March 22, 2020 356th term
2020
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Table of Contents One, Week Review............. 3 Two, Stock Pool Version 2.1.................. 5 Third, the basic introduction to technical analysis........ 7 Fourth, the epidemic has torn down the fig leaf of Western medicine........ 12 Fifth, the market is constantly falling - the policy continues to flow.......................... 15 Sixth, the highlight of the financial war, the exchange rate war is starting......... 17 Seven, this is the real "devil" of the market... ...... ...... ...... ...... 25
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One, this week in review
This week our operation can be described by a word "cool crooked", the market can be said to be "bloody rain and wind" (down almost 5%), some blue-chip stocks have fallen far below the lower rail of the Xuesi channel, there is a phenomenon of oversold, and our emotional stock Tongda shares have achieved 4 up and down, and we have successfully escaped at a high level.
After a series of successes, I believe that everyone has come to believe that emotional stocks are incredibly powerful. Through less than a month of operation, some group friends have completely made up for the losses that occurred in the previous blue-chip stock speculation, and even began to make large profits.
Why are emotional stocks so magical? Why is it possible to ignore the rise and fall of the broader market? Let's answer the second question. This week's sharp decline is mainly blue chips in the plunge, the reason for the blue chip decline is the panic selling of foreign capital, resulting in domestic institutions also panic to follow the trend. Interestingly, our emotional stocks are not in the sight of foreign investors and institutions at all, so even if they want to smash the market, they can't hit us on the head, which is a blessing in misfortune.
Why can sentiment stocks have n limit plates in the short term? That's because the essence of A shares is kuaishou, not knowing, which is determined by the ecological environment of China's stock market, we are a retail market, retail trading volume accounts for more than 90% of the total market transactions, these people's preferences determine the trading style of A shares. They don't like to buy bank stocks, so bank stocks become 5 times the price-to-earnings ratio, and if there is no dividend to support, the bank will continue to fall.
The characteristics of retail investors following the trend are that they come and go like the wind, and when they come, everyone rushes to buy this stock, so it becomes a continuous rise and stop board, and when they go, they are afraid of throwing it away, so it becomes a continuous fall and stop board, and what you have to do is to go with the trend and do not move against the trend.
Ordinary investors simply can't understand those research reports, and they can't figure out the profits, for them can understand only the concept, let's study in detail what concepts we have bet on in the past. At the end of last year, the concept of red live broadcast with goods was super hot, so it drove the bull stocks to rise continuously on Saturday, and finally rose nearly 5 times, but it is interesting that Saturday and Li Ziqi Li Jiaqi have nothing to do with each other, it does not matter, retail brain supplements are related to the two on the line.
Then we bet on the concept of Huawei, Changshan Beiming is the stock that lags behind in the concept of Huawei, so that many people forget that he is related to Huawei. Why didn't he go up? Just because the market has not yet paid attention to him, when he starts to rise, it is still a continuous rise and stop, and the final increase is not lost to others.
Later we began to bet on the mask stock market, which we have explained many times in the group, and will not be explained here. Then I think the new infrastructure will rise, at that time the new infrastructure has two directions, one is 5G, one is UHV, I decisively chose UHV, the logic is very simple, because UHV has not been speculated, so there is a huge space for speculation, in UHV we chose two, one is Tongda shares, the other is smart energy.
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Mastery has been detonated, wisdom has not yet been, but now it is getting closer and closer to choosing the direction, whether it is up or down, and soon there will be a difference.
Of course, we will not stick to UHV now, I have been looking for the next hot spot, looking around, I feel that the next hot spot is the concept of consumption recovery. Now the leaders of various provinces and cities are encouraging everyone to take off their mouths, hurry up and consume, eat hot pot, sing songs, play games, watch movies... Our consumption has been frozen for too long, this is not ok, the service industry has driven so much employment, if they are unemployed, the government is under pressure, so I think the hot spot in the near future is the recovery of consumption, there are many specific stocks, I am ready to say it again when the trading day.
Here are the sentiment stocks that have been watched recently:
General trend research
Long-term trend: determine the upward trend;
Medium-term trend: bottoming out.
Precautions for A-strand thermometers:
Below 1,20 degrees is the buy range, and above 80 degrees is the sell range. Between 20-80 degrees, if it is from the bottom of the rising state, then you should hold the stock; If it is the top down state, then you should short the position.
2, the thermometer has the possibility of bursting the meter, if the meter is exploded, then it is not far from the top. 3, if the thermometer slips from the top, then do not fall below 20 degrees can not blindly read the bottom. 4, the market thermometer is a lagging indicator, about 1-2 weeks behind the market. 5, this thermometer only indicates the overall situation of A shares, can not be applied to a single market.
name
code
conception
Blue Ocean of Happiness
300528
media
Smart Energy
600869
New infrastructure
Friendly group
600778
consume
Guomai Technology
002093
cloud computing
4
Second, stock pool version 2.1
Buy limit
Target price
remark
Chinese architecture
601668
6
7.8
infrastructure
Poly Real Estate
600048
13
18
real estate
Gree electric appliances
000651
48.5
70【Trading Closed】
household appliance
SAIC Motor
600104
26
36
Car
Societe Generale
601166
18.3
24
Bank
HUAYU Automotive
600741
23
34
Happy Huaxia
600340
35
Park
Vanke A
29
40
Ping An of China
601318
80
98
insurance
Minsheng Bank
600016
5.8
7.6
Abc
601288
3.6
4.8
Greenland Holdings
600606
7.2
9.7
50ETF
510050
2.8
3.7
funds
Conch cement
600585
39
60
cement
Haida Group
002311
32【Transaction Closed】
fodder
A new hope
000876
18【Transaction Closed】
Metro Holdings
601155
Taigang is rust-free
000825
5
7
steel
Yangtze River Power
600900
15.3
19.3 【Transaction Closure】
hydropower
Guangyu development
000537
8.4
15
Chinese megaliths
600176
10
Building materials
North New Material
000786
19.5
28【Transaction Closed】
Fangda Special Steel
600507
16
China Merchants Bank
600036
33
41
China Construction Bank
601939
11.7
Kibing Group
601636
9
glass
Wanhua Chemical
600309
chemical industry
Weichai Power
000338
12.2
machine
New Steel Shares
600782
4.2
5.3
OCT A
000069
12
Gezhou Dam
600068
6.8
12.8
Daqin Railway
601006
8
railway
Huaxin Cement
600801
30
China Railway Construction
601186
9.8
17.8
China Railway
601390
6.6
9.9
Sany Heavy Industry
600031
12.5
Securities ETFs
512880
1.5
ETF
Luoyang glass
600876
20
material
Alto Electronics
002587
electron
Kangli elevator
002367
11
North navigation
600435
8.5
Specialized equipment
Divine Fire shares
000933
4.5
coal
1, buy limit means not to buy above this price.
