Depth: The market is not an ass, where is it so elastic!

Author | Xie Xiaobai

In the middle of last night, I received a call from a middle school classmate who I hadn't contacted for a long time.

On the other end of the phone, his voice was low and hoarse, and after greetings and mutual temptation, he asked me a question: When will Big A bounce back?

I let out a long breath, "Damn, you thought you were going to borrow money from me!"

But his question still stumped me, the truth hurts people, and the lie slaps his face...... Silence is Cambridge tonight.

So I talked to him about the ass.

I asked him, "Do you exercise regularly?"

He said, "No." ”

I asked him again, "Is your ass still elastic?"

He was a little stunned, and was stunned for a moment and replied, "I'm getting older, and I lack exercise, so my elasticity is definitely not as good as before." “

I said, "yes, Big A isn't an ass, it's not that elastic." “

He stopped talking, and I talked to him about the M2 growth that had just been announced, the M2-M1 scissors gap in expansion, the CPI and PPI in the double decline, and the demographic structure that was not optimistic.......

It is obvious that in the second half of this year, the economy pulled up slightly in September, and then began to go all the way down.

Although we openly say that "continued improvement", the media even coined the term "weak recovery" for this purpose.

But yesterday's financial data release, in the context of M2 continuing to grow by 10%, M2-M1 continued to expand, which is all illustrating:

1. More and more funds are being withdrawn from circulation;

2. The willingness to invest and consume is sluggish.

As a result, liquidity bottomed out in a market that should not be short of money.

At this time, in order to survive, enterprises have to "roll", laying off employees and fighting price wars at the same time;

However, the income of residents has fallen in line with expectations, making it more difficult for enterprises to achieve revenue.

Such a negative spiral is gradually forming, the structural deflation characteristics are obvious, and the "weak recovery" of the economy is very distinctive.

Why are we where we are today?

In particular, M2 is not low, the Federal Reserve even sang "dove" and began to create expectations for interest rate cuts, and the global market is thriving, but we are the only ones in tears?

There are many reasons here, but I will only mention the three most important:

1. When the PPI is lower, the necessary measures are not taken.

We are a big manufacturing country, and PPI has always been regarded as a leading indicator of CPI.

We can see from the trajectory of CPI and PPI that it was the PPI that fell first, and then the CPI was brought down.

The reason is not complicated, the company first found that if the price is not reduced, the goods cannot be sold, so in order to ensure sales, the profit can only be suppressed.

Profits were pressed again and again, and then it was necessary to reduce the operating costs of the enterprise to maintain the operation of the enterprise, so the company began to reduce wages and lay off employees.

At this time, people's incomes decrease, and consumer spending will naturally decrease. At the same time, there is less investment, and then house prices fall and the stock market falls.

It stands to reason that we should support PPI to help enterprises reduce pressure, such as controlling the rise in raw material prices of state-owned enterprises, reducing taxes and rebates.......

But we all know it's a big year for commodities.

The high cost of the enterprise will inevitably lead to a decrease in the profit of the enterprise, and it has to "lay off employees"!

So the question is, why not bring down the price of raw materials?

2. Real estate companies are not allowed to sell houses at reduced prices.

After the "fall limit", the price of real estate deviated from the market price, and the transaction volume shrank.

If the real estate company does not have enough sales proceeds, then there is no money to get land. As a result, the local government had no choice but to arrange for state-owned enterprises and central enterprises to acquire land at a high price to give blood to the land finance.

This directly led to the deterioration of the financial situation of state-owned enterprises and central enterprises, making it impossible for these originally powerful real estate companies to acquire fallen private enterprises.

In the past two months, almost every one of the country's most bullish central real estate companies has closed or merged into a municipal company in various places, laid off employees and reduced its scale, and every financial report is not good.

The common problem is that too much land has been acquired, but it has not been developed.

Although there are cheap funds borrowed by banks, the asset-liability ratio is about to exceed the red line of 70%, as long as housing prices fall for a while, assets shrink, and they will immediately lose their financing ability.

And if they don't take the land, the local finances will be tight.

Therefore, we see that the local government knows how to "do what it can", on the one hand, it begins to find a name to collect money, such as: simple and crude fines, tax increases;

On the other hand, some subsidies began to be "held down".

