Chapter 322 Recent Market Changes
Thursday, September 5, 2024.
Jisilu temperature: 3.85, Shanghai Composite Index: 2785.26 points.
Another day of new lows.
Another day of despair.
This long bear market is both a huge disaster for stock investors and a valuable asset for stock friends.
Remember how it feels in this moment.
Record the message of this moment.
This will be of great help for future investment.
Before I knew it, a few days had passed. During this unconscious torture, some unusual changes occurred in the market.
1. The Federal Reserve has begun to revise data, and a September interest rate cut is a foregone conclusion.
The American data is so magical.
When it is necessary not to cut interest rates, the data released is strong and powerful, and remains strong for more than half a year.
When it is necessary to cut interest rates, they will directly revise the previous data and start to make drastic changes to pave the way for the cut.
The non-farm data released on August 21 showed that in the past year (2023.4-2024.3), the number of jobs was directly revised down by 818,000, which is equivalent to a downward revision of one-third of the data.
Yesterday's Beige Book and July JOLTS job vacancies also fell short of expectations.
I believe that data in the next few days will also support a rate cut.
Now, the market has shifted from expecting a 25 basis point rate cut to a 50 basis point rate cut.
The capital market, in such a magical way, suddenly began to trade in recession from a strong US economy and US stock market.
This is customary.
Almost every time the Federal Reserve starts cutting interest rates, the market will start trading in a recession, the capital market will become violently turbulent, or even fall, and the decline in the capital market will reinforce recession expectations.
Just like the stock market crash of the century in 2008.
Therefore, the U.S. stock market has begun a volatile downward trend in the past few days, and the future remains pessimistic.
However, US stocks are US stocks, and A shares are A shares.
The capital markets between China and the United States have parted ways since 2021.
Looking back over the past few years (2022-2024), U.S. stocks have risen amidst continuous interest rate hikes, setting new highs.
Global stock markets, except A-shares, are hitting new highs because they are all raising interest rates, easing policies, and are all on the same page, in the same system.
Theoretically speaking, A-shares should also rise and reach new highs.
Just like in 2005-2007, the A-share market not only did not fall in the early and middle stages of the interest rate hike, but continued to rise.
However, this time in 2022, A-shares are different.
In 2022, while the U.S. stock market raised interest rates, my country did not follow suit, but instead continued to ease its monetary policy.
This has led to a huge interest rate gap between China and the United States.
Naturally, a large amount of capital began to chase profits in the US stock market.
Finally, around March 2022, the Federal Reserve had just started raising interest rates, and the A-share capital market began to collapse.
Among them, the plunge in commodity prices is the most eye-catching.
Everything that has happened in the past few years has been different.
Naturally, everything that is about to happen now should also be different.
According to classical theory, after the Fed cuts interest rates and triggers a recession cycle, global capital markets will fall sharply and commodity prices will plummet.
However, I personally believe that during this round of the Fed's interest rate cut cycle, the U.S. stock market and other European and American stock markets will fall.
On the contrary, the A-share market, which has been bearish for the past three years, is brewing a bull market due to the expectation of RMB appreciation.
Commodity prices should stabilize and rebound after a brief decline.
Because, against the backdrop of the Sino-US dispute, China, Russia and the Middle East will not allow oil prices to fall sharply and will devise various measures to maintain oil prices.
Based on this inference, it is very likely that in the next year, commodity prices will soar again against the backdrop of global massive money printing.
Of course, this is just the blogger's personal inference.
Therefore, some time ago, in order to cope with this recession cycle, the blogger moved part of his positions from strong cyclical stocks such as nonferrous metals, shipping, and shipbuilding to smart cars.
But later, after repeated consideration of offense and defense, part of the investment returned to non-ferrous metals, and finally diversified into aluminum, tin and smart cars.
It can be used to attack when advancing and to defend when retreating.
2. A-shares and exchange rates are closely related.
The past month.
Careful stock investors should be able to find that whenever the exchange rate rises sharply, A-shares will rise sharply, and whenever the exchange rate falls sharply, A-shares will fall sharply.
