The rules keep collapsing, and the market will only become more and more volatile.
Soros, throughout his life, pursued the collapse of rules, such as sniping at the pound sterling in 1992 and the thai baht in 1998.
Every time the rules collapse, it must bring huge market turmoil. Bet on the right direction, success will be achieved; bet on the wrong direction, ruin the family.
Only this time, the rules collapsed too badly, even if the bet was in the right direction, it may be ruined.
Take a look at the market.
On March 9, China's stock market super big reversal, the three major stock indexes fell more than 4% at one point, and in the last hour, the market began to counterattack, and finally the decline narrowed to about 1%.
Why did the Chinese market suddenly plummet today?
There are rumors that Norwegian sovereign wealth funds have dumped Chinese assets, and investors are worried that it will continue to liquidate in the future, so they preemptively sell.
This is the result of the collapse of market rules: violent volatility.
In fact, not only today's market, but also in recent times, in addition to the United States, the volatility of the global capital market has risen significantly.
The most intuitive explanation is that the situation in Russia and Ukraine is affected, the market sentiment is uncertain, and the financial market is violently shaken.
The macro interpretation is that the situation in Russia and Ukraine is deadlocked, the prices of oil, gas, palladium, nickel, wheat, corn, etc. are trending, and the market is worried that the world is stuck in stagflation, and stagflation is not conducive to risk assets such as the stock market.
From another point of view, the recent market volatility is the capital breakout under the collapse of the rules.
At present, macro, enterprise, and market rules are gradually collapsing in an all-round way.
The collapse of macro rules will inevitably lead to the collapse of corporate rules and the collapse of market rules, which in turn will affect the fluctuation of the entire market.
01
The Collapse of Macro Rules: Anti-Globalization!
In the 1990s, UN Secretary-General Gurry declared that "the world has entered an era of globalization".
What have been the rules of the world over the past few decades? Globalization under the leadership of the United States has affected every corner of the world.
1. Economic globalization.
In the economic field, countries give full play to their comparative advantages, develop their own advantageous industries, and participate in international cooperation.
The whole world is a whole, you need my raw materials, I need your consumer goods; you need my knowledge and patents, I need your manufacturing and craftsmanship...
In 1994, global merchandise trade exceeded $4 trillion;
In 2006, global merchandise trade exceeded $10 trillion;
In 2015, global trade exceeded $16.5 trillion.
In 2021, global trade will exceed $28 trillion.
……
The volume of global trade has grown exponentially, and imported goods have penetrated into all aspects of ordinary households.
Therefore, the best strategy for any country is to abide by the rules, respect the contract, and participate in the international division of labor.
After all, no one can afford the consequences of being excluded from the world.
2. Financial globalization.
Wall Street famously said that capital never sleeps. That is, as long as it is profitable, capital will flow around the world in pursuit of profits.
For example, industrial capital,
First encountered the upgrading of the US industry, and then transferred the backward industries to Japan and South Korea;
Then the industries of Japan and South Korea upgraded, and the backward industries were transferred to the Four Asian Tigers.
Then the four Asian tigers upgraded their industries, and the backward industries shifted to Chinese mainland.
Thus, after the rise of the United States, Japan, South Korea, Singapore, Chinese mainland and so on have risen.
In other words, with the help of foreign capital, the development of the domestic economy is an important driver of a country's take-off.
Under this wave, the liberalization trend occupies the mainstream, and the financial markets of various countries have also been opened, in line with European and American countries, hoping to attract more capital to develop their own economies.
Therefore, under this big wave, any country must abide by the rules, otherwise it will be abandoned by global capital and lose the impetus for development.
Under the leadership of the United States, the economy has been globalized, finance has been globalized, and the hegemony of the dollar has been determined.
The dollar became the universal currency, the Federal Reserve became the central bank of the central banks of various countries, the United States sneezed, and the whole world was shocked.
3. Culture is inclusive.
There are more than 200 countries and regions, more than 2,500 ethnic groups, more than 6,000 languages in the world, and different ethnic groups have different cultures.
Under the premise of economic globalization and financial globalization, although the global economy fluctuates, it is generally booming.
Whoever has a developed economy has greater influence.
Hollywood movies, Japanese anime, Hong Kong films of the 80s, etc., some of them flourished for a while, some flourished for a long time, and peoples around the world are also willing to exchange and communicate.
In the past few decades, the key words in the world have been: cooperation, exchange, win-win.
The bigger the cake, the less contradictions there are. When the cake is small, it's time to do something.
Perhaps by fate, in the recession phase of the Campo cycle, from the decoupling of Britain, to the election of Trump, to the outbreak of war between Russia and Ukraine, the world is becoming more and more uneasy.
