Author: Tan Yaling, Independent Economist of China Foreign Exchange Investment Research Institute
The U.S. stock market is a foregone conclusion so far, and the three major stock indexes are: Dow Jones 1377%, S&P**2458%, NASDAQ **4422%, which was ultimately the largest annual gain for U.S. stocks since 2003. Behind the United States** lies in the efficacy and support of U.S. economic and financial policies, and then the upward revision of U.S. economic growth in 2023 has a complete basis and parameters, which seems to be completely inconsistent with the market's expectation that the Federal Reserve will cut interest ratesAnd what does the market mean when the Fed expects to cut interest rates?
First, the optimization of the situation of U.S. enterprises is not only the basis for employment stability and wages, but also the focus of the U.S. economic structure innovation mechanism. At present, the optimization and income increase of U.S. stock companies are the main driving force and background, especially the financial reports of U.S. listed companies have been excellent, and exceeding expectations is the normal performance of U.S. companies in recent years. According to statistics, from the first quarter of 2020 to the present, U.S. corporate revenue generation has remained universal and super strong in 15 quarters, which is an important driving force for U.S. stocks. U.S. listed companies have value, and U.S. stocks have the best companies are the basis and performance of stock index support, and the potential of stock indexes is in the company. In particular, Apple's total number of companies has been reduced through buybacks, which has benefited the expansion of the company's business and the growth of the technology market. Apple's stock price has been 52% so far this year. According to the latest report, Apple's market capitalization has increased by $940 billion this year, and its market capitalization has regained $3 trillion and is pointing to 3$1 trillion is on the horizon, and this increase is now even more than the $815 billion of Meta, the world's seventh-largest company by market capitalization. And another leading American company, Nvidia, has a market capitalization of 12 trillion US dollars, the stock price has risen by more than 222% since the beginning of this year, and the price-to-earnings ratio is as high as 245 times. In the second quarter of this year, its revenue far exceeded the value of Wall Street analysts surveyed, which reached about $16 billion, about $3.5 billion higher than expected. Nvidia's earnings report drove Nasdaq Technology stock price**. The current share price of Microsoft and Meta is up around 2%. This includes Nvidia's approval of a $25 billion increase in the size of the buyback program and the expectation that it will continue to repurchase this fiscal year. Nvidia's revenue is expected to expand to $40 billion in 2025. U.S. enterprise technological innovation and mechanism innovation at the same time, technology activation capacity and corporate profits are the main driving force for economic security and promotion, U.S. enterprise innovation model and profit space go hand in hand with the orderly cycle, U.S. employment is active, income stability, and wage increase are the practical advantages and long-term competitive potential of U.S. enterprises.
Second, the long-term cycle technology of the U.S. stock market is more than comfortable, especially the U.S. stock strategy is more active in catering to the policy purpose. Looking back on the whole year of 2023, U.S. stocks are basically three bands: pre-stable, medium-low and post-high, especially from November to December in the fourth quarter, when the technical correction and advance layout of U.S. stocks are the focus of their long-term skillful response. Especially compared with the market's first half of the expected low in the first half of the year, and then the second half of the year is not expected to hit a new high. The U.S. stock S&P indicator is expected to be pessimistic, reaching **to 3,800 points in the middle of the year**, and the final result is that the S&P not only did not fall, but rose strongly. Looking back at the middle of this year, Morgan Stanley strategists believe that the future of the United States is problematic, and his target for the S&P 500 index at the end of the year is 3900 points, which means that the index is **11%. However, at present, the S&P does not **, on the contrary, following the Dow and Nasdaq** obviously, the current S&P is only one step away from the historical high, and there are subjective and objective multiple complexities between the soaring US stocks and the technical momentum, and there are layouts and arrangements and strategies worth considering for artificial technology and policy. According to the U.S. stock cycle, U.S. stocks entered a technical bear market in June last year, and ended the technical bear market in June this year to turn into a technical bull market. Market records show that in June last year, the three major U.S. stock indexes hit a new low in the current cycle adjustment, of which the Dow fell more than 1,000 points intraday, the Nasdaq fell nearly 5%, and the S&P **388%, the United States entered a bear market. In June this year, the three major U.S. stock indexes**, especially the Dow Jones to 34,000 points, marked the end of the technical bear market in the United States and entered the technical bull market cycle. The market of the U.S. stock market is the focus of observation, and the U.S. is prepared and long-term is the consideration and parameters that are worth paying attention to, including the expected judgment of the U.S. stock. This is associated with the current Fed interest rate cut expectations, whether this is also similar to the US stock ** expectations, the Fed interest rate cut or beyond the usual deliberately manipulative and layout of public opinion, and the ultimate intention is to promote the Fed's monetary tightening strategy The purpose remains unchanged.
Third, the special stage of the dollar depreciation is the normalization of the US stock market, and the currency and the dollar strategy are coordinated. Through the long-term observation of the U.S. market, two important conclusions and observations can be drawn. First of all, the United States pays attention to the combination of market confidence and psychology as the core reference, confidence in the macroeconomic atmosphere, and psychology comes from the financial allocation. The second is that the market operation has formed long-term logical laws and laws, that is, the basic logic of the rise of US stocks and the US dollar, and the rise of US stocks and the US dollar is the norm, and the timing and conditions of the US dollar depreciation at the time of the US stock market are important benchmarks, and they are also important support and protection indicators for the coordination of US dollar funds and assets. The combination and benchmarking of the depreciation of the US dollar from external factors is the main basis and design strategy, but the US stock market ** is the key support for the competitiveness and profitability of internal enterprises. This forms a circular personality and privilege of the US dollar with a system, mechanism, system, share, advantage and irresistible, while the US stock market is the dominant strength and power of the enterprise in terms of innovation, science and technology, profit margin, priority rate and the strategy of global layout competition. Therefore, the United States has the advantage of global currency scale and the particularity of the monetary mechanism, and the United States also has the dominant position and influence of the number and number of bonds, and then the policy of the dollar depreciation country is easy and logical to realize the purpose and willingness of dollarization through the coordination of market mechanisms and institutional operations. The depreciation of the US dollar this year is a foregone conclusion, and US stocks** are an inevitable trend. After all, the U.S. economic growth rate comes from the support of the U.S. economy and the economic environment and policies are favorable to the U.S. stocks, which is in contrast to the current market expectation that the Fed will not raise interest rates, and there are potential risks and asymmetry, and there are potential risks or future focus. As the Federal Reserve said, the market's excessive interest rate cuts by the Fed are psychological factors, but it is contrary to the reality of the U.S. economy, the level of economic growth, stable employment and strong consumption of unnecessary interest rate cuts, on the contrary, the continued interest rate hike climate or due to U.S. inflation can be funded, among which oil variables, rising wages, international competition, and monetary cooperation may all be strategic combinations and strategies of the U.S. dollar.
There is a strong confrontation between the new high situation in the United States and the Fed's interest rate cut expectations, and the competitive layout is the key, and striving for the depreciation of the dollar to promote the Fed's interest rate hike is the core, on the contrary, the oil downturn and the maximization of U.S. interests and loss minimization design is a critical period for the Fed's long-term cycle of interest rate hikes. It is expected that the depreciation of the dollar of oil ** will be more extreme, and the repeated inflation in the United States will be the justifiable argument and parameter for the Fed to raise interest rates.