Chief Economist of Jiufang Intelligent Investment Xiao Lisheng
Produced by Sohu Think Tank
Edited by Zhong Xingge
The latest U.S. CPI in May once again exceeded expectations. The CPI in May rose 8.6% year-on-year, hitting a new high since December 1981. And higher than April and the expected 8.3% growth; May CPI increased by 1% month-on-month, significantly higher than the expected 0.7% and April's 0.3%; May core CPI increased by 6% year-on-year. In this regard, Sohu Think Tank talked with Xiao Lisheng, chief economist of Jiufang Intelligent Investment.
Xiao Lisheng told Sohu Think Tank that the CPI in April had a slight correction compared with March, but in May it further exceeded the upper limit in March, with a month-on-month growth rate of 1%. In the coming months, the United States will still be under greater inflationary pressure. "As U.S. inflation continues to rise month-on-month in the first half of the year, and the base period effect affects summer, U.S. inflation may remain at a relatively high level in the first half of next year, putting greater pressure on inflation fundamentals," Xiao Lisheng said.
The U.S. CPI in May exceeded expectations again, and its impact on the financial market was even more obvious. "Originally, the market believed that inflation had peaked in March and would gradually fall thereafter, indicating that supply-side factors were dominant, that is, the epidemic eased, the supply chain gradually eased, and inflation then fell. But now that inflation continues to rise, it means that in addition to supply-side factors In addition, demand side factors are also very important. If demand side factors dominate, it means that monetary policy needs to be tightened further to reduce household consumption expenditure and corporate capital expenditure. Both of these are closely related to the economy, so the economy In the next stage, there will be greater pressure from monetary policy control," Xiao Lisheng said.
Xiao Lisheng pointed out that in the second half of the year, the U.S. economy is actually on a downward trajectory. Implementing a tighter monetary policy in the economic downturn will lead to a sharp decline in US stocks . Xiao Lisheng said that the profit of U.S. stocks is closely related to the economic status. The current economic situation is good, so the profit of U.S. stocks is relatively optimistic. "Once the economy goes down in the second half of the year, profit expectations drop, and interest rates are still rising, there will be a 'Davis Double Kill', that is, profits will fall, valuations will fall, and the decline in U.S. stocks will be worse." Xiao Lisheng said.
" The pace of interest rate hikes by the Federal Reserve will further accelerate, at least 50 basis points, or even 75 basis points in June. A further 50 basis points increase in July. Interest rates may continue to rise in the second half of the year, benchmark interest rates should be increased to at least 2.5%. "Xiao Lisheng said that this will have a great impact on the US economy and even the global economy, including my country's exchange rate and monetary policy.
The Federal Reserve’s radical tightening policy is likely to lead to a “hard landing” of the U.S. economy. Xiao Lisheng believes that in the economic downturn, if tightening monetary policy is implemented and financing costs are increased, it will have a relatively direct impact on U.S. junk bonds, including zombie companies of listed companies. The financing costs of this part of the company will rise rapidly, and BBB-level companies will For bonds or junk bonds rated below BBB, their credit spreads will expand rapidly. "By that time, it is not ruled out that there will be a local liquidity crisis in the U.S. bond market or stock market, resulting in greater economic risks."
