Chapter 290 Capital, Shuttle between Tai Chi Yin and Yang, Seeking Eternal Life
Tuesday, June 4, 2024.
Yesterday's news:
1. A technical failure occurred at the New York Stock Exchange, and the Class A shares of Berkshire Hathaway, owned by Warren Buffett, fell 99%!
Among them, someone bought the stock at $185 near the lowest point, but unfortunately the exchange canceled the transaction afterwards.
In addition, more than a dozen stocks plummeted.
Was this a preview of future events, or just an innocent and simple glitch?
Could this be another rehearsal for the epidemic prevention drill conducted before the outbreak of the new coronavirus?
2. Accept Biden’s “three-step” ceasefire plan; Colombia demands that its ambassador leave the country within a specified period of time; WTI7 oil prices fall by more than 3%.
In the second half of the year, major international events, or rather turmoil, occurred one after another.
The first thing is that two days later, the European Union cut interest rates, which became a secret for the United States.
A country's capital cost affects its production efficiency to a certain extent.
For a long time, the production efficiency and comprehensive interest rates of developed countries such as Europe and the United States have been far lower than those of my country, making them net capital investors.
However, my country's production efficiency and comprehensive interest rates are higher than those of developed countries all year round, and thus it has become a net capital investment country for a long time.
This kind of capital investment and investment relationship has led to part of my country's economy being heavily dependent on foreign countries. This economic dependence has led to spiritual dependence, as well as rigid and blind thinking.
As a result, the "comprador class" and comprador mentality emerged, which can be found in any country.
In the past tides of the US dollar, when the US dollar got sick due to interest rate hikes, the world had to take medicine, and when the US dollar eased its interest rate cuts, the world breathed a sigh of relief.
But, just a few years, or it seemed like only three years had passed, the situation was completely different.
In today's my country, domestic interest rates are getting lower and lower, and the huge productivity has nowhere to go. It is even undergoing further upgrading (industrial upgrading). A huge amount of capital is circling in the country, looking for all opportunities (asset shortage) and looking for opportunities to go overseas. my country is on the verge of becoming a net capital exporter (cultivating industries, classes, ideas and cultures in other countries that are dependent on my country).
On the other hand, the United States has seen rising domestic interest rates, rising inflation, and a serious shortage of product supply (downgraded to a developing country?). This, to a certain extent, reflects the decline in its domestic production efficiency (immigrants are not high-quality productivity after all), and it is on the verge of becoming a net importer of capital.
(Harmonized part of the content)
This has led to what people now jokingly call a battle between China and the United States: a battle between hypoglycemia and hypertension.
However, if this situation is allowed to continue, the high cost of the US dollar (too expensive) will lead to increased borrowing costs internationally, which may lead to the opportunity for its low international settlement position to be replaced by other currencies.
Because, in transactions, everyone will use low-cost and fast transaction methods.
This is also why monetary transactions in human history have evolved from shells, to bronze, to gold and silver, and finally to paper money, and in the future to digital currency (convenience, high value, and low transaction costs).
Now, the EU wants to reverse course and cut interest rates ahead of schedule, which will to a certain extent deprive the US dollar of its global settlement status (more than 400 million people in the EU).
In this regard, where will the US dollar go?
Should they launch a "Kosovo War"-like campaign to suppress the euro, or should they follow suit by cutting interest rates and not give in?
Behind the credit of a country's currency, there are solid assets to back it up.
Behind the big ruble stand natural resources such as food, oil, natural gas and commodities.
Behind my country's RMB stands a huge and irreplaceable manufacturing capacity across the entire industry chain.
Behind the EU stands the old money, colonies and various industrial capabilities left over from centuries of colonialism.
Behind the US dollar hegemony is the domestic high-tech production capacity and, more importantly, military hegemony.
It is precisely because of the military endorsement that the Middle East petrodollar has its foundation (endorsement), and that the "Five Eyes Alliance" of Australia, Britain, New Zealand, and Australia and all the resources behind this alliance are there to endorse the dollar.
This is why colonial countries like Japan, South Korea, and Germany have manufacturing capabilities to endorse the credit of the US dollar.
If the US dollar does not have the resources behind these countries to endorse it, it will not be able to support the huge global dollar system by relying solely on its own domestic high-tech industries.
Nowadays, under the background of low interest rates, the RMB is constantly eroding the foundation of the US dollar (currency swaps, RMB settlements), and the euro is about to cut interest rates in advance to further grab the world trade share (euro settlement share).
Where is the US dollar headed? Where is it headed?
3. Overnight, nine companies received inquiry letters regarding their annual reports.
(Harmony part)
This round of overhaul of the capital market started with the announcement last year (financial meeting) and began to be implemented this year (new village chief took office with a mission) (new nine articles). This top-down overhaul of the capital market is just the beginning, and the best is yet to come.
Today's market:
Today's market has improved slightly compared to yesterday.
After the Shanghai Composite Index opened at 3071.32, it began to rise slowly after several adjustments. Real estate rose during the session, non-ferrous metals rebounded, and gold, copper, aluminum, tin and shipping generally rose.