2, the target price is that you have the opportunity to sell at this price for a profit within one year, the time is 12 months (April 2020).
3, if the target price and buy limit price are adjusted, or new stocks are added, they will be marked in red font. Price changes resulting from ex-rights are not adjustments.
4, I only guarantee the profit between your limit price and the target price, the other is not guaranteed.
Third, the basic introduction to technical analysis
Old note: This is the most basic knowledge, especially suitable for newcomers to read, can understand the content of this article, basically even if it is a technical analysis introduction.
There are many stock trading software, basically all the same, you have the function of others also have, because this line is not high-tech. Newcomers open the stock trading software on the blind, because there are too many parameters, look dizzy. In fact, it is not complicated, let's use oriental wealth to make a simple introduction.
Newest: The latest stock price.
Average Price: The average price today.
Gains: The percentage increase or decrease today compared to yesterday.
Ups and downs: The number of ups and downs today compared to yesterday.
Total lots: 100 shares are counted as one lot, and 233,600 lots in the figure is 23.36 million shares. Amount: The total volume of today's volume. Turnover: Today's turnover rate, the turnover rate refers to the number of shares traded today divided by the outstanding order of the stock. Volume Ratio: The ratio of today's volume to the average volume of the past 5 days. The figure shows 1.12, just say
The stock's trading volume for the day is 1.12 times the average volume of the past 5 days. High, Low: Today's high and low prices. Open today, close yesterday: today's opening price and yesterday's closing price. Up-limit, down-stop: If the limit is up or down, the stop price and the stop price are down. Outer market: the amount of active purchase transactions, as if rushing in from the outside, so it is called outer disk. Inner disk: the amount of active selling transactions, as if escaping from the market, so it is called the inner disk. Net assets: The net assets per share of the stock, the so-called net assets are assets minus liabilities. ROE: RETURN ON EQUITY, the higher the ROE, the better. In the graph is 6.07%, which is only counted
First quarter report. The stock's return on equity last year was almost 29%, which is already a very high number.
Earnings (1): Earnings per share, one in parentheses represents the first quarter, if it is a semi-annual report it is two. PE (moving) :P E is the price-to-earnings ratio, which is a number obtained by dividing the stock price by earnings per share. in parentheses
"Moving" refers to the dynamic P/E ratio, as opposed to the static P/E ratio. The static P/E ratio is to divide the stock price by the previous year's earnings per share, and the dynamic P/E ratio is to divide the stock price by this year's annualized earnings per share.
Total share capital, total value: total share capital and total market capitalization. Outstanding shares, flow value: outstanding shares and circulating market value. The same numbers in both sets indicate that the stock is fully outstanding.
Ratio: The ratio of buy orders to sell orders. If the limit is up, only buy orders, then the commission ratio is 100%, if it is a stop, then the situation is just the opposite, only sell orders, the commission ratio is -100%.
Commission: The difference between a buy order and a sell order. As you can see in the figure, the sell order is 30650 lots more than the buy order.
Buy one buy two to buy ten: ten gear buy orders, in fact, the buy and sell orders between the limit price and the stop price are valid, but the chart only shows ten gears.
Sell one sell two to sell ten: ten stalls of sell orders.
Entering the tick chart, you will see a white line and a yellow line, the white line is the current stock price, and the yellow line is the moving average of the day.
There are also two windows below, namely the time-sharing game and the time-sharing DDX.
There are four lines in the time-sharing game, which are super-large households, large households, medium-sized households and retail investors. Very large and large households often form a joint force to control the rise and fall of stock prices, while although retail and medium-sized accounts for a large proportion of the trading volume, they cannot form a joint force, and the forces cancel each other out.
Tick DDX refers to the proportion of net buying to the outstanding order. This usually follows the super-large households, because the power of the retail investors will cancel each other out.
What is a moving average?
After the basics are finished, the following is the candlestick chart. By default, you open the candlestick chart will superimpose the moving average system, to talk about technical analysis, you must talk about moving averages (MA), because most technical analysis methods are developed from the moving average system.
A moving average is a curve that connects the average price of a stock over a period of time to show the historical fluctuations of the stock price. Moving averages are divided into short term (e.g. 5 days, 10 days), medium term (e.g. 30 days, 60 days) and long term (e.g. 120 days, 200 days) according to the calculation period.
It may seem like a complicated concept, but with a very simple metaphor you can quickly grasp it. You can think of the stock price and the average as a puppy and a owner walking with a dog, because the puppy is very naughty, he is always running around, may run far in front of the owner, may also be far behind the owner, but if you make the absolute distance the puppy moves as a moving average, you will find that this is exactly the owner's trajectory, because no matter how the puppy runs, it is always centered on the owner.
Puppy = Stock Price Owner = Moving Average
The movement of the puppy may also affect the owner, the puppy runs too fast the owner will speed up the pace, the puppy lags behind a lot, the owner will also stop and wait. So we know an important fact: it is very difficult to predict the movement of the puppy, but you can judge the general movement trend of the puppy by the movement of the owner. This is what the moving average is all about.
If the puppy always runs ahead of the owner, then this market is called a bull market (bull market); If the puppy is always running behind its owner, this market is called a bearish market .) The puppy passes through the owner quickly from the back to the front, indicating that the stock price has an upward trend; The puppy quickly passes through its owner from front to back, indicating that the stock price has a downward trend.
Bollinger Bands (Boll)
The inventor of the Bollinger Bands is john Brin, and Brin believes that the stock price is not too high and too low, everything is relative, you can only judge that the stock price is relatively high or relatively low, and there has never been a stock price that is too high to buy or too low to sell.
Bollinger Bands main plot overlay
The Bollinger Bands are divided into three upper, middle and lower lines, and the stock price generally always runs in between. In a bull market, if the stock price is close to or above the upper band, it is more likely to maintain the upward trend; In a bear market, if the stock price is close to or above the upper band, the possibility of reversal is greater; In a bull market, if the stock price is close to or above the lower band, the possibility of reversal is greater; In a bear market, where the stock price is close to or above the lower band, it is more likely to maintain the downward trend.
If the upper and lower bandwidth of the Bollinger Bands gradually narrows (converges), the stock price begins to consolidate; If the upper and lower bandwidth of the Bollinger Bands gradually widens (diverges), the stock price begins to move sharply.
If the stock price breaks through the middle line from the top down, there is a downward trend to test the lower rail;
If the stock price breaks through the middle line from the bottom up, there is a trend to test the upper band upwards.