This involves the issue of the direction of global capital flow.
Everything will be revealed on September 19th.
If the Federal Reserve starts a cycle of interest rate cuts on that day, it is very likely that A-shares will usher in a wave of market trends.
Of course, it is also possible that it will continue to bottom out along with the US stock market.
However, now it is 2781 points, there is basically no room for downward movement, but there is a lot of room for upward movement.
In this bottom area, I have always been optimistic and proactive in taking risks.
Of course, in the future I will also be pessimistic about the top area and actively stay away from risks.
3. The style of A-shares is moving closer to mature markets and starting to pay attention to dividends.
A few days ago, there was a very important news.
The five major banks unexpectedly started distributing mid-term dividends.
As we all know, bank stocks are having a very difficult time with the interest rate cut channel and the economic downward channel.
Some banks are living beyond their means, while others simply give up and their profits go into negative growth.
Against this background, the five major banks all started distributing mid-term dividends for the first time.
This is a Z size.
It is also a signal of a change in market style.
In the future market style, dividend yield will be an important criterion.
This is not only reflected in the high dividend stock market in the past six months, but will also be reflected in the future, where there will still be high dividend market conditions.
When we choose stocks, in addition to paying attention to the macro economy and sectors, when choosing individual stocks, we should pay more attention to the dividend yield and the PE ratio.
4. The market conditions are extremely depressed.
In the slow decline, the strongest fortress in the market, high-yield stocks and bank stocks collapsed, and the atmosphere in the entire capital market was
It has evolved from disappointment, despair, and numbness to a state of calmness and freedom from desire.
Some people no longer pay attention to the market,
Some people started to close their accounts and leave the market.
No one believes in the arrival of a bull market anymore. It seems like a joke.
No one still remembers the series of policies introduced since August last year.
No one remembers it anymore.
No one believes it anymore.
This is a good phenomenon.
We need to be more patient.
The daily trends are scary.
But in the end you will find that the index can no longer fall.
Many times, I was confused and didn’t know what was going on, but the index kept rising up, trembling and shaking.
Shareholders exchange:
1. "Fat Brother Lincheng": "With the US stock market falling, the AI concept bubble led by Nvidia seems to be gradually bursting. The industrial revolution brought about by artificial intelligence is not yet due."
No matter how great an industrial revolution is, it must be implemented from blueprints into practice. Only profits are real.
Even the grandest vision needs to be supported by corresponding profits.
Otherwise, if this expectation is not met, the consequences will be devastating.
This is also the reason why I never invest in high-tech stocks.
2. "Chen Xiaotian":
"It's really hard, and I'm feeling depressed. Hey, brother, why are we starting a cycle of interest rate hikes? I've never figured it out. I think with the current state of the real estate market, wouldn't it be better to lower interest rates, release liquidity, and allow for some inflation?"
(Because if we flood the market with money now, a lot of liquidity will be sucked into the American capital market to earn high interest)
We have started another cycle of interest rate hikes, and it will take at least two years.
After this round of interest rate cuts by the US, we will also truly begin to loosen our monetary policy to stimulate the economy (because if we flood the market with money now, a lot of liquidity will be sucked into the US capital market to earn high interest rates).
In this context of China and the United States releasing large amounts of money in tandem, we can refer to 2021, which should cause global inflation.
This will lead to the start of a cycle of interest rate hikes.
As for whether the US will start raising interest rates, or whether China and the US will raise interest rates together, that will be considered later.
Now I really can't see that far.
3. "Spring flowers bloom like fiery red": "Author, please advise. The pharmaceutical sector has seen unusual activity recently. Leading pharmaceutical companies are bottoming out, and the government's centralized procurement of pharmaceuticals has also come to an end. The pharmaceutical sector has experienced several years of decline, and its valuation is already relatively low. The government has also released positive news for the pharmaceutical sector. The price of certain mycin has increased recently, an anthrax outbreak has occurred in Shandong, and the Federal Reserve's interest rate cut is also positive for the pharmaceutical sector. In summary, does the pharmaceutical sector have an opportunity?"
I don't understand medicine; it's beyond my area of competence.
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