Buffett on inflation! Yellen says to raise interest rates! Is the May Curse really going to be fulfilled?
Author: Knowledge Planet finds Lao Qi's reading circle
May Day can not be regarded as a long holiday, only five days of rest, but also before and after the weekend, but a lot of things can happen in these five days, first at the Buffett shareholders' meeting, the stock god frightened everyone, when the US economy recovered from the most serious period of the coronavirus pandemic, inflation will become the biggest risk to the US economy. He also said that because of shortages of raw materials and the high savings of those who kept their jobs but were barred from spending on holidays and other things during the lockdown, the companies he invested in "felt very heavy inflation" in a range of areas. This has caused people to worry about the capital market, because inflation is bound to raise interest rates, and if the Fed raises interest rates, then the stock market may not be too good. Just as Buffett was just finishing talking about inflation, U.S. Treasury Secretary Aunt Yellen, more bluntly, said that if Denge's $4 trillion plan was implemented, interest rates might have to be raised to prevent the economy from overheating. As soon as this statement came out, the US stock market immediately plunged, and the nasdaq fell more than 4% at the maximum, but then the plot reversed, and Aunt Yellen urgently refuted the rumors and proved her innocence, which was not my prediction, nor was it a suggestion. I'm a staunch believer in fed independence, and if anyone appreciates fed independence, I think that person is me. He also said that I don't think there will be an inflation problem, but if there is, the Fed has the ability to solve it.
For this diametrically opposed, even contradictory statement, many friends have also come to the fan base of the Knowledge Planet to ask Lao Qi, in the end, how to look, in fact, the latter is good judgment, everyone should not habitually associate Yellen with interest rate hikes, he is now the secretary of the Treasury, and no longer the chairman of the Federal Reserve, that is, he does not count. He should be the one who is the least willing to see a rate hike now, because the Treasury is responsible for borrowing money, while the Fed is responsible for printing money and interest rates, and if it is raised, it means that the fiscal burden will increase significantly. This will be very detrimental to Aunt Yellen's work. And he did say the wrong thing, he shouldn't talk about interest rate hikes and inflation, which is really not his duty.
As for inflation, Buffett is seeing shortages of raw materials and crazy price increases for upstream products. In fact, we have also experienced that many factories have felt that whether it is metal or chemical, these things have been rising, and even they are almost unable to bear it. But is this inflation? It is really not, because the downstream does not increase the price, the finished products that everyone buys have not increased much, and now the cpi is still very low, and the core cpi, which is disturbed by food factors, is also very low. This year, the price level is not good enough to exceed 1.5%, so it is certainly not inflation. So how to explain the price increase of raw materials, in fact, Lao Qi mentioned many times in the evening class of the fan base that the price increase of raw materials is related to the shortage of supply last year, and this year everyone began to synchronize the inventory, so the price will rise. But the downstream because of everyone's insufficient consumption, so the price can not rise, then you guess what the company will think, must be more and more dry, the more he loses, soon he will not want to do it. So the inventory began to go again, and the price of raw materials fell. It is estimated that in the second half of the year, the upward cycle of this wave of raw materials will also end.
This is actually a big trend that we are going to face, and for a long time to come, we will face underconsumption and overproduction. Mainly because the gap between the rich and the poor is gradually widening, the rich have money, no demand, and the poor have demand, but no money, coupled with the growth rate of labor productivity is getting faster and faster, far exceeding the growth rate of income, so globalized countries, are caught in a huge oversupply, then it is difficult to increase the price of terminal consumer goods. So don't look at how many years the United States has printed so much money, and how many years japan has had negative interest rates, but their biggest problem is still deflation, not inflation. Inflation is becoming harder and harder to achieve, so market interest rates are getting lower and lower. Because if you don't cut interest rates, you may fall into the risk of deflation or even recession.
We are better than them, but basically the same, although we do not have the risk of deflation, but inflation will certainly not happen, 1 we have not released much currency in recent years, 2 the value of currency is more locked in the house, the future of this part of the market value can only be eliminated basically will not come out, so you can rest assured that global inflation is definitely not there. It will only happen to countries that do not have globalization, such as Venezuela, Zimbabwe and so on. Raw materials rise, the second half of the year will pass. Not worth worrying about.
As for how to see the Market in May, Wall Street has a famous saying, sellin may, that is, Sell in May, in 12 months of the year, the most undesirable is May, it is said that summer, everyone wants to vacation, do not want to make money, is to play, and do not have the heart to do stocks, so many people may have to sell stocks to cash out, in May the market performance is not very good. There is also a proverb in the A-share market called five poor six absolute seven turnaround, which shows that for the market in May and June, everyone is not very optimistic.
So in terms of data, it is also true that someone specifically made a fool's strategy, selling in May, buying in October, the result is a huge difference in long-term returns, 11-4 months of holding positions, than 5-10 months of holding positions, the average annualized return is higher than about 7%. It does have a bit of a metaphysical flavor. This piece we put in the fan base tonight, we will give you a detailed explanation of why this is so, and what is the logic behind metaphysics.
In terms of this year, the market in May is definitely still dominated by shocks, so don't expect too much. During the long holiday, both US stocks and Hong Kong stocks fell, and it is a high probability event that we continue to adjust in May. So Lao Qi always stressed, don't get rid of the scars and forget the pain, the market is not stable, we still have to be a little patient, and now we must continue to defend. Only by enduring loneliness can we keep prosperity. Reading more books, reading less disks, holding the allocation ratio, and not messing with the operation are the important main lines of investment this year.