For example, in Zhengzhou, even the promised maternity subsidy has begun to play "Tai Chi".

But the most important thing is that the local government has to make money, how to do it? He has to have money to pay it.

3. Uncontrollable bulk prices

are all mentioning "being a large enterprise" and "state-owned enterprise reform", have you ever thought about the purpose behind this?

In my opinion, it is for more profits and taxes.

And to increase profits and taxes, you have to increase revenue.

Coincidentally, our upstream energy is monopolized by state-owned enterprises.

So can commodity prices hold up?

I can't remember exactly, it was about 04 or 05, and an organization did a survey of private enterprises.

The bosses of private enterprises unanimously said that the most serious factor restricting their development is that the prices of raw materials of upstream state-owned enterprises are too high.

At this time, we will find a "closed loop".

The profits of state-owned enterprises are getting higher and higher, and the production costs of private enterprises are getting higher and higher.

This is truly a "vicious circle of expectation and disappointment".

You may ask, can't it be solved by throwing coins?

M2 up 10%!

Good question, the biggest problem in the market right now is that the new M2 is mainly due to debt, not simply currency printing.

When an individual or business borrows, the new M2 goes directly to the lender or its payee.

Therefore, M2 did not go unnoticed to residents, but directly affected economic actors through loans.

Here's an example, you get the idea.

Those landscapes, stadiums, bridges that have been mounted all over the country...... Even, the canteen of the supply and marketing cooperative......

How soon do they pay for themselves?

The double-digit growth of M2 in the past two years has not brought inflation, but the fundamental reasons for the signs of deflation in the market are:

The wealthy class, represented by entrepreneurs, began to take the initiative to reduce leverage and transfer debt to the middle class.

And the middle class is spending less because of rising debt.

At this time, once the decline in the velocity of money exceeds the increase in the total amount of money, it will exacerbate market deflation, prices will fall, and the company's revenue growth will be difficult.

Inevitably, there is a contradiction between M2 growth and declining consumption.

No, the root of the problem now is:

It is a change in the way money is distributed that results in the concentration of money in the hands of a few and the concentration of debt in the hands of another.

This leads to:

The misunderstanding of "we think they have a good way, they think we have a lot of money" is deepening.

But now, after a few months of tugging, the misunderstanding between the two sides has been cleared up:

The top is really out of tricks, and the bottom is really out of money.

In fact, the first step I want to take now from such reinforcing expectations is, in my opinion:

Recognize the problem.

Here's the good news: they seem to recognize the problem.

I don't know if you have noticed, this time "active capital market" and "guaranteed delivery of buildings" did not appear in the press release.

This means that expectations for large-scale stimulus will be frustrated.

In the eyes of many people, "finished" and "disappointed".

But in my opinion, it's quite the opposite.

This shows that we must first change the distribution, let the funds flow into the entity, bring down the upstream prices, boost the PPI, solve the CPI, and effectively protect the income of residents, so as to boost market confidence.

epilogue

At this time, I am looking at the big A, such a trend, is it strange?

In addition, we have reminded many times about the decline in liquor and real estate.

Pull up and you're leaving, and we've reminded you many times.

After all, the reality is here, and the truth is here.

By the way, I've seen a lot of smart people who have lost a lot of money because they make decisions based on their own preconceived notions rather than the truth.

The scariest thing is that because they are smart enough, they refuse to learn their lesson, even if they lose a lot, a lot of money.

When you tell them the truth, you think you're going to help them.

Then I'll tell you, 99% of the results are, they want to "strangle you".

That's real human nature.

So, when I told my classmate, "Big A is not an ass, not so elastic", he seemed very silent, even though I pulled a lot of M2, M1, PPI, and CPI with him......

The last thing he asked me was, "What should I do?"

I told him, "Although the age is coming, keeping exercising helps the metabolism and accelerates the recovery of the elasticity of the butt!"

Yes, in my opinion, being able to distinguish (opinion and truth) is one of the hardest things a person can do.

I'm still cultivating about this.

Congratulations, I am Xie Xiaobai, who hopes that your wealth is free.

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