This article is reproduced by Niu Danqin (id:bullpiano) with authorization. Author: Niu Danqin
When I wake up, a new financial storm is coming.
Tragic, quite tragic!
Blood flowed into the stock market, and the hearts of American investors were dripping blood.
We have witnessed another black Monday. The Dow Jones index was down at the beginning of the session. It once plummeted more than 1000 points. In the last three trading days, it fell 638 points, 880 points and 876 points in a row.
The three major stock indexes in the United States all share the same fate, with a decline of at least 2% on Monday.
Dow Jones, down 2.79%;
Nasdaq, down 4.68%;
S & P 500, down 3.88%.
US stocks are entering a bear market.
Take the S & P 500 as an example. After this black Monday, the stock index is nearly 22% lower than the high point on January 3 this year. More than 20% is considered a bear market.
The NASDAQ index, on the other hand, entered the bear market first. The current point is 32.7% lower than the peak on November 19 last year.
The Dow Jones index is 17% lower than its recent high, and a bear market is just around the corner.
Once, the US stock market outstripped the rest of the world by its rise. But now, everything is in its original shape. You can see that he has raised a tall building, that he has entertained guests, and that his building has collapsed.
It is very interesting that in the past, the U.S. stock market plummeted, and the international oil price fell with it. Both prosperity and loss were lost. But this time, on the contrary, the oil price just doesn’t fall.
On Monday, international oil prices rose slightly to close above $120 a barrel.
Alas, the stock market is weak and the oil price is strong.
What the hell is going on?
Because there is a big problem in the US economy. The biggest problem is inflation. The price of almost everything in the United States, from clothes to food, from housing to oil prices, is soaring.
According to the data released by the U.S. Department of labor on the 10th, the U.S. CPI (consumer price index) in May rose by 8.6% year-on-year, even greatly exceeding the expectation of 8.3%.
The last time inflation was so high, the United States was 1981.
The biggest increase is in energy prices. As we all know, the United States is a country on the wheel. The rise in oil prices has seriously affected the well-being of Americans. Americans who are used to low prices are now full of complaints.
American politicians care about Ukraine and keep an eye on China, but what Americans care about most is prices. People’s livelihood is the biggest politics. Biden’s support rate has been declining all the way, and he has even been criticized as an “unpopular president” by the Washington Post. Biden was so angry that he vented his anger on Western oil companies, accusing them of “earning more than God”.
The Federal Reserve is also a bit silly. You know, the inflation that the Federal Reserve can generally tolerate is 2%, but now it is many times 2. At least it also shows that the Federal Reserve has failed to regulate the economy.
Former US Treasury Secretary summers criticized that “the Federal Reserve began to predict in March that the inflation rate would fall to the 2% range by the end of this year. Frankly speaking, the prediction at that time was wishful thinking, which seems more absurd today.”
What should I do?
Then we can only raise interest rates, raise interest rates, raise interest rates.
According to external expectations, at the Federal Reserve meetings this month and next month, it is normal to raise interest rates by 50 basis points, and it is not uncommon to raise interest rates by 75 basis points, which will also be the largest rate increase by the Federal Reserve since 1994.
What are the consequences of the Fed’s war on the worst inflation in 40 years?
As a result of the interest rate hike, capital became more expensive, and wall street was immediately unlucky. If there was a foam, it would mean that the possible stock market foam burst. In other words, the bear market in the United States may have just begun.
Even so, with the radical interest rate hikes and soaring prices, the US economy is in turmoil. According to a Financial Times survey, nearly 70% of economists believe that the US economy will fall into recession next year.
Don’t underestimate the negative influence of the United States. After all, the United States is still the world’s largest economy, especially the US dollar is the world’s main reserve currency.
It is no wonder that the US Treasury Secretary Connery in the Nixon era once said, “the US dollar is our currency, but it is your trouble.”
The feeling of complacency is not disguised!
For the United States, the biggest bonus of the dollar is that it can “cut leeks” for the world.
During the financial crisis, by means of quantitative easing such as interest rate cut, the printing machine was started, and the US dollar flowed overseas. In essence, it was forced to borrow money, which was the first round of “cutting leeks”; Since then, the Federal Reserve will raise interest rates. The huge siphon effect will allow the dollar to flow back. Other countries have lost blood and even the financial crisis. This is the second round of “cutting leeks”.
For many countries, the Federal Reserve cut interest rates, suffering; Federal Reserve raises interest rate, bitter!
But the United States is desperately trying to save itself, despite the flood.
Finally, let’s say something:
1. We are witnessing history. In the past few months, we have witnessed the worst war on the European continent since the Second World War, the most serious inflation in the United States in the past 40 years, and waves of century epidemics. I really don’t know whether we are lucky or unfortunate, but this is the fact, the cruel fact.
2. This should only be the beginning. After all, S & P has just fallen into a bear market. Alas, 2022 is a bad year. Under the floor, there is a basement, and under the basement, there are 18 floors of hell… That’s the same sentence. You see he rises a tall building, you see he banquets guests, and you see his building collapse.
3. Why? The conflict between Russia and Ukraine is the biggest black swan. The sanctions imposed by the West add fuel to the fire. The epidemic situation in the century has added another fire, not to mention the consequences of the US trade war with China. In the final analysis, it is still a man-made disaster! The United States, out to mix, also always have to pay back.
4. We should prepare for a rainy day. If you see a cockroach, there may be 1500 cockroaches active. Biden was so desperate that the Federal Reserve could only save his life. A new crisis is coming. Get ready, we will definitely see more black swans and grey rhinos.
5. We can’t compare with the United States. Black Monday in the United States, but in the global stock market, it is very rare that my A shares, which have been very weak, are still soft, and unexpectedly went out of an independent market on this day. At the critical moment, whether a shares should be red or green depends on you! If all a shares can be strengthened, what else can we not do?