U.S. CPI inflation was higher than expected in August, and its bet on the Federal Reserve's 100 basis points rate hike next week rose to 47%, with U.S. stocks hitting the largest single-day decline in more than two years, with the Dow Jones and S&P falling about 4%, the biggest d

U.S. CPI inflation in August was higher than expected, and the bet on the Fed's interest rate hike of next week rose to 47%, U.S. stocks hit the largest single-day decline in more than two years, the Dow Jones Industrial Average and S&P fell about 4%, the largest drop since June 2020.

recession trading may be the mainstream next. After the CPI data came out last night, even CICC said that the United States will face a double-debt kill, and the bottom of the US stock market seems to be far away. So, what should ordinary investors do?

1. Phenomenon: The significant decline in energy prices has led to a slight decline in CPI, but the core CPI is still rising

The United States' unseasonal adjustment CPI increased by 8.3% year-on-year, estimated to be 8.1%, and the previous value was 8.5%. This is the last major economic indicator before the resolution of the Federal Reserve on September 22. This exceeding expectations of inflation data makes the probability of hiking interest rates in in September basically a foregone conclusion.

It has to be said that the overall CPI in the United States has indeed seen a decline in growth rate. The CPI in May was 8.6%, 9.1% in June, and then fell back to 8.5% in July and 8.3% in August. This is mainly due to the significant decline in energy prices, which has led to a slight decline in CPI, but the core CPI is still rising.

• We exclude the core CPI of food and energy components with high volatility, up 0.6% from July and 6.3% from a year ago, which is the first annual acceleration in 6 months. All data are higher than forecast. Housing, food and healthcare are also one of the biggest contributors to price growth.

From the sub-item analysis, due to the significant decline in energy prices, the prices of air tickets and logistics have declined. However, food prices and land rents are significantly rising.

In addition, the price of household appliances has declined, but the local production volume is not large, most of which are imported, and may become cheaper due to the rise in the US dollar exchange rate; as for the growth rate of medical prices, the growth rate of medical prices has declined relatively, but the price of drugs has risen significantly.

Core CPI continues to rise rapidly against the backdrop of continuous interest rate hikes and falling energy prices, which shows that inflation is not under control. At present, the market interest rate is still significantly lower than the CPI, and the actual interest rate is still and .

• Now it seems that the US CPI data in August was higher than expected, and the three major U.S. stock indexes collapsed directly. But this data is not the end point, and worse CPI data in the future are not difficult to predict.

2. Analysis: The United States has a big trouble this time, and it is impossible to have the best of both worlds. US stocks and US bonds will be scrapped. It can be said that the two evils are the least, and the Federal Reserve will surely protect US bonds. So, the market currently generally expects the Federal Reserve to raise interest rates faster, and may directly raise interest rates to 100 basis points.

• In other words, the Federal Reserve can only protect the US dollar, after all, the US dollar is the lifeblood of the United States. If you protect the US dollar, you will continue to raise interest rates. If you raise interest rates, you will have to go to the "pills" first.

As for how much rate hike will the Federal Reserve raise? This is hard to say, it mainly depends on the ability of Europe, Japan and China to resist beatings. Of course, the United States itself is not feeling well. It is hard to say whether it will collapse first like in 2008. The life gate of the euro is to lose Russia's cheap oil and natural gas supply, and the life gate of the Japanese yen is a super high-scale Japanese debt. As long as Japan continues to maintain zero interest rates and the EU continues to impose sanctions on Russia, the US dollar will continue to raise interest rates, and the Japanese and EU will continue to lose blood. However, Japan cannot but continue to maintain almost zero interest rates, otherwise the interest on government bonds will not be able to bear it.

yen is said to be a "freely convertible currency", so the American father's hedge fund can borrow almost zero cost yen from Japanese bank , and then immediately ordered Japan to exchange foreign exchange reserves for US dollars. Japan dare not not borrow nor exchange. Then, the American father enjoys the spread , which can be said to be risk-free arbitrage. Finally, the powerful chaebol families in Japan that hold a large amount of Japanese yen will also lose their bottom line and join this stolen arbitrage activity.

• Now, the euro has begun to raise interest rates, but the yen can only continue to fall freely.

3. Forecast: What should we ordinary people do if we invest?

I remember the overall judgment made at the end of last year was that investment is not easy to do in 2022. As 2022 is about to enter its fourth quarter, few people predict that the macro economy will be so "exciting" at the beginning of the year, so the best way is to wait for the Fed to turn.

Now USD index 110 is around 110. In fact, the intention is to drive global capital to take over US and US stocks, but things went against their expectations. No one knows how the operating mechanism of the black box of inflation in the United States and when it can be controlled. Therefore, the investment signal can only be based on whether the Federal Reserve believes that inflation is controlled.

• will definitely be affected for A shares investors, but the strong linkage between European stock markets, Japanese stock markets and US stock markets is still less affected. Because the RMB is not a global currency, our economy has been consciously interrupted by the United States in 2018 and has not followed Europe and the United States to release money after the epidemic began, so we can still find many unique features.

European and American countries have not found a good way to replace "water release and economic promotion". I personally believe that I will still not be able to find it in the next few years. It is really addictive to let water release and economic promotion.

In this way, the US stock market has not had a few circuit breakers to cut off the hot money in the market, which is not the end. How many retail investors are waiting to buy at the bottom of and . Tesla PE is still at 110. The US stock market is still much higher than before the epidemic, and there is still a lot of room for decline. For example, the market will be corrected by Tesla .

• Finally, if it really makes a hard landing, either the monetary policy will turn again when it can't stand it, or it will have to get back "globalization" and use industrial division of labor to prevent the economic decline. Either way, it's a good thing for us.

Generally speaking, compared to the US stock market, the Federal Reserve and the US economy are driving a larger roller, which is conceivable.

Last words: Next year, the possibility of the US economy falling into a regression is increasing!

When more and more capital sees all this clearly, it will be driven away by the continued high inflation and leave as soon as possible. After all, the US dollar continues to inflate and the US stock market is in bearish, and it is impossible to give an increase that can offset inflation. So is it a good idea to wait for losses here every day?

• This is a sign of the collapse of the American hegemony building. It used to be so pleasant to eat hot pot, sing songs, and ride a train to climb the hillside. Now it is so miserable that it is being criticized by the gun. Everything has already been priced, so where can I have free lunch?