Since the second half of 2023, the stock markets of developed countries such as the United States, the United Kingdom, Germany, Japan, and South Korea have come out of a wave of crazy rises, and even the stock markets of India and Russia have also risen. As of January 26, 2024, the S&P 500 has risen to 4,900 points, more than doubling from 2020.
Why the stock markets of Europe, America, Japan, South Korea, India and other countries have risen wildly in recent years, first, the impact of the epidemic is relatively small, and the economy recovers quickly, taking the United States as an example, the preliminary annualized quarterly rate of real GDP in the fourth quarter of the United States recorded an increase of 3.3%, which is definitely a very good result for a developed country, and the Indian government predicts that the GDP growth rate in 2023 can reach 7.35%. Second, since 2023, the central banks of Europe and the United States have been releasing expectations that they will end monetary tightening, and have said that they will cut interest rates in 2024, and many economists even predict that the Fed will cut interest rates by more than 150 basis points in 2024.
It is precisely under the above two reasons that the European and American stock markets have risen all the way, even without stopping, but, as far as the current economic situation in Europe and the United States is concerned, it may make the Fed significantly slow down the magnitude and progress of interest rate cuts. Let's take a look at a few sets of data:
1. Employment: According to the employment data released by the U.S. Department of Labor in December 2023, the number of non-farm payrolls continued to increase and far exceeded expectations, and wages grew faster, with the unemployment rate only 3.7%, which is at the best level in history.
2. Inflation level: The annual rate of CPI in the United States in December 2023 was 3.4%, and the core CPI was 3.9%, both higher than expected.
3. Consumption: In December 2023, retail sales in the United States increased by 0.6%, which is also a relatively high level in recent years. Consumption continues to grow.
4. GDP: The GDP of the United States in the fourth quarter of 2023 increased by 3.3% compared with the third quarter, far exceeding expectations, and the annual GDP exceeded 27 trillion US dollars.
What do the above four sets of data illustrate? At present, the economic situation in the United States is very good, the employment level is very good, and the inflation level is on the high side, so the Federal Reserve does not need to rush to cut interest rates, nor can it rush to cut interest rates, but to maintain the current state of high interest rates to control inflation and prevent the economy from overheating and causing a stock market bubble.
Judging from the attitude of the Federal Reserve interest rate meeting in December 2023, the market is also releasing this expectation, but the US economic data released in January 2024 further indicates that the Fed's interest rate cut will fall far short of market expectations, which will inevitably affect the trend of the stock market.
JPMorgan Chase & Co. said that investors are advised to hold cash because the Fed will not cut interest rates significantly in 2024, and the stock market will fall by about 12% in 2024.
In fact, not only the United States, but also other developed European countries are similar to the United States, the economic development trend is still very good, and the central banks of Europe and the United Kingdom will not cut interest rates quickly and sharply, which is obviously not good news for the stock market.
In particular, the above analysis is not aimed at A-shares, and I don't know what impact it will have on A-shares!