China Fund News reporter Ivan
The US January CPI data has exploded again, soaring to a new 40-year high! The Fed's aggressive interest rate hike expectations exploded, and the US stock market and US debt shook dramatically. The three major stock indexes fell sharply, erasing the previous day's gains, and the Dow surged more than 500 points; the US Treasury fell sharply, and the ten-year US Treasury yield jumped to the highest intraday level in two and a half years.
Leading star technology stocks and chip stocks led the decline, the world's two largest companies by market capitalization, Apple and Microsoft, both fell more than 2%, Tesla recalled 570,000 cars fell nearly 3%, and the market value evaporated by more than $28 billion (about 180 billion yuan) overnight.
Many Chinese stocks rose against the trend, with Lu Jin rising more than 15% to lead the Chinese stocks.
BlackRock, the world's largest $10 trillion asset management giant, announced its holdings in the fourth quarter of last year, steadily increasing its position in large technology stocks.
The U.S. CPI once again shocked the market
Biden urgently reassured: Inflation will fall sharply before the end of the year
Before the market hours on February 10, the U.S. Bureau of Labor Statistics released data showing that the overall CPI in the United States rose 7.5% year-on-year in January, and the growth rate accelerated again, soaring to the highest level since March 1982, 7.3% above expectations, and also higher than the previous value of 7.0%. This is already the data for nine consecutive months of reaching or above 5%.
In addition, the increase in CPI unexpectedly widened in January to 0.6%, compared with an expected increase of 0.4% and a 0.5% increase of the previous value.
Excluding relatively volatile food and energy prices, the core CPI reading for January was 6 percent, also at its highest level in nearly 40 years. Slightly above expectations of 5.9% and also above the previous 5.5%; the core CPI rose 0.6% sequentially, slightly above expectations of 0.5%, unchanged from the previous value.
This is the 20th consecutive month of increase in the CPI, and the cost of goods and services is all rising.
In a statement released by the White House on February 10, Eastern Time, Biden said that his two top economic tasks are to build a developing economy, bring more affordable jobs, and lower prices, which stem from the global problem of inflation caused by the epidemic. The government has been using everything at its disposal in the face of rising prices, and Thursday's CPI data is a reminder that Americans' budgets are being cannibalized in ways that really put pressure on the table. But there are some signs that we can overcome this challenge.
"While today's report [shows inflation] is high, forecasters are also expecting a significant slowdown by the end of 2022," the White House statement said. Fortunately, we saw positive real wage growth last month, and car prices, which accounted for about a quarter of last year's overall inflation, were modest (growth). We also see good news that the number of new claimants for unemployment benefits continues to decline. This is a sign of the real progress we made last year in getting our citizens back to work. ”
Biden promised that the administration will continue to crack down on curbing high costs for families and workers, and continue to push for increased competition to make the U.S. market more competitive and consumers more choice.
The Fed voting committee once again let go of the eagle
U.S. Treasury yields soared in the long and short term
A few hours after the CPI data was released, James Bullard, one of the Fed's votes this year and president of the St. Louis Fed, once again released the eagle. He said he supported raising interest rates by a full percentage point in early July, including a 50 basis point hike for the first time since 2000, to counter the hottest inflation in the United States in nearly four decades.
As the top Fed official with voting power at this year's FOMC meeting, Bullard stressed that the Fed's focus is on fighting inflation. His plans include spreading rate hikes at three meetings and scaling back the Fed's balance sheet starting in the second quarter, followed by deciding on the path of interest rates in the second half of the year based on the latest data, but Bullard said there was no final decision on whether to raise rates by 50 basis points in March, saying he would listen to Powell on the size of the rate hike.
As for the number of rate hikes, Bullard said not long ago that the market's estimate of five rate hikes this year is not outrageous, but the specific number of increases depends largely on the development of inflation.
The more-than-expected inflation explosion and Bullard's "hawkish" speeches sent Treasury yields soaring, with the 10-year Treasury yield breaking through the 2% mark for the first time since August 2019.
The two-year Treasury yield, which is more sensitive to monetary policy, rose more than 10 basis points intraday, refreshing the two-year high on the eve of the epidemic, while after Bullard released the "eagle", the two-year US Treasury yield rose more than 22 basis points to 1.57%.
In addition, the US 2/10-year US Treasury yield curve flattened, hitting 50 basis points, in line with market expectations for rate hikes. Short-end U.S. Treasury yields rose significantly more than the long-end.
The surge in market interest rate hikes has spooked U.S. stocks
The three major stock indexes dived in unison
After the release of the CPI data, money markets now expect the Fed to cumulatively raise rates by one percentage point over the next three meetings, meaning one of them could raise rates by 50 basis points, or officials call an unplanned emergency policy meeting to raise interest rates. Currently, the market sees a 50 basis point hike in March as more than 75% of the probability, after expecting a 50% probability.
Derek Holt, head of capital market economics at Scotiabank, said the Fed was "far behind the inflation battle with the U.S. at or above maximum employment, and rising wage pressures that would be difficult to resolve without sudden and draconian policy changes." ”
Paul Jackson, global head of asset allocation research at Invesco, has also predicted that the 10-year Treasury yield could break through 2.5% this year, which will have a relatively greater impact on the growth-dominated S&P 500 index and may cause the S&P market to fall this year.
Barry Gilbert, asset allocation strategist at LPL Financial, also said inflation spiked unexpectedly again in January and markets continued to fear that the Fed would take aggressive measures. While things may start to improve, fears of excessive Fed tightening will not disappear unless there are clear signs that inflation is being brought under control.
