Chapter 307 The Stock Markets of Two Worlds
Wednesday, June 26, 2024.
Jisilu temperature: 4, Shanghai Composite Index: 2937 points.
The market continues to fall endlessly, and I don’t know how many people have left the market and never come back.
Investors are in a depressed mood, with their screens filled with negative information, so they are too lazy to type even if they want to brag.
1. Since we can’t brag, let’s start talking nonsense and talk about the Chinese and American stock markets.
A normal stock market has ups and downs, but in the past few years, the Chinese and American stock markets have gone to two extremes.
The U.S. stock market has been rising, rising forever, and seems to be going through the roof.
The Chinese stock market has been falling and it seems that it will continue to fall forever.
This is not normal.
The stock market is a monetary phenomenon. The reason why the US has been rising is because interest rates have been rising. This has attracted a large amount of financial capital with high interest rates, allowing for risk-free arbitrage in the US.
In our country, although monetary policy has been relaxed, a large amount of funds continue to withdraw from the stock market due to various reasons.
In recent months, this situation has reached an extreme.
The AI revolution sector in the United States has seen a crazy rise in value. The market capitalization of the three giants, Nvidia, Microsoft, and Apple, has exceeded 10 trillion US dollars, which is enough to buy the entire A-share market. Countless people are obsessed with it.
However, basic common sense tells us that this is very abnormal. There is no stock market in the world that will always rise without falling, and trees will not grow to the sky.
Now, either the US stock market is overvalued or the A-share market is undervalued.
In fact, a big reason why the Federal Reserve does not cut interest rates now is that it is afraid that the interest rate gap will narrow, the dollar will depreciate and flow out, which will lead to the collapse of the U.S. stock market.
Therefore, now the various Federal Reserve officials are like taking medicine, some are bullish and some are bearish, and the data they release are good some days and bad some days, which makes people confused.
Yesterday, another hawkish Fed official said that the interest rate cut would be postponed to 2025, but traders are betting that there will be a 300 basis point rate cut in March 2025.
Too divisive.
This is most likely a bet on the US economy and the trend of US stocks.
It can be said with certainty that if the United States continues to insist on such high interest rates and refuses to cut them, its domestic economy will not be able to bear it, and it will definitely lead to a recession or even a depression.
Once this day comes, it will lead to an economic crisis, a stock market crash, and of course a sharp interest rate cut to save the economy.
By then, a new round of dollar tsunami will hit the world.
What will happen then?
This can be partially referenced in 2020, when the U.S. stock market plummeted due to several circuit breakers caused by the coronavirus, and the Federal Reserve began to cut interest rates and flood the market with money.
At the same time, after the sharp drop, commodities embarked on a wave of growth within half a year.
After a sharp drop, the Shanghai Composite Index started a round of market trends. After the Federal Reserve raised interest rates in 2021, capital began to flow out again, and the stock market began a sharp adjustment accordingly.
However, this time, it is likely to be different because the US stock market bubble is too big and my country's stock market is too low.
It is very likely that after the U.S. stock market plummets and experiences initial chaos, my country's stock market will usher in a larger rally with the continued inflow of foreign capital.
However, there is still one biggest variable, which is whether it will lead to a global depression like the one in 1929.
Everything seems to be unknown.
2. These days, there is another speechless thing, that is, American pharmaceutical companies have begun to develop some kind of miracle weight loss drug.
Domestic media and pharmaceutical groups also began to follow suit, touting the "miracle weight loss drug."
Capital, in order to make money, really does not disdain any money.
In the past, there was artificial meat, and now there is the "magic weight loss drug". The purpose is to develop various concepts to harvest audiences who are brainwashed by information.
Is artificial meat so magical? Isn't it just tofu?
Is losing weight magical? Isn't it just about moving your legs and controlling your diet?
When it comes to capital, it’s about creating concepts and getting you to pay money, which is like taking medicine.
3. In recent days, Saudi Arabia came to China to discuss JS cooperation.
If you don't sweep with a broom, the dust will not go away by itself. The economic confrontation will sooner or later be transmitted to the military.
Without a resounding victory, the world will not change.
This confrontation would be best done later in someone else's home.
Today's market:
The K-line of the Shanghai Composite Index has been falling smoothly these days. This continuous and long-term decline has far exceeded the plunge in February this year and has had a psychological impact on investors.
On the market, bank stocks supported the market, the liquor sector seemed to have stabilized, while other sectors continued to fall and there was nothing interesting to watch.
The market is very depressed, popularity is very low, and funds are very confused.
At this moment, we have to recall the time in February this year and now. Are our positions and logic still there?
Shareholders exchange:
"Shen Junwen who loves spicy goose meat": How about Yangtze Memory Technologies?
I don’t understand the tech stocks related to chips.
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