Chapter 249 After fifty years, the US economy has fallen into stagflation again?
Friday, April 26, 2024.
Last night's news was full of bombshells, which made Li Feng extremely excited and he couldn't sleep well.
First, the US economy is suspected to have fallen into stagflation.
Last night, the US first quarter economic data was released and it was very shocking.
The initial estimate of the U.S. real GDP annualized quarter-on-quarter growth in the first quarter was only 1.6%, far exceeding expectations (previous value 3.4%).
The initial value of the U.S. core personal consumption expenditures (PCE) price index in the first quarter rose to 3.7% on an annualized quarterly basis, which also far exceeded expectations (previous value 2%).
The economy is stagnant, inflation is high, and it is a clear sign of stagflation.
The government does not like inflation or deflation, but is most afraid of stagflation. When a country faces stagflation, all monetary means will fail.
If you cut interest rates to stimulate the economy, it will further stimulate inflation.
Raising interest rates to curb inflation will only depress the economy.
What a dilemma.
It's even more difficult.
In fact, everyone on earth knows that the most correct way is to reduce or even cancel tariffs and continue to import large quantities of cheap Chinese goods. This way, the inflation in the United States can be directly suppressed without raising interest rates.
Or, as I have also suggested, we can follow our country's approach and overturn the major issues in healthcare, education, and even real estate, internet finance, and carry out reforms on our own to reduce inflation.
However, due to political reasons, the two parties have been fighting each other, and containing China has become a consensus, and no one dares to change their course easily.
At the same time, due to the state system, both parties' governments are puppets of capital and it is difficult for them to take action against themselves.
The imperial elite only care about manipulating power and managing capital to make quick money. How could they care about the lives of ordinary people?
This has led to the economic phenomenon that China would rather have a blade of imperialist grass than a seedling from China, and that all problems are attributed to other countries, not to China itself.
A few days ago, I saw a news report that thousands of American "economic refugees" flocked to Mexico to buy shampoo and toilet paper, causing local prices to rise.
The local Mexicans called these Americans who were traveling in the opposite direction "the plague."
It's really shocking.
Elder politics, constant party strife, rampant drug abuse, no one paying attention to the common people at the bottom, the powerful and wealthy living in extravagance and unwilling to compromise, wars raging on the borders, and rampant corruption and armaments...
All of this is so familiar.
The decline of the empire is becoming increasingly apparent.
I wonder if the American elite are willing to cede their interests and delay the decline of the empire? Or will they simply abandon ship and board the "Noah's Ark" on the other side?
At present, when US Secretary of State Blinken arrived in Beijing, there was no red carpet, no Red Flag car, and it was cold and deserted.
If he were more sensible, he would give up some interests and make the right choice. Of course, it is more likely that it is just a show.
Times change, hosts and guests shift positions, and the world is about to change.
Second, French President Emmanuel Macron, one of the main voices in the EU and one of the five permanent members of the UN Security Council, warned on the 25th:
"The world is undergoing unprecedented change, and Europe could perish if it doesn't act"
And stressed: "The EU can no longer rely on the United States for security."
ECB Executive Board member Pta said:
"The central bank can take small steps to cut interest rates, and the disconnect between the ECB and the Fed's monetary policy direction is not a critical issue."
Germany came to visit and French President Macron spoke again. It seems that the EU, which has been sitting on the fence, has come to its senses.
Not only does it want to deviate from the United States economically, but it is also hinting at seeking complete political independence.
The world is becoming more and more lively.
Third: The last issue mentioned precious metals and non-ferrous metals.
my country is a major manufacturing country, but due to the international strategy of the top leaders and the reality that the domestic CPI is still low, the prices of upstream resources such as kerosene and non-ferrous metals can rise, but cannot skyrocket.
Only by increasing prices slowly can inflation, or costs, be slowly transferred to downstream areas.
These days, first the Israeli-Palestinian conflict and then the Iranian-Iranian conflict led to a surge in resource stocks. Last night, the Federal Reserve data was weak again, triggering a new round of resource price increases. This is not in the interests of our country.
So, according to the rules, you have to shout.
If shouting doesn’t work, then let Chow Yun-fat do the talking.
If Chow Yun-fat’s words don’t work, then sell off your reserves.
If selling reserves doesn’t work, then raise interest rates.