The surge in interest rate hikes, coupled with the hawkish statements of Fed officials, led to the performance of U.S. stocks throughout the day, although briefly recovering intraday, but the overall decline expanded rapidly after Bullard's speech, and finally closed down.
As of the close, the Dow Jones Industrial Average closed down 526.47 points, or 1.47 percent, at 35,241.59 points; the Nasdaq closed down 304.73 points, or 2.10 percent, at 14,185.64 points; and the S&P 500 closed down 83.10 points, or 1.81 percent, at 4,504.08 points.
At this point, the three major U.S. stock indexes have stopped rising twice, the S&P 500 index has fallen from a new weekly high, the Dow has fallen from a three-and-a-half-week high, and the NASDAQ has fallen back from a three-week high. S&P and the Dow have reconsidered the 100-day moving average.
In terms of constituent stocks, Amgen fell 3.53%, Microsoft fell 2.84%, and Cisco fell 2.52%, leading the Dow.
Leading tech stocks led the decline
Microsoft fell nearly 3%
Expectations of rate hikes have soared, putting pressure on high-valued technology stocks. Leading tech stocks fell. Facebook's parent company Meta closed down 1.7%; Amazon closed down 1.4% for two consecutive days; Apple closed down 2.3%, stopping two consecutive gains and retreating from a five-week high; Microsoft fell 2.8%; Netflix closed down 1.6%; Google parent Alphabet fell more than 2%, losing a week's high.
Recalled more than 570,000 vehicles
Tesla's market capitalization evaporated by 180 billion
Tesla recalled 578607 car in the United States for speaker function or sound problems that masked pedestrian warning systems, the 11th since October last year.
The National Transportation Safety Administration (NHTSA) said on February 10 that the recall is mainly due to the "Boombox" function in Tesla speakers, which allows drivers to play sounds while the vehicle is driving, which may mask sound warnings to pedestrians, thereby violating federal safety standards.
NHTSA said Tesla will fix the issue by means of a remote upgrade (OTA) and the "Boombox" feature will be disabled.
The recall covers the Model S, Model X and Model Y produced between 2020 and 2022, and the Model 3 produced between 2017 and 2022.
As U.S. safety regulators step up scrutiny of Tesla, Tesla has recently opened frequent large-scale recalls. On Wednesday, Tesla announced it would recall 26,681 vehicles in the U.S. due to software errors that could lead to a decline in windshield defrost performance.
On February 3, Tesla announced a recall of more than 817,000 vehicles in the United States because of software security issues, which is also the largest recall in the company's history.
For the frequent quality problems of Tesla vehicles, the company's CEO Musk has long foreseen. In an interview as early as February last year, Musk publicly admitted that once the company significantly expanded production capacity, the quality of Tesla's electric vehicles would be affected.
When asked when he should buy Tesla, Musk admitted that the average customer will either buy it at the beginning or wait for the production to stabilize before buying, and the company's products will be doomed to various problems in the process of production climbing.
Tesla closed down nearly 3 percent, wiping out more than $28 billion (about 180 billion yuan) at $904.55 per share, for a total market capitalization of $934.9 billion.
Chip stocks are under pressure
The group fell
The broader market fell, and chip stocks could not escape. Qualcomm fell 5.37 percent; AMD fell more than 5 percent, AMD announced it had all the necessary approvals to acquire Xilinx and the deal is expected to close around Feb. 14; Nvidia fell more than 3 percent; TSMC fell 0.65 percent, and its January sales of NT$172.18 billion rose 36 percent year-on-year, setting a new monthly high in revenue.
Chinese stocks bucked the trend
Lu Jin led the way with a rise of more than 15%.
The broader market is down, but many popular Chinese stocks have outperformed the broader market against the market. Lu Jin's rise was more than 15%, Shell was up more than 6%, Tuya Intelligence and Dingdong Buy Vegetables were up about 4.0%, Liulishuo, The Head of Education, and the Happy Times were up at least more than 2.3%, Pinduoduo and NetEase Youdao were up about 1.5% at most, and 360 Digital Sciences was up 0.8%.
However, the Chinese new energy vehicle "Wei Xiaoli" fell together, Alibaba and Tencent ADR fell 2%, Baidu and B station fell 1%.
After us stock market on Wednesday, MSCI included five stocks, including Lu Jin's ADR, into the MSCI China All-Stock Index. MSCI, as the leading index compiler, provides a benchmark index reference for global investors. It is reported that the inclusion of the mainstream index in the market will help listed companies broaden their sources of funds and improve liquidity. These adjustments will take effect after the market closes on February 28, 2022.
Boosted by this positive, Lu Jin rose more than 15%, leading a number of Chinese stocks.
BlackRock, the world's largest asset management giant, announced its holdings in the fourth quarter of last year
Steadily increase the position of large technology stocks
BlackRock, a global asset management giant with assets of $10 trillion, disclosed its 13F position in the fourth quarter and steadily increased its position in large technology stocks.
According to the filing, BlackRock's top five buying stocks in the fourth quarter of last year were Microsoft (MSFT.O), Nvidia (NVDA.O), Tesla (TSLA.O), Qualcomm (QCOM.O) and Broadcom (AVGO.O). In the fourth quarter of last year, BlackRock reduced its holdings in PayPal (PYPL.O), Walt Disney (DIS.N), JPMorgan Chase (JPM.N) and so on.
(Source: whalewisdom)
In terms of heavy stocks, the first heavy stock is Apple, with a shareholding ratio of 4.61%, and the second heavy stock is Microsoft, with a shareholding ratio of 4.44%. This is followed by Amazon, Google and Tesla. Nvidia is also at the top of its heavy stocks.
EDIT: Captain
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