US stocks have been falling continuously this year, and it is still difficult to see the top. On October 7, the Nasdaq fell 3.80%, and once fell more than 4% during the session. The Dow Jones Index fell 2.11%, especially chip stocks fell sharply. Chip giant AMD closed down 14%, m

This year, the US stock is falling continuously, and it is still difficult to see the head. On October 7, the Nasdaq index fell 3.80%, and once fell more than 4% during the session. The Dow Jones index fell 2.11%, especially chip stocks fell sharply. The chip giant AMD closed down 14%, marking the largest daily decline since March 2020. The IT sector where chip stocks are located fell more than 4.1%.

This shows that this round of sharp drop in US stocks is not only a factor in interest rate hike , but also a factor in economic recession. Their logic is:

Inflation explosion - interest rate hike - economic recession or asset prices fall.

Feder rate hike is seen as a direct factor in the decline of US stocks. After continuous interest rate hikes, I thought that US stocks could breathe a sigh of relief, but in August, the strong hawkish remarks of Chairman Powell, hit the market hard, and he hinted that the Fed would also raise interest rates significantly to control inflation.

In October, U.S. inflation slowed down, with the U.S. consumer price index (CPI) in August rising 8.3% year-on-year, down from 8.5% in July and 9.1% in June. This seems to slow down the pace of interest rate hikes.

But the plan cannot keep up with the changes, and something more interesting is coming.

As oil prices continue to fall, "OPEC+" suddenly announced a cut in production. OPEC and non-OPEC oil-producing countries ("OPEC+") decided that since November 2022, "OPEC+" will reduce the total oil production by 2 million barrels per day.

OPEC's decision has poured cold water on the US efforts to control inflation, and the US oil prices have a great impact on CPI. Someone has done statistics that for every 250% increase in the price of natural gas , the relevant CPI indicator will jump by about 15%, and the impact of the rise in oil prices on CPI may be about four times that of the price of natural gas.

Russia-Ukraine conflict is one of the main driving forces affecting US inflation. In the first half of this year, oil prices hit a high of $130, and then fell. The prices of natural gas in Europe have increased several times compared to a year ago.

There are two biggest uncertainties at present: 1. How to interpret the conflict between Russia and Ukraine, Recently, Russia announced a partial mobilization of 300,000 yuan, and the "Northern Stream" pipeline leaked. The latest news is that The explosion occurred on the Crimea Bridge , and I don’t know how Russia reacted afterwards. But what we know is that the intensity of the conflict between Russia and Ukraine will definitely increase, and its impact on global stock markets will also increase.

The second is OPEC cuts production . At present, it seems that OPEC is not willing to let oil prices return to lows. As long as oil prices do not drop, the Federal Reserve will have to continue hikes.

What I want to tell you here is that the recent decline in CPI in the United States is not mainly due to interest rate hikes, but rather the slowdown in global economic growth. According to the forecast of World Bank , the world economic growth rate will drop to 2.3% in 2023, down 1 percentage point from previous expectations. The economy is down, demand slows down, and prices will naturally fall.

But the United States is currently facing recession-style inflation. The sharp drop in chip stocks shows that global demand for chips is slowing down, economic activity is shrinking, and the US economy is expected to hover in a recession. On the other hand, the conflict between Russia and Ukraine and OPEC's production cuts have kept oil prices high, and it will be difficult for the US CPI to be reduced to a satisfactory position in the short term. The two embarrassing situations of

will inevitably lead to US stocks continuing to find the bottom. It is too early to assert that the United States stops falling.

. For A shares, we may be relatively optimistic, and opportunities may appear after November. First, there may be many positive things in the future, and second, A shares have approached 3,000 points, which is a very strong bottom.

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