The whole macro world has changed dramatically: anti-globalization has emerged, populism has prevailed, and signs of clashes between civilizations are becoming more and more apparent.
What does this mean?
The cost of following the rules is getting bigger and smaller, and the end result is:
Everyone does not abide by the rules of win-win cooperation, but chooses to take the neighbor as the enemy and take me as the mainstay, only looking at the immediate interests and disregarding the long-term development.
02
The collapse of corporate rules: reduced to a tool of struggle
What are the biggest rules for businesses?
Over the past few decades, American business schools have been communicating the idea of maximizing returns for shareholders.
Enterprises are neutral, products are neutral (except for military enterprises), they should not have values, they should not have political leanings.
Under this concept, enterprises should develop the market to the greatest extent in the world, never ending, never too much.
As long as the products of multinational enterprises do not violate public order and good customs, they should participate in fair competition and should not be banned.
In recent years, changes have occurred.
The impact of anti-globalization is becoming more and more serious, and everyone has begun to pay attention to factors such as corporate social responsibility, so ESG investment has become popular.
After the outbreak of the Russo-Ukrainian War, the rules of enterprises were even more collapsed, and enterprises completely became the "tools" of politicians, which greatly undermined the rules of enterprises.
What do we learn about us militarily and financially in "The Russo-Ukrainian War is a Rehearsal?" has already been said:
Who would have thought this time that the United States would suspend the use of Apple Pay and Google Pay in Russia, resulting in Moscow citizens being unable to use mobile phones to pay for subway tickets and queuing up to buy tickets with paper money.
What does this trick mean?
First, the United States drove more Russian people to use paper money to run Russian banks, causing greater systemic risk to Russian finance;
Second, it caused great inconvenience to the Russian people, triggered public dissatisfaction with Putin's actions, and then shook domestic support.
In fact, there are many more US tech giants involved in sanctions against Russia, such as:
1. Computer technology giant Oracle announced the suspension of all operations in Russia.
2. Mercedes-Benz suspends local production in Russia and exports of vehicles to Russia.
3. H&M suspends sales in Russia.
4. ExxonMobil, Siemens, Apple, Microsoft, Google, META, Twitter and other western large enterprises have successively announced their withdrawal or suspension of services in Russia.
5) MSCI has received feedback that Russian securities should be removed from the MSCI Emerging Markets Index.
All private enterprises in Europe and the United States, all scientific and technological products, have become potential weapons.
Apple phones, Apple computers, Windows systems, Android systems, etc., as well as PS, programming, and other various software in Europe and the United States, will become the tools of the United States attack.
In addition, in the context of economic globalization, countries participate in different international divisions of labor.
I have paid a huge amount of manpower and material resources to achieve a technological breakthrough, and I deserve to be protected by patents, and if you want to use my labor successfully, you need to pay the corresponding fees.
This is the rule that everyone can "play" together.
Now, too, that's changed.
Previously, the European Union and the US Patent and Trademark Office issued statements to stop cooperation with Russian officials, which is a sanction against Russia in the field of intellectual property rights.
On March 7, Russia also introduced countermeasures to cancel the payment of patent compensation to unfriendly countries.
Under the new regulations, if the patent holder is from an unfriendly country or region whose invention, utility model or industrial design is used without authorization, the amount of compensation to be paid is 0% of the actual proceeds from the production and sale of goods, the completion of work and the provision of services, i.e. no compensation for the unauthorized use of the patent is required.
The Russian government has approved the list of unfriendly countries and territories, including the United States, EU member states (all 27 countries), Ukraine, the United Kingdom, Japan, Australia, New Zealand, Canada, South Korea, Singapore, Switzerland, Montenegro, Albania, Norway, Iceland, Liechtenstein, Andorra, Monaco, North Macedonia, San Marino, Micronesia and Taiwan.
We believe that the further back on, the more cases of similar corporate rules collapsing.
Why is this happening? It is the collapse of macro rules, under the tide of anti-globalization, I can't play with you for a long time, so I don't have to take care of your interests.
What are the impacts of the collapse of corporate rules?
Multinational enterprises have the greatest losses, strong R & D capabilities and weak manufacturing capabilities, and the greater the losses.
03
The collapse of market rules: finance is no longer neutral
The collapse of macro rules, in addition to causing the collapse of corporate rules, has also led to the collapse of market rules.
The collapse of market rules leads to violent market fluctuations, and those who bet on the right direction will definitely make a lot of money.
For example, Soros sniped at the Thai baht that year, the flat exchange rate system of the thai baht against the US dollar collapsed, the thai baht depreciated sharply, and Soros made a lot of money and retired.
Soros can succeed on several preconditions:
1) Soros was able to participate "equally" in Thai financial markets, such as foreign exchange and stock markets.