If the stock is rising strongly, it is simply impossible to break the middle line to the fall, and the middle line becomes a strong support; If the stock is in a strong decline, it is simply impossible to break through the mid-line upwards, and the mid-line becomes a strong resistance.
If the stock is in a weak consolidation, it can make a short difference between the upper and lower bands and make a small profit.
Shex Channel
I compared the mainstream stock market software on the market and found that only Tongdaxin's "Xuesi Channel II" was the most realistic. A typical Shexer channel diagram looks like this:
The purple line above and the green line below constitute a long-term large channel; The white and yellow lines form a short-term pathway. Stock prices usually fluctuate up and down in the middle of a long-term large channel. The chart above is typically balanced, with stock prices oscillating back and forth between upper and lower channels. This is ideal for medium-term short spreads, with each cycle of about 20 trading days.
Generally speaking, the stock price falls below the lower band (green), which is a time to buy, while the stock price rises below the upper band (purple) is a time to sell. In the vast majority of cases, this operation is fine. In a few cases, the stock price will rise continuously, or fall continuously. Continuous rise is to step on the short, this problem is not big, do not lose money, if the continuous decline, then do not make up the position too early. Wait until the long-term channel is flattened and then buy, you will not be covered a lot.
Fourth, the epidemic has torn down the fig leaf of Western medicine
Old note: It's another patient's own statement, much more credible than those studies.
Text/Clear the fog
As a science and engineering man, many years ago, I also believed in the scientific nature of Western medicine.
At that time, I had to be hospitalized for two months a year for several years because of chronic hepatitis B attacks.
However, scientific Western medicine tells me that chronic hepatitis B is not cured well and can only control symptoms, so I am accustomed to it.
By chance, I saw a book called "Taiyi Health Care Treasure Book: The Family of Chinese Medicine Talks About Three Points and Seven Points of Nourishment", and the content of the book shocked me.
The author Liu Hongzhang, a descendant of liu chun, a famous physician of the Ming Dynasty, said:
"Chronic patients are people who make mistakes, and not changing the wrong diet and lifestyle can't cure chronic diseases."
A large number of so-called incurable diseases in Western medicine, such as high blood pressure, diabetes, hepatitis B and even cancer, are not incurable, but need to be divided into three points and seven nutrients.
I immediately followed the method in the book: stop all Western medicine, drink appetizing soup (hawthorn 100 grams, wood aroma 50 grams, pig lily 50 grams, Magnolia 50 grams), drink broth, drink juice, eat corn and other coarse grains, basically do not eat dinner, and maintain moderate exercise.
In less than two months, all symptoms of chronic hepatitis B disappear and the hepatitis B virus DNA turns negative. More than two years later, the hepatitis B surface antigen also turned negative, and surface antibodies appeared. In this way, the incurable disease declared by Western medicine was cured by the three-point treatment and seven-point nourishment of Chinese medicine.
Only then did I know how great the Ming Dynasty taiyi Liu Chun and the medical officials founded the three-point rule and seven-point nourishment. They simplified the complexity and divided human diseases into 16 categories, each of which has a corresponding method of seven-point nourishment and a three-point method.
Zhao Yingjian interviewed many of Dr. Liu Hongzhang's patients and published Frontiers of Life - Chinese Taiyi Health Care 12
The book "Self-Treatment Case Investigation Record" records the personal experiences of 119 people from 23 provinces. From this, I have met many patients who have been cured by three points and seven points, including the treatment of cancer, diabetes,
Cases of various diseases such as hypertension.
At this time, I realized that there were not so many incurable diseases at all, and I was deceived by Western medicine.
Western medicine has three fatal flaws:
1. The concept of Western medicine is killing
Western medicine must find an enemy, thinking that killing germs, viruses, and cancer cells will make the disease better.
However, many chronic diseases are caused by poor diet and living habits, which lead to problems in the human body itself, and it is impossible to cure the disease without solving this problem.
And many acute diseases, is the pathogen affects the function of the human body, resulting in metabolic waste can not be discharged, then hou guang thinking about killing pathogens, often can not solve the problem.
While killing germs and viruses, it inevitably damages the body's immune system. Once the human immune system is injured, pathogens that can be easily controlled usually have pathogenicity, which is easy to cause secondary infections.
Viral pneumonia In order to control secondary infections, antibiotics can also damage the immune system, if the wrong type is selected, the disease is even worse. If the disease is covered up with hormones to suppress immunity, the patient will eventually die of the virus, but the immune system will collapse, resulting in sepsis and multi-organ failure.
The Chinese medicine classic "The Yellow Emperor's Inner Classic" points out: "Good qi exists within, and evil cannot be done."
When people are sick, illness and evil are external causes, and their own resistance is internal causes. The same flu, some people get sick, some people can not get sick; Some people are seriously ill, some people are lightly ill. This is why each person's health level is different, their resistance is different, and their symptoms are different.
The idea of Chinese medicine to treat diseases is not to kill microorganisms together, whether good or bad, but to use Chinese medicine to restore human body functions to normal. If the disease is on the table, then sweat to remove the disease; If the disease and evil are in it, they will use vomiting, purification, and inferior methods to remove the disease and evil; Between the sickness and the surface, the method of reconciliation is used. Therefore, no matter how the disease changes, Chinese medicine only needs to prescribe medicine for the symptoms it causes to the human body.
Just like the pond has become stagnant water, the bacteria grow wildly, and the method of Western medicine is to poison and sterilize; The method of Chinese medicine is to change the environment to attract living water to discharge wastewater, although it is not sterilized, but the natural pond will be restored to clear.
2. Western medicine is replaced by a package that directly interferes with human metabolism from a microscopic point of view 13
Western medicine starts from the microscopic level, develops drugs, and directly interferes with the physiology and metabolism of the human body from the molecular level. This seems to be very "scientific" high-tech. But for such a super complex system as the human body, it is completely beyond the current capabilities of human beings to accurately grasp every detail of its operation in the molecular dimension.
Just like reading only part of the source code but arbitrarily modifying the system software, developing drugs from a microscopic molecular point of view will inevitably cause unexpected side effects. This is the reason why the success rate of Western medicine development is extremely low and the side effects are inevitable.
Viruses multiply inside human cells, and it is basically impossible for current technology to find a way to kill only the virus and not harm the human body. The so-called antiviral drugs can only hinder the replication of the virus, but also inevitably damage the physiological functions of the human body.
Because the treatment of disease is a systematic process, the special medicine pursued by Western medicine may never exist.
It has been 17 years since SARS, and there is still no specific drug. Now that a new coronavirus has come out, there is still no specific medicine.