The script has been prepared long ago, and it all depends on the performance of CPI and resource prices.
Fourth: State Council Report: Promote the leading securities companies to become stronger and better.
The policy of building a "financial power" has been rolled out in waves. The report states that we must "concentrate our efforts on building a 'national team' in the financial industry" and "promote large state-owned financial enterprises to benchmark against world-class financial enterprises."
Perhaps it was for this reason that Guolian Securities merged and acquired Minsheng Securities last night.
This really makes one think.
What are the main businesses of large international investment banks?
It's nothing more than internal and external.
At this stage, what my country's financial industry lacks most is probably external development.
Stock market quotes:
After many surprises last night, Li Feng came to the VIP room of the business hall early today to watch the show.
Sure enough, the Shanghai Composite Index opened in the red and continued to rise. Gold, copper, and oil, influenced by US data, were the only ones to perform well. CNOOC, Zijin Mining, and Luoyang Molybdenum rose by more than 3% at one point, while the rest of the aluminum, tin, shipping, and shipbuilding sectors lagged behind. Brokerages rose overall, with the brokerage ETF rising by more than 3% at one point. Real estate inexplicably strengthened, while coal weakened...
Xiao Bo watched LME copper futures head straight for $10,000 and couldn't help but sigh, "I thought the Middle East geopolitical conflict had come to an end and resource stocks could have a good time adjusting, but I didn't expect the Americans to act weird again last night."
"The world is becoming increasingly unstable."
Old Chen's eyes were fixed on the unusual movements in the real estate sector, and he couldn't help but ask, "Resource stocks have risen enough. Are you interested in investing in the real estate sector?"
"Real estate?" Xiao Bo was amused when he heard this and said with a smile, "Old Chen, you can lie to me, but please pay attention to the number of times. How many times has the real estate industry been rescued? How many policies have been introduced? Is there any improvement at all?"
"Tsk - doesn't the book always say, crisis, crisis, there is opportunity in crisis? Now is a crisis moment for the real estate sector. If you wait until the industry turns around, you won't be able to get the hot stuff even if you eat shit, and you will definitely become the one who takes over." Old Chen argued.
"Old Chen, you're not thinking of buying the bottom of the real estate market, are you? Be careful, or you might end up in the basement. There's hell in the basement, and there are eighteen levels of hell waiting for you."
"Go away! Can't you keep your mouth clean? Didn't you brush your teeth and rinse your mouth this morning? Is there any curse like that?"
"Don't believe it?" Xiao Bo rolled his eyes at him, then poked Li Feng and said, "Li Feng, Lao Chen wants to buy the real estate sector at the bottom. What do you think?"
Li Feng raised his head from a pile of financial reports, pondered for a moment, and said:
"The real estate sector is a pillar industry in my country. It's definitely not going to collapse, but no one knows when it will bottom out. After all, this is the first time my country has faced a nationwide real estate cycle downturn."
"I used to estimate the bottom would be around 2028, but now it seems possible. Look at the real estate sector right now. Ever since the collapse of leading company Vanke A, investors have labeled it a worthless entity... This bias will lead to continued declines in stock prices, but it will also create room for future growth..."
After a pause, Li Feng continued, "If you buy real estate stocks now, it's hard to say whether you'll make money or not, but at least you won't suffer the huge losses of the past three years."
Li Feng said some correct nonsense, and Xiao Bo shrugged helplessly.
Then, Li Feng added: "Compared to the real estate sector, I am more worried about the liquor sector."
"The liquor sector?" Xiao Bo frowned, scrolling through his phone. "What's wrong with the liquor sector? Stocks with poor performance have already plummeted. For example, Jiugui Liquor and Shede Liquor are both roughly 80% off, and Wuliangye has also fallen quite a bit. Stocks with good performance, like Kweichow Moutai and Fenjiu, have basically not fallen. They announced a 30% increase in earnings last night. Are you worried?"
"Yes, what I am worried about are the companies whose stock prices are still at the top, such as Fenjiu, Kweichow Moutai, and Luzhou Laojiao..." Li Feng said slowly.
But before he could finish his words, Lao Chen glared at him and whispered, "Keep your voice down. There are several shareholders over there who are committed to investing in the value of liquor. If they hear us, it won't be good to start a quarrel."