2. Obtain Thai Baht, USD and stock at the market price.
3, soros earned money can be smoothly withdrawn.
These prerequisites, the participation of a country in the international financial market, are the most basic rules of financial globalization and must be respected.
A country does not dare to break this bottom-line rule for the sake of temporary benefits, thus losing global credibility.
If it is put aside, the biggest possibility is that even if Soros bets in the right direction, he will lose his family.
These three conditions, any one set limits, Soros's sniping, will not succeed, the result is only one: meat buns hit the dog, there is no return.
Why? Take a look at a classic case from the recent commodity market.
On March 7, the price of nickel futures on the London Metal Exchange (LME) rose all the way. The day rose as much as 72.67%, closing at $50,300/mt. On March 8, the price of LME nickel futures continued the previous day's rise, breaking through the $100,000/ton mark during the session.
The big rally market is also transmitted to the domestic market. On March 8, in the main contract of domestic futures, Shanghai nickel 2204 sealed the up and down board, at 228810 yuan / ton, an increase of 15%.
Behind the sharp fluctuations in nickel futures prices is a short war, involving domestic Qingshan Holdings and Switzerland's Glencore.
Tsingshan Holdings is a nickel producer, selling nickel, so it needs to sell contracts in the futures market, that is, short, to lock in future prices, which is called hedging.
However, the company played big, the short position was too large, its products did not meet the standards, could not be delivered, which changed from hedging to "speculation".
Switzerland's Glencore, also an international energy giant, is said to have half of LME's inventory.
Coincidentally, the Russo-Ukrainian War broke out, and the exchange issued rules that did not allow delivery with Nickel produced in Russia.
As a result, there is a serious shortage of deliverable spot nickel, so Glencore can force short and pull up prices.
As a result, due to shorting, Tsingshan Holdings has a huge floating loss on its books.
What everyone never expected was that the LME suddenly changed the rules, which was simply unbelievable:
It began by announcing the postponement of the delivery of all spot nickel contracts originally scheduled for delivery on March 9, 2022. This gave Aoyama enough time to look for spot delivery.
This was followed by the announcement of the cancellation of all nickel trades executed on or after 00:00 UK time on or after 00:00 UK time and the LME select screen trading system.
This is equivalent to directly declaring that the transaction price does not count, not at the price of 80,000 US dollars / ton on March 8, but at the price of 50300 US dollars / ton.
This kind of price change is unheard of.
Of course, if it is delivered according to cash, this behavior can make Tsingshan Holdings lose less, but it is also a loss.
The latest news shows that the nickel futures market forced the palace incident has alarmed the above.
Peer Jinchuan reached out to help, exchanging his deliverable products for Aoyama's non-deliverable products, coupled with the strong support of the National Reserve,
Aoyama's empty order, enough spot number!
At this moment, Glencore was confused.
If you dare to take over so many spots, the futures market originally had more orders, immediately regardless of the cost of closing the position, nickel futures prices will plummet, Glencore with so many spot in hand, can only admit planting.
In fact, in the financial market, the short market is quite common, and there will be a case every few years, and even Qingshan is made by forcing the short.
Forcing the short, in the previous normal market environment, betting on the right direction can become famous.
But now, the rules of the market are slowly collapsing, and it will be easy to change the rules, let you bet in the right direction, and finally lose money.
By the way, LME's shareholder is the Hong Kong Stock Exchange, and Li Xiaojia strongly suggested that it be acquired.
What is financial neutrality? Not anymore.
The United States can sanction Russia with Swift, the United States can freeze the foreign exchange reserves of the Russian central bank, why can't I change the rules?
04
The rules collapse and trust is gone
The world has changed.
The wave of globalization and liberalization has passed, and the beggar is the enemy.
From macro, to enterprise, to the market, the rules are constantly collapsing. Trust was also greatly undermined, followed by looting.
Now, there are even French people who have suggested confiscating 200 oil paintings from the Russian Morozov collection. The paintings, which began exhibiting in France last year, belong to the Russian Museum.
Market rules are constantly collapsing, and Norwegian sovereign state funds are also worried about their foreign positions, so it is understandable to sell Chinese assets.
One objective effect of this behavior is that China's stock market is in turmoil.
Such a world is completely reversed from before.
For example, in capital-rich regions, domestic asset prices will perform better, which can be said to be a bubble, or it can be said to be a capital return;
For example, in countries or regions that use a lot of foreign capital, financial markets will fall and industrial capital will retreat.
For example, in countries with strong manufacturing, commodity prices will decrease; in areas with weak manufacturing, commodity prices will rise.
There are many more such cases, welcome to leave a message to add.