If every time a new virus comes out, we go to find a new special drug, then we will always be exhausted, the old one will not be cured, and the new one will come out again, because the mutation of the virus is really too fast.
For viral diseases, only the body's immune system can rely on itself to defeat it. Therefore, there are only two ways: one is to make the body produce antibodies through vaccines, and the other is for the human body to produce antibodies in the fight against the virus.
While vaccines can only prevent and cannot cure diseases, Chinese medicine can.
3. The division of the family is too fine, splitting the human body
Because Western thinking is microscopic, partial, and fragmented, superstitious data and indicators have also caused too fine divisions and one for each. It uses statistics and various indicators to determine whether you are healthy or not.
Liver indicators are not normal? Take some liver protection pills. What should I do if the liver protection medicine hurts the kidneys? Sorry, go see the nephrologist. Take some kidney medicine. What should I do if the kidney medicine hurts the spleen and stomach? Sorry, go see gastroenterology. Take some stomach-saving medicine. What should I do if the stomach medicine hurts the liver? Sorry, go see the liver department... So the more you take the medicine, the more problems there are, the vicious circle.
The above is the fundamental flaw in the methodology of Western medicine, and it is impossible to succeed without changing its concept.
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Fifth, the market has been falling and falling - the policy is constantly flowing
Old note: How fierce the rise in the past, how miserable it is now. The ten-year bull market in the US stock market has made everyone firmly believe that as long as they buy ETFs, they can rise forever, so some people continue to add leverage to buy funds, and now the big fall is because these investors continue to redeem, the fund company can only sell stocks to deal with redemption, and as long as the customer still has profits in his hands, his redemption will not end.
Text/Tao Dong
The COVID-19 pandemic is spreading like a wildfire outside of China, and central banks outside of China are desperately fighting the fire. Last week,the capital market was 1:0 ahead. The rapid spread of the COVID-19 virus in Europe and the United States, and the governments of various countries have changed their past insensitivity and resorted to lockdown and quarantine policies, the economy has been hit hard, and the stock market has continued to plummet like a laxative.
The US Federal Reserve once again cut interest rates urgently, once cut the policy interest rate to zero, and restarted quantitative easing, and the European Central Bank, the Bank of England and other central banks have responded. The Trump administration has introduced bailout measures, and German fiscal policy has shown signs of action, but the positive reaction of the venture asset market has not exceeded 24 hours, and the stock market has not rebounded for two consecutive days. U.S. stocks fell by a third, completely erasing Trump Bump's stock market gains since taking office. Cash is king and cash pours into the dollar area, the dollar index breaks through 100, and the pound, euro, yen, and renminbi weaken. Oil prices suffered a price war and a short selling war, WTI plummeted to $23 a barrel, brent crude oil is equally ugly. The fund cashed out to pay for redemption, and the yellow gold did not show a hedging function, and suffered a strong sell-off.
Last week's U.S. stock market decline was the fifth largest on record. The plunge that began in mid-February added up to a level of brutality in 1929. The trigger for the market plunge is, in my opinion, mainly the passive deleveraging of non-bank market participants. Constrained by the new regulation, banks have significantly lower risk exposures than in 2008 and have not been systematically poisoned by derivatives. The financial institutions behind the banks have thrived on QE and financial innovation, ETFs have been the investment products that have been red in the past decade, and AI algorithms as selling points have become the fastest growing investment tools in recent years. The central bank's ultra-loose monetary policy has allowed investors to leverage at low cost and add leverage. Several forces converged to create a rainbow momentum of the PAST US stock market. However, the epidemic has brought about a sudden change, the global recession suddenly unfolded in front of the market, uncertainty soared, and asset prices fell. This triggers a simultaneous reversal of ETFs, AI and leverage, and the lever is forced to liquidate, bringing a new round of squeezes. Banks have "closed their umbrellas on rainy days" in this market turmoil, tightening lending standards, and contributing to the transmission of risks in the asset market.
The US Federal Reserve has cut interest rates twice in two weeks, intending to stabilize market sentiment and reverse the decline in risk assets, but the funds are not appreciative, and each time the Fed's "big hand" brings about a stock market circuit breaker and plunge. Why are the measures that were in effect during the last financial crisis ineffective this time? The main body of the last crisis was the banking system, and banks had a liquidity crisis. The Fed put the money into the hands of the banks, and the market panic was eliminated. The main body of this crisis is not banks, but funds, junk creditors, and high-net-worth private bank customers. Central banks put liquidity into the hands of banks, which do not pass this on to entities in need. Those who lack money are still short of money,
A new vicious circle can be triggered at any time, so panic cannot be reduced. Bernanke and Yellen pointed out to Powell last week: The Fed's water should not be lost to the banks, but to the credit bond market. Fiscal policy should issue consumption coupons to encourage consumers to spend money. The impact of the epidemic on the economy may exist for a considerable period of time, and these are not something that monetary policy can reverse. But financial system risks can be mitigated if central bank liquidity can flow to areas where funds are in dire need. In the author's opinion, the monetary policy rescue has been carried out on a large scale, and the key points in the tools are not available for the time being, but the door can be found in the near future. The so-called helicopter throwing money means that it bypasses all intermediate links and directly distributes liquidity.
Market spotlight this week: market panic and government/central bank response. In terms of data, the initial unemployment benefit and the University of Michigan Consumer Confidence Survey should give the first data point after the epidemic. The Bank of England has already taken an emergency rate cut and there should be no further action at this week's regular meeting.
Sixth, the highlight of the financial war, the exchange rate war is starting
Old note: The United States can withstand 50% of its citizens infected with the new crown virus, and it does not matter if millions of people die, but the United States cannot afford the collapse of the dollar, so the ultimate key is the exchange rate war, which is the biggest possibility in the case that the hot war can no longer break out.
The recent sharp rise in the dollar index stems from the current full liquidity of the entire financial system in the United States
crisis.
This includes stock markets, treasuries, corporate bonds, gold, commodities, all of which have a liquidity crisis.
This makes the most core piece of the US financial system, the "dollar", also have a liquidity crisis.
In fact, it is not uncommon for the dollar to have a liquidity crisis.
When Lehman collapsed in 2008, it also caused a liquidity crisis at the dollar level in the United States.
In fact, it is correct to say that Lehman went bankrupt precisely because of the liquidity crisis of the US dollar.
Therefore, the recent sharp rise in the dollar index actually stems from the current liquidity crisis of the dollar, to put it bluntly, the dollar is scarce, and the money on the market has become less, so it has become more expensive.
But last night the Fed used a big move. That is, the Fed reached an emergency currency swap agreement with 9 central banks last night. This currency swap agreement, in short, is that the Fed can directly sprinkle the printed money to these 9 countries.
