Be a careful person and find clues in the market and some hidden codes. Let me tell you what impact the U.S. stock bubble has on A-shares?

The sources of funds for this bull market in U.S. stocks are not only U.S. institutional retail investors, foreign capital attracted by the appreciation of the U.S. dollar or the rise of U.S. stocks, but also An important source is the company's own funds to repurchase and increase stock holdings. Now, the U.S. dollar index has begun to decline. Due to the expectation of the appreciation of the U.S. dollar, the flow of funds to the United States will inevitably decrease, and even cause the withdrawal of some funds from U.S. stocks.

In addition, the behavior of U.S. companies using their own funds to increase their stock holdings has also reached its peak and begun to decline. This part of the lock-in position (the liquidity is reduced after repurchasing shares, in fact, this way the U.S. stock market is better maintained) There is a lack of incremental funds to drive U.S. stocks to continue to rise. Then what is left are individual and institutional investors in the United States. It depends on how much funds they have to maintain the rise. In short, the valuation of U.S. stocks is already quite high. If it is not maintained well, this bull market will be over.

In addition, in the first few years before the appreciation of the US dollar, China’s foreign exchange reserves dropped significantly. In addition to the money that ran out of foreign capital and private capital, there were also funds from state-owned enterprises. This money should be returned as soon as possible. Come on, don't get caught in the end, it will be a big deal. The flow of these US dollars out of China will lead to further appreciation of the RMB and depreciation of the US dollar, thus creating a positive feedback mechanism. However, if the recirculation flows back too quickly, it may cause an increase in the issuance of RMB. If the amount is small, monetary policy can be used to alleviate it, but if the amount is large, it will cause a certain impact.

What impact does the U.S. stock bubble have on China’s stock and bond markets?

1. The direct reason for the sharp decline in U.S. stocks is that the market’s expectations for interest rate hikes have changed dramatically. The market’s previous expectations for the Federal Reserve’s Expectations for interest rate hikes are seriously insufficient. Recently, the market has begun to realize that the Fed's three interest rate hikes in 2018 were not a "crying wolf". The sharp fall in U.S. debt became the last straw that crushed U.S. stocks. In December 2017, the official path of interest rate hikes given by the Federal Reserve was to raise interest rates three times in 2018, but market expectations are that the interest rate hikes in 2018 are expected to be between one and two times (implied value of U.S. interest rate futures); the market has recently begun to Realizing that the previous understanding was wrong, as of February 3, 2018, the market's interest rate hike expectations implied by interest rate futures had reached 3 times. The Fed's interest rate hike path prediction was successful, leading to a sharp adjustment in the U.S. bond market, which in turn triggered an increase in interest rates. Concerns about the stock market and the economy.

2. From a valuation perspective, the US stock market earnings ratio has exceeded that before the 2007 financial crisis and is the third highest in history, second only to the Internet bubble in 2000 and before the Great Recession in 1929. As the U.S. economy picks up and corporate profits pick up, the value of U.S. stocks is indeed rising, but prices are rising faster, and there are already large overdrafts and bubbles. After a nine-year bull market in U.S. stocks, the price-to-earnings ratio of U.S. stocks has reached 32.1, far higher than the average of 20.3 since 1951. It was only 28.3 in 2007 and is currently at the third highest level in history.

3. From the perspective of the proportion of residents’ asset allocation, the American stock market and crowded trading, and excessive consensus expectations imply huge risks. In July 2017, the proportion of U.S. residents directly allocated to stocks (the size of U.S. residents’ direct shareholdings/the size of U.S. residents’ financial assets) had exceeded that of 2007. By January 2018, this ratio may even be higher than that of 2000. Crowded trading is very obvious. As of July 2017, the allocation ratio of residents has reached 32.5%, which is much higher than the average of 26%. In 2007, it was only 28.9%. From the end of 2017 to the beginning of 2018, the US stock market surged by 20%, which means that residents directly allocate stocks. The proportion will reach about 40%, which is even higher than 36% in 2000.

4. The U.S. stock market plunged. One possible evolution path is: Although the direct cause of the stock market plunge is the Federal Reserve’s expectation of interest rate hikes and the plunge in U.S. bonds, the U.S. stock market plunge may trigger the U.S. market’s reaction to U.S. stocks. Concerns about overvaluation and crowded trading have caused the U.S. stock market to gradually turn from a sharp decline to a plunge;

5. The U.S. stock market is crucial to the U.S. economy. , the U.S. stock market is in trouble, and this will become Trump's Achilles' heel. U.S. residents’ direct allocation of stocks accounts for nearly 40% of residents’ financial assets, and another 50% is allocated to pensions and insurance, of which nearly 40% is still stocks. This means that direct and indirect shareholdings of U.S. residents account for residents’ financial assets. 60% of the total assets of residents, accounting for 46% of the total assets of residents. The plunge in the US stock market will undoubtedly trigger a "negative wealth effect", which will be a heavy blow to the consumption-led US economy.

6. The U.S. stock market plummeted, which was negative for the Chinese stock market and positive for the Chinese bond market. On the one hand, the risk of U.S. stocks may spread to the Chinese stock market, and it may lead to a downward risk for the U.S. economy, which will be negative for the Chinese stock market; on the other hand, for the Chinese bond market, although the direct cause of the decline in U.S. stocks is the rise in U.S. bonds , but the current U.S. debt will not become a factor restricting ChinaBond. On the contrary, from the perspective of China's stock market and economic fundamentals, it will be more beneficial to the Chinese bond market.