Inflation stagnation but banks collapsing!!! What’s FEDs Choice ?
Due to the intervention of the U.S. government, the bankrupt Silicon Valley Bank can now withdraw money normally, but people are still worried about whether other banks will not be able to hold up in the future, and the crisis of trust is spreading in the banking industry.
Depositors with deposits in small and medium-sized banks will definitely find a way to transfer money to large banks, thus forming a run situation again.
The Federal Reserve has put forward a policy to this, that is, banks can use the purchased long-term U.S. bonds to mortgage to the Federal Reserve for the same amount of cash in advance, so that banks have cash to deal with depositors' withdrawals, so as to avoid the emergence of floating losses caused by the sale of long-term U.S. bonds like Silicon
The Federal Reserve is now slapped with each other in the face. While raising interest rates to shrink liquidity and reducing inflation, the bank will die to show you, and then it has to print money to save the bank. This matter can only be done by the United States, and China must not be sprayed into a sieve by we-media experts.
Then why did bank stocks fall so miserably?
The U.S. government's statement only said that it would protect the depositors' money, regardless of the life or death of the shareholders, so what the shareholders will think, they must smash the market first, lest the bank's bankruptcy shares return to zero.
Here is an operation idea. When the U.S. stocks and bank stocks plummeted the day before yesterday, a group of friends bought the bottom. According to the biggest opening decline, the bank stocks rebounded and made three times yesterday.
This is a low probability and high odds thinking. The risk is very high, and it may be zero, but once the bet is right, the return will be quite rich. It is not impossible to fight for high returns with a small amount of money that you can afford to lose.
Most people like high-probability low odds, such as buying bond funds with fixed income +. Although the return is very low, the safety probability is relatively high.
For stock speculation, if you want high odds, you should never chase high, because there are no odds at high points, only low points have odds. Therefore, I never like things that have risen, and now the odds of U.S. stocks are about to fall.
The Federal Reserve's interest rate hike has always had two purposes: to curb inflation and harvest the world.
Inflation has now solved half. Although the CPI in the United States increased by 6% year-on-year in February and fell for eight consecutive months, it is because of the high base. Last February CPI was 7.9%, and last year's CPI was 9.1% in June, so it is not surprising. Next The CPI will be a downward trend in a few months, and inflation will be solved in this way. I don't think so.
The other half can't be solved by raising interest rates alone. If you continue to increase, even if the banking system does not collapse, you can't afford to pay the interest on treasury bonds. How can you reduce inflation if you don't increase it? You have to rely on political means, that is, don't fight with China, import cheap goods from China, and reduce the cost of living. End the war between Russia and Ukraine, restore the smoothness of the global supply chain, improve production efficiency and reduce production costs, but now this is an impossible political right in the United States.
If you don't put down inflation, it will lead to the depreciation of the U.S. dollar, and the purchasing power will decline. The internal black man will buy zero yuan. External people will increasingly believe in the U.S. dollar and do not reserve the U.S. dollar, which will affect the status of the U.S. dollar.
It is also the unspeakable core purpose of the Federal Reserve to raise interest rates and create a financial crisis in some countries while raising interest rates to continue the lives of the United States. Poor countries like Sri Lanka are not enough for the United States. It must be a country with a medium-sized economy or more to fill the pit of the United States.
At present, it is difficult to see Russia, Turkey, Japan, South Korea, India, etc., but we have not seen the shadow of the economic crisis. If the interest rate hike is stopped now, these countries can be resurrected immediately. This round of interest rate hike is equivalent to an increase in loneliness.
Therefore, Guo Erxia believes that the Federal Reserve will continue to raise interest rates until it achieves its strategic goals, even if it is discounted, which is the most favorable approach for the United States.
Of course, it is not to look down on U.S. stocks. As long as the valuation is cheap enough, U.S. stocks are still the most worth investing in the world. Let's wait for a bargain.
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- Trevelyan·03-17wow, interesting analysis. so in ur opinion, there likely be a crisis in years or decades?2Report
- Tracccy·03-17Someone chase hign for pocket money, but someone chase high, for getting rich overnight...2Report
- DaveLewis·03-17The Fed turns out to be really sinister, no?2Report
- Eatmi·03-18Bad time,× to catch good stocks now1Report
- Gloria112·03-17Unique analytical perspective! Bargains await us ahead!1Report
- All in Tesla·03-17The relief rally may start in April 🤔2Report
- Bryan8786·03-19 21:55👍LikeReport
- Michael8208·03-19 21:52[Great]1Report
- Aoyjai·03-18No choiceLikeReport