At present, there is a strange phenomenon, that is, the more the Fed throws money at the market, the more the market is short of money. This is mainly because all the world's funds have flocked back to the United States because of the outbreak of the economic crisis.
This is because the US dollar, as the world currency, has the first natural advantage of full circulation and full exchange, so when the economic crisis breaks out, the world's funds will instinctively flow back to the United States.
However, these funds that flow back to the United States from all over the world do not buy US stocks or treasury bonds, but uphold the concept of "cash is king" when the economic crisis comes, so they hold the money in their hands and do not make any investment.
This is where the current U.S. liquidity crisis is at its worst.
We all know that a common sense in economics is that money has to flow before it can be valuable.
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Money that does not flow is itself waste paper.
Only in the process of flow will the value of the money be reflected.
Therefore, the current large amount of dollars that are flowing back to the United States without doing any flow directly leads to a large number of dollars accumulating in the United States and forming a blockage.
This is also the reason why the Current Fed is printing more and more money, and as a result, the dollar is still rising, and the US liquidity crisis is becoming more and more serious.
So the Fed's current priority is not to print more dollars, but to dredge the pipeline to solve this problem of fund blockage.
That's why there was this currency swap agreement.
For the rest of the world, because a large number of dollars flow back to the United States, in addition to exacerbating the blockage of funds in the United States, it has also pushed up the dollar index, resulting in a general depreciation of the currencies of other countries in the world.
In this case, the Fed introduced this currency swap agreement in order to sprinkle money directly across the world, not just domestically.
It is equivalent to the rest of the world flowing back a large amount of dollars to the United States, and then the Fed will withdraw some of it and put it back into other countries in the world.
That is, the Fed artificially re-exported a portion of the dollar to the world.
So today, after the currency swap agreement took effect, the dollar index, which rose for 9 consecutive days, also fell for the first time.
So the fed introduced this currency swap agreement in order to solve the current liquidity crisis at the global level.
After all, the global financial system is now built on dependence on the dollar. Therefore, this behavior of the Fed, in the final analysis, is to maintain the existence of the dollar hegemonic system. However, this approach of the Fed is actually still a palliative rather than a cure. First of all, this currency swap agreement is nothing new.
Back in late 2007, the Fed introduced the Central Bank Liquidity Swap, which started at 140 to 18
The $100 million gradually increased, eventually reaching $553.1 billion in the subprime mortgage crisis.
Even so, however, the currency swap agreement did not prevent the subprime mortgage crisis from erupting.
Therefore, to solve the liquidity crisis, it is not just a matter of throwing money, the key lies in the confidence of investors.
The modern financial system is based on credit.
Without confidence, the modern financial system would be as fragile as a straw.
For example, if all bank depositors take out their money collectively tomorrow, no bank in the world will be able to hold on and will go bankrupt.
Therefore, the current liquidity crisis of all assets in the United States as a whole is rooted in the lack of confidence of investors and in the panic of the economic crisis.
So everyone holds the money in their hands and refuses to invest.
In this case, no matter how you print money and release water, it will not help, but will increase panic.
Including the Fed's signing of currency swap agreements with 9 major central banks, it can only save the emergency and alleviate the needs of the moment.
If we do not solve the current phenomenon of large-scale capital outflows from all countries in the world, even if the Federal Reserve provides quotas to all countries in the world, it is only a situation in which water is released here and water is leaking on the other side.
And as long as the magnitude of the water leakage is much greater than the amplitude of the release of water, then the liquidity crisis is difficult to contact. So why would the Fed do that? Behind this, I personally think that there is a deep evil intention hidden. First of all, yesterday's article has systematically explained to you why the us dollar will eventually collapse. We, let's try to deduce it this way.
If after half a year, the dollar begins to collapse by 30%, then how much money the dollar throws out at this time is equal to how much money it makes.
The Fed is equivalent to taking the dollar, which may depreciate sharply in the future, in exchange for the currencies that countries may appreciate in the future.
In this way, after the future sharp depreciation of the dollar, the Fed can exchange fewer national currencies for the same
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Dollar.
So this can actually be seen as a hedging strategy for the Fed's own assets.
This time, the Fed offered a currency swap agreement with a quota of up to $450 billion.
This can actually be seen as some of the currencies of other countries as asset preservation by the Fed.
This also reflects the possibility of a sharp depreciation of the US dollar in the future.
The current dollar liquidity crisis in various countries in the world has also led to countries having to borrow more dollars from the Federal Reserve, and it is still a dollar that will not maintain its value in the future.
So, this is what the Fed really started to harvest the world to save itself.
In fact, we can see from this economic crisis that the global financial system is completely dependent on the united states dollar, a single currency, which is seriously flawed.
That is, when the economic crisis breaks out, countries will lose the ability to resist the crisis, because they are completely dependent on the dollar and have to be subject to the dollar.
So why do I say that dollar hegemony will eventually come to an end.
The reason is that the countries of the world should have actually had enough of being harvested back and forth by dollars.
Overall, the unusual rise in the dollar this time, although the main reason is the liquidity crisis of the dollar.
But there is also part of the reason, which is likely to be fueled by the Federal Reserve, or a strategy for the United States to protect the dollar.
At this time, the Fed will then start to throw dollars around the world through currency swap agreements. This should actually already be part of the exchange rate war. So we can see that while the dollar is rising, the renminbi has also depreciated sharply. Currency exchange rates are the most intuitive way to see the overall inflow and outflow of funds in a country. A devaluation of a currency means a massive outflow of capital. The appreciation of the currency means a large inflow of capital.
So after the outbreak of the epidemic, the renminbi depreciated from 6.84 all the way to the lowest time yesterday at 7.16.
This shows that there is a large amount of capital fleeing behind this.
So I even have a little suspicion that the Fed is behind the current global liquidity crisis.
to secretly push up the dollar and create a global crisis.
In this way, when the dollar peaks, the Fed can buy high-quality assets of various countries at the price of cabbage based on its own advantages as the world's currency.
Coupled with the fact that we officially opened our finance on April 1, and it happened to be at such a juncture, there was such an abnormal exchange rate fluctuation.
This has to make us suspicious and must be guarded against.
However, as I have always said, the great power game is full of variables.
No one must win, and no one must lose.
Everyone is actually gambling, which is called a game.
For example, the Federal Reserve is pushing up the dollar index and detonating a global asset bubble to use cabbage prices to bottom out global assets in the future.
But other countries are not fuel-efficient lamps, nor will they make the United States so satisfied.
In particular, the Red Side and Russia are the mainstays of the current resistance to this harvest by the United States.
Taking Russia as an example, Russia is the most crisis-conscious country in the past few years, and this has to be said to be a fighting nation.