Old Chen breathed a sigh of relief.
In the past few days, the Shanghai Composite Index continued to fall, dropping from 3174 points to 3061 points in one breath. The downward trend has lasted for more than ten days. The K-line trend is extremely ugly, and it seems that it will break through 3000 points.
In the past few days, strong cyclical stocks have been fluctuating up and down, rising for three days, plummeting for three days, rising again for three or four days, and then plummeting for three days, making everyone panic and uneasy.
"Li Feng, has the market reached its bottom and is starting to rise?" Old Chen turned around and looked at Li Feng.
Li Feng picked up the water cup, took a sip of water, thought for a moment, and said:
"Old Chen, stock trading is all about speculation on expectations and the future, and the future is unknowable, so stock trading inherently carries risks. That's why I don't know what the market will be like today."
"However, as the old saying goes, to understand the present, we should learn from the past. To understand the future market trend, we should repeatedly review the past market trends."
"Now is a critical time node for interest rate cuts in Europe and the United States. We can learn from the market at the end of 2021 to review and infer future market trends."
"In 2021, domestic inflation in the United States soared, reaching a multi-decade high. The economy was already on the path of raising interest rates. my country seized the opportunity and decisively and swiftly eliminated major sectors like real estate, online finance, education, and healthcare, initiating a tightening policy six months in advance. This led to strong cyclical stocks experiencing a 'power outage' crisis adjustment after a mid-year surge. At the beginning of 2022, under the pressure of interest rate hikes, a round of adjustments began. Naturally, during this round of adjustments, the declines in real estate, finance, insurance, and consumption were even greater, deeper, more terrifying, and more appalling..."
"Now, in mid-2024, the United States is also experiencing high inflation, but has basically entered a period of interest rate cuts. The European Union has already decided to cut interest rates on June 6, and my country has already started a new round of interest rate cuts six months in advance. Therefore, we can optimistically predict that strong cyclical stocks will perform well in this round of interest rate cuts."
"In addition, there is another issue worthy of our attention. Since 2020, my country's monetary policy has been six months ahead of the United States. As of now in 2024, if we start calculating from the interest rate cut in August 2023, my country's monetary policy is already at least a year ahead of the Federal Reserve..."
"Under the influence of monetary policy, the relationship between China and the United States has already formed an economic and financial trend internationally that resembles the yin-yang fish of Tai Chi."
"In a Tai Chi cycle of rising in the east and falling in the west, then falling in the west and rising in the east again, capital shuttles between China and the United States to arbitrage, forming an arbitrage cycle, seeking a kind of immortality."
"Nowadays, as a new cycle of rising East and falling West begins, a large amount of international capital has begun to flow into Hong Kong stocks and indirectly into A-shares for various purposes."
"At this moment, my country is rectifying its financial markets and building a financial power. This means we are digging into the financial corners of the United States, attracting European and American money to China, uniting the bourgeoisie within Europe and the United States, building a world-class capital market with Chinese characteristics, and jointly building a community with a shared future for mankind."
Q&A with stockholders:
1. "Fat Brother Lincheng":
It looks like aluminum, copper, iron and tin will go down for a while?
No one can predict the short-term trend.
In the short term, we will focus on the interim report data, in the medium term, we will look at the price of oil, and in the long term, we will focus on (harmony).
2. "Ziying of the Romantic City":
Real estate transactions have decreased, while related consumer transactions have increased. Would it be more accurate to calculate the difference based on this transaction?
I basically just make rough estimates. The real estate industry is a trillion-dollar industry. A decline in its transactions will affect the performance of many companies in the industrial chain, such as cement, steel, glass, building materials, gardening, cabinets and wardrobes, etc. This is a very long industrial chain, and the total output value is almost immeasurable.
The real estate industry is the true mother of the economy, as it affects the entire economy.
The decline in real estate transactions will greatly affect economic development. This is not a consumption-related issue that can be compensated by these transactions in the short term.
It is for this reason that my country's proactive decision to burst the real estate bubble during the extraordinary period of international inflation in 2021 is a feat that kills two birds with one stone (suppressing inflation and curing chronic diseases) and requires great courage and wisdom.
This will lead to a sharp drop in domestic inflationary pressure in my country in the next few years, which will of course also lead to employment difficulties, sluggish CPI, and the economy urgently needs to be reborn from the trough.
Similarly, in fact, it has liberated everyone from the endless competition in housing prices, the endless anxiety of extracurricular competitions, and the boundless medical burden. It has truly liberated everyone from the burden of buying a house and completely prevented the trend of disorderly financial development in industries such as real estate (financialization of real estate, education, and medical care).
Otherwise, step by step, in the future, it is very likely that the real estate market will become like the deformed one in Hong Kong - a large number of people will be reduced to tools, dry batteries, and slaves of capital under financial manipulation and the dimensionality reduction and exploitation of people by capital.
Fortunately!
Today's stock market rebounded, and the rise was decent. While stock friends were happy, they also clicked on the reminder for updates and sent a free one to show their love.
Your support is my motivation to update.
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