Li Feng looked up at a corner of the VIP room, where several stockholders were sitting together, looking at the red stock index and talking about the future of liquor. Their faces seemed to have become much rosier.
"Who among young people still drinks strong liquor these days? It's a Class A carcinogen... Besides, how precious is life these days? Which middle-aged or elderly person doesn't care about health? There's absolutely no market for liquor..."
Old Chen muttered softly,
"I talked to them last time, but they still wouldn't listen. They insisted on talking to me about value and dividends. Sigh... they don't understand. If the performance drops, will the dividend also drop? Didn't you see that Vanke canceled its dividend? They're so stubborn, so stubborn..."
Hearing this, Li Feng couldn't help but smiled and said:
"Old Chen, I think I heard what you said ten years ago. When the liquor industry was in crisis around 2013, everyone said the same thing. Of course, when the liquor stock price rose, these voices disappeared. It's just for fun, don't take it seriously."
"The real problem with the liquor industry is the lack of a holistic industry bias. Look at the real estate sector right now. Hasn't it become something that's not even loved by everyone? That's the feeling."
"Generally speaking, a standard industry cycle goes like this," Li Feng analyzed. "The cycle begins—corporate performance and stock prices soar—the cycle peaks—performance and stock prices hit record highs—the cycle ends—performance and stock prices plummet, leading to industry losses—the cycle bottoms out—the industry continues to be sluggish, and the continued sluggish stock prices and performance create industry bias—and the cycle begins."
“It goes on like this.”
"Therefore, the liquor industry is still lacking an overall industry bias, and it's almost there. This feeling must be represented by the majority of liquor companies in the industry suffering losses. Just like the liquor cycle described in Chapter 34 of this book ten years ago, there must be a clearance of the liquor industry - with the plummeting of leading companies as a sacrifice."
"It's not just about clearing out production capacity, but also about investors completely clearing out their shares, which can lead to a reversal of the entire industry."
Old Chen frowned and after listening, he couldn't help but ask:
"Will it be different this time? If we don't liquidate, will the stock price go up and the industry turn around?"
"Nothing is absolute, but this is possible," Li Feng continued. "But if things develop this way, then the bottom won't be deep, and the future top won't be too high either, so there won't be much value in participating."
Q&A with stockholders:
"Fat Brother Lincheng": In this great change that has not been seen in a century, the confrontation between China, the United States and Europe is becoming increasingly tense, and the major channel, the South China Sea, is also not peaceful. Please ask the author to analyze the prospects of shipping and shipbuilding industries, thank you.
Before analyzing this issue, we must first clarify our position, that is, our country is a major manufacturing country, the world's factory, and the world's hub.
Therefore, from an economic perspective, we must ensure that the raw materials for the factory, such as food, timber, crude oil, natural gas, copper, bauxite, zinc, iron and other resources can be transported in, and then various industrial products can be transported out.
This will inevitably ensure that we have strong civilian ship transport capabilities and military ship support capabilities.
If we put it into the context of the Sino-US dispute and the great changes that have not been seen in a century, the most important thing is to build more aircraft carriers and build them as soon as possible.
In summary, the shipping and shipbuilding industries are key industries that must be developed and protected in my country. In terms of A-shares, the shipping and shipbuilding sectors are core assets.
To analyze it more specifically, the shipping industry includes several categories, such as container shipping, oil shipping, dry bulk shipping, and special shipping. Shipbuilding is mainly divided into shipyards such as China Shipbuilding and China Heavy Industry, and there are also sub-enterprises in the industry chain such as anchor chains and power.
As the market has progressed, COSCO Shipping Holdings, a container shipping company, has grown tenfold. The container index has recently soared, indicating a surge in international shipping demand. This is a prediction of the interest rate cuts in Europe and the United States to restart the economy, as well as the inventory replenishment trend in the European and American markets. This trend is bound to spread to dry bulk shipping, leading to an increase in the entire shipping index.
My personal judgment is that the entire shipping industry will continue to strengthen in the next six months, but that does not mean that every stock will necessarily strengthen. The shipbuilding industry should see a reversal in performance in the next six months, leading to rising stock prices.
It is not easy to write. This huge chapter of nearly 4,000 words took me four or five hours... I am speechless. Brothers, if you have time, please give some encouragement and send a free gift for love.
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