Russia sold out all of its U.S. debt as early as last year.
Moreover, Russia's current fiscal situation and government debt ratio are among the best among the world's major economies.
This is also the reason why Russia has the courage to fight this oil price war. Therefore, Russia said that it can withstand 6 to 10 years to maintain 25-30 US dollars / barrel, which is not a big deal.
Previously, regarding the price war between Russia and Saudi Arabia, some people said that Russia and Saudi Arabia sang a double reed to kill the United States.
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Others say the United States and Saudi Arabia are trying to kill Russia.
When I analyzed this matter before, I made it clear that whether it was Russia or Saudi Arabia singing the double reed, russia's idea of killing the United States was true and had already been put into action.
Including from our current financial situation, Russia is indeed not so easily killed by low oil prices.
It is true that the United States is likely to be killed by low oil prices.
Therefore, with regard to the statement put forward by some people that the United States and Saudi Arabia have joined hands to engage in Russia, in fact, as long as we look at whether a large number of US oil companies will go bankrupt and go bankrupt after half a year, we will know whether this statement is very ridiculous.
If a large number of OIL companies in the United States default on their bonds after half a year, go out of business in batches, and trigger a corporate debt crisis, we will know that this kind of Us is deliberately lowering oil prices in order to engage in Russia's argument, which is a very ridiculous statement.
Because no one will use suicide to maim others. However, Russia may use self-harm to kill others. Therefore, in the face of the exchange rate war launched by the United States, or the financial war, Russia has already made a move. Now in fact, everyone is looking at the red side, waiting for the red side to make a move. At present, it seems that the Red Side is still steadily advancing the full opening of finance on April 1. But the internal rectification has actually begun. Especially the following matter, everyone should take a good look.
I've told you before that I hope we can push back the opening up of the financial sector.
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This is also the best way to defend against financial warfare.
However, in the great power game, the considerations at different levels are different.
Because the amount of message fetch at different levels is completely different.
Therefore, since the above is still steadily promoting financial opening-up, there must be considerations behind it.
I tried to reason myself, for no more than a few reasons.
1, the current world funds are still flowing back to the United States, and cash is king, everyone is trying to take the dollar, and when the world economic crisis breaks out to the climax, then flock out to the bottom.
2) Based on the first article, we need to try to co-opt some funds to stay in China. There is no doubt that a more open, or fully open, China will be more attractive to funds.
3. There is no doubt that we need to give up some interests. However, as long as we can support the attack of foreign capital short-selling and not let foreign capital pick up too much cheap, then it is also a trade-off to reasonably give up some interests.
To put it bluntly, in the great power game, it is impossible for you to fish for the benefits of anything, and everything is always a trade-off.
But we must grasp the bottom limit, that is, we cannot let foreign investors short Chinese assets succeed. I think there is a more intuitive bottom line.
1, the RMB exchange rate can not break 8, which is our bottom line to avoid a systemic crisis. 2, A shares can not fall below 2200 points, which is the bottom line of not allowing foreign capital to pick up the price of cabbage.
Grasping the bottom line of these two days, I think that we have fully opened up finance, and indeed have the courage and courage to be full of rivers, then it is possible to really compete with the United States for the flow of this large amount of funds.
To achieve this, first we need to block the first wave of foreign short-selling.
As mentioned earlier, over the past 10 days, foreign investment has been at least 50 per day as the dollar has appreciated significantly
The size of 100 million is flowing out of A shares.
Today, because of the effectiveness of Fulsit Russell's inclusion in A shares, there are almost 6 billion passive fund opening inflows.
After deducting the 6 billion yuan of passive inflows, the scale of active net outflows of foreign capital today still reaches the scale of 3 billion yuan.
Don't look at this daily outflow of billions is not too big, but it adds up to more.
In the past month, northbound funds have had a net outflow of 100 billion. And northbound funds still have nearly 1 trillion chips in their hands to smash the plate. Therefore, we want to grasp that the bottom two days of the two days that I mentioned above will not be broken.
First of all, we must resist the ferocious attack of foreign capital.
This is also why I call on everyone, together with me, to take over the market for the country this summer.
Because only when we gather sand into a tower and work together can we block these jackals and leopards that will come in on April 1, and there is a possibility of captivity.
Of course, it is useless to rely on us alone. However, I believe that the above has already been dealt with.
The news mentioned above, increasing the proportion of state-owned capital in key financial areas, is a clear signal.
In January this year, when I predicted the trend of the whole year to the left, I clearly mentioned two bottoming points this year. One is in June this year and the other is in December this year. I think the historical bottom I expected would form in these two months. The range of this historical bottom may be around 2300 points.
This point is the best reasonable point where we do not have a systemic crisis, and the funds of a certain team of the red side such as pensions can be sucked up in a big mouth.
If foreign investors really smash the market and short the assets of the red side, our red side team is likely to close at 2300 points and collect all the smashing chips according to the order.
At this time, we just need to follow the pace of a certain team of the red side and go to take over the market for the country together.
A certain team eats meat, and we drink soup. We take over for the country, and this blood will not be in vain.
Take two or three years, and when the real super bull market comes, the growth of wealth is the best return for us to take over the country.
Seventh, this is the real "devil" of the market
Old note: Why the US stock market can not casually copy the bottom, this article tells you the reason. What we face is a truly epic crash.
Wen/Pan Lingfei Zeng Xinyi Recently, under the bombardment of the epidemic and low oil prices, the global market has jumped like a wind
Jump down.
Of course, the main thing is to jump down, and occasionally go up and down. Oil prices slashed, stock indexes broke, gold plummeted, and even US debt poured down.
You who originally just wanted to invest and make money did not expect to witness history. Even the editors who have seen and heard about it have a good eye.
In the past, the US stock market fell a 3% on the jaw dropped, screaming plummeting, and now it has not fallen to 7% as a small fight, and it is too lazy to look - the circuit breaker has not arrived, can it be called a fall?
The previous Fed was not reticent, raising interest rates and cutting interest rates the whole market was looking forward to it. Nowadays, QE, zero interest rates, all kinds of rockets do not want to lose money. In this way, the market still does not buy it, and directly lies down and pretends to be dead.
It's a long time to live. It is only then that we understand that "reverence for the market" is not lip service. Unconvinced, Mr. Market uses a bloody account to teach you how to be a person in minutes.
Accustomed to seeing all kinds of epic markets, many people may have felt that their investment experience has been directly chasing the stock god Buffett, after all, the stock god has lived for 89 years, and he has only seen a circuit breaker more than you.
But we responsibly tell you that the worst hasn't happened yet. Everything you're seeing so far may just be a prelude. The collapse in oil prices could be the last straw that crushed the U.S. credit market, and corporate bonds were the market's biggest nuclear bomb.
