks. Maybe there is no such thing. The harvest in the next few years may be far beyond your imagination. Let’s see it in a few years:)
Keep the clouds open and the moon is bright, and flowers bloom will be sometimes.
This article ends, see you on the weekend.
Author profile:
becomes Fujun, born in the 1980s, the top three majors in 985 universities, stock investment for 15 years, annualized 25+%.
This column wants to devote itself to explaining the essence of value investment and asset allocation to everyone, and to shape the correct value investment system with everyone, and to become rich slowly together. Welcome to follow and forward it. I hope this column can help more friends.
