In recent times, various financial comments and analysis have been hyping up the high expectations of US inflation, which has triggered concerns about the US dollar's interest rate hike, which has led to a decline in US stocks and a chain reaction that has led to a decline in Chinese stock markets. This kind of analysis can be said to be largely disregarding the facts and confusing the public. Let me briefly talk about a few logics:
The first logic: What will the various types of fiscal stimulus and large-scale water rebate in the United States lead to?
The fiscal stimulus of the United States last year plus the recent 1.9 trillion stimulus will cause huge amounts of money to flow into the market, which will lead to two results:
One is that the total amount of money in circulation increases, while the actual creation of goods and services does not increase, and actually generates currency depreciation and inflation. This is a causal relationship;
The other is that there are too many currencies in the market, which will generate capital flows, either flow into US capital market to obtain risk-free returns, pushing up the stock market, or flow into other valuable emerging markets, such as China.
is OK. Please remember this first logic first.
The second logic: What is the reaction of inflation?
Inflation is directly reflected in the rise in prices (it needs to be explained here that because the US dollar is a global currency, many US dollars flow to the world), the price increase here is reflected in two ways. One is the rise in commodity prices around the world, which leads to the import-type inflation of various countries; the other is the depreciation of the currency, which forces the yield of US bonds to rise (you are not valuable, the yield naturally needs to increase to cover the existing capital costs. Haven’t you seen that Japan is the largest seller of US bonds recently). After understanding these two internal logics, we can see many things:
1. Why has the oil price rise recently? Everyone understands that the oil price is denominated in US dollars. If the US dollar increases, the oil dollar will naturally rise;
2. Why has the returns of US bonds increased? Because people lack confidence in US bonds and are willing to hold them before they require additional returns. Does this have anything to do with the stock market? It has a certain relationship. The yield on US Treasury is the anchor of many yields, but the core factor is that US stocks were too high last year under the stimulation of huge currencies, and they sneeze when there is any slightest movement. This is the fundamental reason.
The third logic: What are the reasons for the rise in asset prices and the decline in stock market in my country?
fundamentally speaking, the US dollar will inevitably flow to the world, especially my country, which will bring inject inflation of rising asset prices to my country. Once the US dollar raises interest rates, it will inevitably cause market turmoil (the so-called US dollar acquisition logic). Therefore, my country strictly investigates the flow of funds into the real estate market, sets up the slow bull market, and hopes to establish a new reservoir while improving the direct financing function of the capital market. However, the surge in US Treasury yields after the New Year, coupled with the over-concentrated overvaluation of group stocks, caused the stock market to trample on the stock market after the New Year (basically, regulators do not want the market to fall sharply, and the regulatory voice on March 20 is a signal), and the government hopes to guide but does not want to be crazy. But capital is profit-seeking. Since the stock market is uncertain, we will continue to have a real estate market. So you can see that under the strictest regulatory policies, most of our 70 large and medium-sized cities have risen in the first two months, and funds are still flowing into the real estate market in a curve. The real estate market government will strictly control it, but it must not suppress it too much (40% of China's GDP is in the real estate market), this is the ballast.
The fourth logic: Why is the rise of in the index?
The US dollar index represents the strength or appreciation or depreciation of the US dollar. We all know that the US dollar is flooding, causing all kinds of global inflation to rise. Logically, the US dollar should depreciate and fall. But the strange thing is that the US dollar index continues to rise (the logic of explanation is that because of the US dollar inflation, the US dollar 5 interest rate hike is expected to increase in , guiding the US dollar index to rise), and completely walked out of a trajectory opposite to the economic logic (all three fat people launched two more missiles, and the US dollar index shook again, which is a later story). So recently, the US dollar index expected inflation and the US dollar depreciation, but in fact, the US dollar index soared and the US dollar appreciation, forming a decline in commodity prices, which fully reflects the Federal Reserve's deception. The rise of the US dollar index has no economic support, but it is the Federal Reserve's public opinion guidance.
The fifth logic: Will the United States raise interest rates?
What is the interest rate hike? Rates are the currency in circulation in the market that will raise bond interest rates and increase asset prices because the cost of capital increases. If the United States really has a prosperous economy, then is it necessary for the United States to engage in rounds of monetary stimulus? It's funny to think about it, but so many market analysis is serious, the Federal Reserve responds ambiguously. What the Federal Reserve most expects is to guide the market's expectations of interest rate hikes and attract capital to return to the United States to support the United States, but it cannot really raise interest rates. It also needs to suppress the 10-year US Treasury bond interest rate (reduce the US interest payment cost). This is the ideal state of the United States, and only the US dollar index will increase. Some countries with poor foundation, Turkey and , Brazil and can't stand it first. Of course, it would be even better if there is a country with a size like China that cannot withstand it, it would be even better. If China announces a rate hike one day, it means that we are either completely out of the crisis? Or it is facing a huge crisis.
OK, the above is what I want to share with you in the near future. If you want to know more, please leave a message and comment.