How the Americans have blown out an unprecedented asset bubble in the past decade, and how this bubble is deeply bound to the US economy, with both prosperity and loss.
After reading this article, you will understand that the current US economy is on the verge of a bubble that may burst at any time. The fuel for the bubble is provided exclusively by the Federal Reserve, and the engine is the bond market, and the bull market in the US stock market over the past decade is the beautiful appearance of this bubble. Don't be fooled by the beautiful appearance of the bubble, the end of all bubbles is bound to be bursting, and this time it is difficult to escape the exception.
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At present, all the efforts of the Fed and the US government are only struggling to keep this bubble from bursting for the time being, and do not change the nature of this bubble. Have you ever seen a tumor patient who is cured without surgery and only relies on hanging water injections and medicines?
The only problem is that all bubble bursting needs a fuse, lehman in 2008, who will it be this time?
01, the U.S. economy: see him rise tall
It all started with the decade of prosperity in the U.S. economy after the financial crisis.
As we all know, in the post-crisis era, the Fed has opened the door to convenience, not only maintaining zero interest rates for 7 years, but also investing nearly $4 trillion in the market through QE, encouraging various industries to borrow and expand, and pulling the US economy.
The easing policy has continuously reduced the cost of financing, US enterprises have borrowed wildly in a low interest rate environment, the debt level has skyrocketed, and the debt of financial enterprises has reached 47% of GDP, exceeding the level of previous crises.
At present, the size of the US stock of bonds has exceeded $10 trillion. Among them, investment-grade bonds (BBB grade and above) accounted for 78.5%, and high-yield bonds (BB grade and below) accounted for 21.5%.
The debt is up, and so is the U.S. economy. The U.S. economic recovery has been going on for 11 years since 2009. The stock market has also followed an unprecedented bull market.
But beneath the appearance of prosperity, there are hidden worries. The U.S. economy is not as good as it seems.
If you look closely at the above chart, you will find that the current round of economic recovery is much worse than before. The average growth rate of this round of economic recovery is 3.3 percent, and the average growth rate of the cycle that began in 2001 is 5.1 percent, a difference of 1.8 percent.
02, American enterprises: gold and jade outside
The same is true for microcosm corporations, which create GDP but do not create corresponding profits. The Tianfeng Securities study found that the total profit of U.S. companies is still at the level of 2014, and the proportion of corporate profits to GDP is still stuck at the level of 2005.
In theory, only need to earn more money than borrowed money, the company can continue to reinvest the borrowed money, the scale is getting bigger and bigger, forming a virtuous circle.
But U.S. corporate profits haven't grown for five years, and debt is growing. This means that the solvency of enterprises is getting weaker and weaker, and in the end they cannot repay their debts, and they can only borrow new debts to pay off old debts, which is very dangerous.
Nearly 40 percent of U.S. public companies are losing money, the highest level since the late 1990s during the economic crisis.
Among them, 42% of the loss-making companies belong to the healthcare industry, and 17% of the companies are technology companies. Of course, the most common losses are relatively small companies.
So, are there any companies that make money? Of course, there is, that is the leader of the current bull market in the US stock market - technology giants.
In recent years, one of the important driving forces driving the overall profit growth of the United States has been the increase in profits of US stock technology companies. In this round of profit cycle, American companies, especially technology companies, have obviously benefited from low taxes, and technology giants need not be said.
Goldman Sachs noted in last month's report that in the fourth quarter of last year, the earnings of S&P 500 companies increased by 2% on the same footing, but almost all of this was due to "FAAMG" — Facebook, Apple, Amazon, Microsoft and Google's parent company Alphabet.
Excluding these five tech leaders, the earnings growth of the S&P 500 index is almost zero. The cake is so big that the tech giants with huge market share swallow most of their profits alone
The dilemma of his industry can be imagined.
In a nutshell: The U.S. economy is currently a false boom at high debt levels, and the bond market is underpinning that boom.
03, U.S. stocks: the largest artificial bull market in history
Some people may ask, the stock market is the barometer of the economy, if the economy is not good, why will the stock market rise?
This is also related to the bond market. It is the steady stream of cheap money provided by the bond market that has created the US stock market
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Up to 11 years old buffalo. The key to this is stock buybacks. The so-called stock repurchase is the purchase of their own shares by listed companies.
The act of giving back to shareholders and raising the stock price.
Why can share buybacks drive up stock prices? Because the stock price = earnings per share (EPS) * price-to-earnings ratio (PE), in the case of a constant price-to-earnings ratio, as long as the earnings per share increase, the company's stock price will rise accordingly.
Listed companies buy back their own shares and write them off, reducing the total number of listed shares. In this way, although the company's total profit has not changed, due to the decline in the number of shares, the profit per share has been artificially increased, thus achieving the purpose of promoting the rise of the stock price.
Share buybacks were supposed to be stock price manipulation and were prohibited by U.S. regulatory authorities. But in 1980, during the Reagan era, regulations were deregulated and legalized. This time, when the Fed encountered an unprecedented easing cycle, listed companies used it as a "sharp weapon" for stock price management.
This chart from Zhongtai Securities clearly shows that the contribution of "buyback whitewash" to the earnings growth of US stocks is as high as 30%.
This round of bull market in the US stock market has eaten through the dividends of stock repurchases of listed companies, and the biggest buyer of the US stock market is the company itself. Where does the money for buybacks come from? Borrowed from corporate bond issuance financing.
In the eleven years of the US stock market, many companies have become accustomed to repeatedly "snowballing" between the stock market and the bond market to maintain the dual decency of earnings and stock prices.
To put it simply, enterprises can first take the money from issuing bonds to buy back the company's shares, and after the repurchase, the stock price rises, and then they can issue more bonds at a low price, and then continue to buy back, once again pulling up the stock price.
Through buybacks, the stock and bond markets formed a good positive feedback: buybacks - stock prices rose - low prices issued bonds - back 28
purchase...... Over the past few years, the scale of U.S. stock repurchases has expanded year by year, reaching 800 billion in 2019. But it's a train that can't stop. The larger the size of corporate stock buybacks, the size of the bonds that need to be issued is also
The bigger it is.
Corporate buybacks will be suppressed as soon as monetary policy tightens, or economic growth slows, bond ratings are downgraded or credit spreads rise. The positive feedback of the stock market and the bond market in the bull market will all be reversed into negative feedback, and the impact on the stock market will become more and more large.
What's more, now that the bull market in the US stock market has come to an end, after the rise in financing costs, the method of enterprises to maintain the shareholding price through bond issuance has disappeared, and the scale of repurchase has also shown signs of shrinking.
In the past January-February, the size of stock repurchases announced by U.S. listed companies was only $122 billion, the lowest in many years, and down 46% from a year ago, and the year-on-year decline is also the largest year since 2009. This means that the life of American companies is starting to be difficult.
04, the real devil - the bond market bubble At this point, we can already draw a conclusion, whether it is the current recovery of the US economy or the bull of the US stock market
Behind the market is a growing bond market.
As long as the bond market, the engine, continues to supply cheap money to enterprises, the bubble in the US economy and stock market can be maintained forever.
But the waking hour came, and the surging COVID-19 pandemic interrupted it all. This super bubble created by the Federal Reserve and US companies "conspiring" is now in jeopardy.
Even with such a massive release by the Fed over the past few weeks, spreads on U.S. junk bonds have skyrocketed to more than 1,000 basis points.
This level has surpassed the period after the dot-com bubble of 2001 and the 2008 financial crisis, and it continues to rise rapidly.
This means that the financing costs of those companies with poor credit ratings in the United States have reached a very frightening level. Once faced with a large-scale debt maturity and some companies default because they cannot issue new bonds, the AL-tight US bond market may have a chain reaction and an avalanche.
At that time, the US stock market that has lost the most support may collapse completely, and the US economy may enter the Great Depression 2.0. Don't think that the current 30% decline in US stocks is already very large, the average US stock market fell by 50% during the previous financial crisis, and the US stock market fell by 90% during the Great Depression in 1929.
So, the important thing to say three times, the biggest devil in the market right now, is corporate debt, corporate debt, company
debt!
At present, the riskiest is the debt of the US oil and gas company under the impact of low oil prices.
The U.S. energy industry is already low-profit and high-debt, especially shale oil companies, which are very dependent on continuous capital expenditures, and the cash flow situation is very poor.
Simply put, shale oil extraction is expensive, and to maintain production before wells with a lifespan of only 2-3 years dry up, you must drill more new wells while drilling old wells.
In order to maintain the scale of production, shale oil companies can only continue to borrow, first produce, and then rely on oil prices to recover costs. The cost price of shale oil companies is generally above $45.
Long before the impact of the epidemic, the situation of the US oil and gas industry was already very difficult from the perspective of profits covering interest. Judging from the interest coverage ratio, the US oil and gas industry has been almost surviving in recent years.
According to energy company Rystad, only 5 U.S. energy companies can still afford to lose money at $31 in oil.
Now Saudi Arabia has provoked a price war, smashing the oil price below $30, so that the US shale oil producers are "completely wiped out", and the vast majority of miners cannot make a profit, and the number of more than 100.
That means $142.1 billion in junk debt from oil and gas companies has reached the brink of a cliff.
Oil and gas junk debt accounts for 14.4% of the nation's junk debt. The consumer sector, another hard-hit area hit by the epidemic, accounted for more garbage debt, reaching 16%. Whichever industry thunders first, it has the potential to drag down the junk bond market of about $1 trillion.
What's more, investment-grade bonds with higher credit ratings are now also powder kegs. BBB-grade bonds have swelled from $726.9 billion in 2008 to $3.2 trillion, accounting for more than 55% of investment-grade bonds.
Although BBB is investment grade, it has the lowest rating among investment grade bonds, only one level higher than junk bonds. As long as the economy is in recession or the financial environment deteriorates, they can be downgraded to junk at any time.
Over the next three years, U.S. corporate high-yield bonds will peak. It is not difficult to see that the current US corporate debt is already in danger. In 2008, the subprime mortgage bubble burst
Once the financial crisis bursts and the corporate debt bubble bursts, the financial tsunami will be no less than 12 years ago. Just as the coronavirus is more deadly to older people with underlying medical conditions. If the U.S. economy is in the blue
In the prime of life, the impact of the epidemic may only be short-term, and it can be carried through.
But unfortunately, when the epidemic occurred, the unprecedented bubble in the United States had lasted for 11 years, the debt cycle was nearing the end, and the disease had long been "accumulated".
The two phases are superimposed, and it is unimaginable how deep and steep the cliff in front of the US economy is.
This is very clear to corporate executives, the market is very clear, and the Fed is even more insightful!
In addition to maintaining basic liquidity at a time of market panic, what is more important is to provide enterprises with the most urgently needed cheap funds so that the us economy and the pillar bond market of the US stock market will not collapse at a critical moment.
With two rate cuts of 150 basis points and 700 billion QE, the Fed ran out almost all the bullets and almost got out of the market to buy corporate bonds.
Last week, two former Fed chairmen, Bernanke and Yellen, had pitched to Powell that they could ask Congress for authorization to buy a limited number of investment-grade corporate bonds.
It's not impossible either. Currently, the U.S. Federal Reserve Act prohibits the Fed from directly purchasing corporate stocks and corporate bonds. But as long as the situation deteriorates further, congress is not ruled out removing this restriction in "crisis mode."
At that point, the Fed will be able to buy stocks and bonds in person, rather than operating through financial institutions as it once did. After all, the Fed is the money itself, and it can theoretically provide unlimited ammunition if she wants to. Then the enterprise that gets the money to continue to live can live forever, there will be no default, and there will be no collapse.
But is this a crisis avoidable? Too naïve. The Fed's cheap money may save the time, but it will not solve the core crux of weak corporate profitability.
As we have analyzed before, only when enterprises can really make money in market competition and use the money they earn to pay off their debts, can such an economy be truly healthy and dynamic.
Remember why American companies have fallen to where they are? Isn't it because the cheap money has been used for a long time, is comfortable, and slowly loses its vitality?
Now the Fed's way of saving them is to continue to give them cheap money. Drink poison to quench thirst! If this can cure the disease, it is really a big fool in the world.
If the Fed continues to spend cheap money to let enterprises eat grain and survive, it will only create more and more zombie enterprises and make the entire economy lose vitality.
In one point, Japan is a lesson for the past. Over the past few years, the Bank of Japan has been entering the market to buy stocks, making itself the largest shareholder in the Japanese stock market. But the Japanese economy is still hovering around zero growth, and so are we
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We have not seen any more internationally competitive technology companies grow in Japan.
The well-known Japanese companies you remember now, such as Sony, Panasonic, and Toyota, did not exist 20 years ago, and even these companies are currently in decline.
Therefore, the dilemma faced by the Fed is: not to save, to collapse in an instant, to mourn everywhere, and to tear everything down and start over; Rescue, the bubble is blowing bigger and bigger, and zombie companies are worsening like tumors, eroding the vitality of the entire economy.
Two roads, one to die quickly, one to die late, how did Powell choose? It was as if we heard the devil knocking at the door.
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