Support: Investment Group of Yuanchuan Institute
The American stock market became panic. Following the plunge in June 1 1, US stocks opened sharply lower again on June 15, and the three major indexes fell collectively. Dow Jones opened down more than 2%, while Nasdaq and Standard & Poor's 500 Index also fell sharply. As of press time, the decline of each index has narrowed.
In fact, the adjustment of US stocks has long been a harbinger. At noon on June 15, Beijing time, the three major stock index futures in the United States dived collectively, and the Dow futures once fell by more than 950 points, a decrease of more than 3%. As the leading indicator of US stock index, index futures play an important reference role in the market. On June 1 1, before the opening of the US stock market, the stock index futures of the US stock market also plunged obviously.
Repeated epidemics, economic recession and high debts of American companies are undoubtedly the sword of Damocles hanging over American stocks. Rain is coming and the wind is getting stronger and stronger. A storm is coming.
Since March this year, under the attack of successive "black swan" incidents, US stocks have continued to plummet, triggering fuses many times. Unexpectedly, under the negative influence of the epidemic, economic shutdown and soaring unemployment rate, the US stock market has started a magnificent "bull market" since it bottomed out on March 23rd. Even the racial conflict since May has not affected the pace of US stock rebound.
The rebound of US stocks came too suddenly, completely divorced from the economic fundamentals. In the first quarter, the GDP growth rate of the United States was -5.2%, the worst performance since the economic crisis; In April and May, the unemployment rate soared to around 15% and 13%, and the actual unemployment rate may be higher. Even so, it has exceeded the level during the economic crisis in 2008. The bad news continues, but the stock price keeps rising, which puzzles many investors.
The irrational rise of US stocks this time is mainly due to the implementation of the Federal Reserve's unlimited easing policy. After a sharp interest rate cut, on March 23rd, the Federal Reserve launched a new round of economic stimulus plan, and the unlimited easing policy BLACKPINK appeared. The expectation of monetary easing and the injection of liquidity not only solved the stampede crisis in a short time, but also greatly enhanced the market's risk appetite and investor confidence, which became the driving force for the market to continue to rise.
At the same time, the US stock index is seriously distorted and "kidnapped" by some weight plates and individual stocks, which cannot fully reflect the real situation of the market.
Among the three major indexes of American stocks, Standard & Poor's 500, Nasdaq and Dow Jones Industrial Average, the information technology sector is the most important, followed by health care and optional consumption. These three departments are not only the least affected by the epidemic, but also the importance of some departments is fully reflected in the epidemic. As a result, the stocks in these sectors are favored by funds, which further promotes the strength of the index.
Statistics show that from March 23rd to June 10, the information technology index of US stocks rose from 39 14 to 432 1, with a cumulative increase of more than 10%. Health care and optional consumption index also rose to varying degrees during this period.
In addition, the rise of index heavyweights also played an important role in pulling up. Take Na Zhi, which took the lead in "filling the pit" and reached a record high, as an example. Its constituent stocks are all emerging industry companies. The top ten heavyweights are all from TMT industry. The top five giants are Apple, Microsoft, Amazon, Google and Facebook. From March 23rd to June 10, these stocks generally rose by more than 40%.
The unlimited release of water by the Federal Reserve boosted market confidence, but it also concealed some negative factors. Coupled with the pull-up effect of heavyweights, US stocks have performed exceptionally strongly in the past three months. However, without the support of fundamentals, it is difficult for the stock market to rise continuously. When the margin of the stimulus effect of the Federal Reserve's quantitative easing policy weakens and the second wave of epidemic breaks out, the already high US stocks will naturally pull back again.
Before the US stock market plunged in June 1 1, gundlach, a new creditor, warned in a live webcast that despite "Superman" Powell, the zero interest rate and quantitative easing introduced by the Federal Reserve were not effective policies, and investors should buy some gold to avoid risks. He also said that if the yield of US bonds continues to rise, the yield curve control similar to that in the 1940s may reappear.
Facts have proved that the debt king was right again this time. Recently, the two most important variables affecting US stocks-economic recovery and the improvement of epidemic situation-have evolved in the opposite direction of market expectations. The decline of US stocks is getting stronger and stronger.
The pessimistic expectation of the Federal Reserve for the future economy makes the funds begin to question whether water release can stimulate the economy to return to growth. This has become the fuse of the recent decline in US stocks.
On June 10, the Federal Reserve announced that it would maintain the zero interest rate unchanged, and it is expected that this policy will last until the end of 2022. Judging from the tone, it is indeed dovish not to raise interest rates, but it is within the market expectation, and the duration of zero interest rate also exceeds the market expectation, which implies that the Fed is pessimistic about the economy for a long time to come.
The Fed's statement broke the illusion that American investors had been longing for a V-shaped economic recovery, and market confidence took a sharp turn for the worse. The secondary market chose to vote with their feet, which led to a sharp drop in US stocks in June 1 1.
After the U.S. stock market plummeted, the "bosom friend king" angered the Fed on Twitter, blaming Powell for the market adjustment, saying that they often made mistakes. The U.S. non-agricultural data performed well, and the data in the third and fourth quarters would be better. Next year will be the best year, and vaccines will appear soon. I have to say that I really understand why the US stock market plummeted, and every sentence hit the nail on the head.
Another important reason that hinders the continued rise of US stocks is the recurrence of the epidemic. Racial conflicts broke out in the United States in May, and demonstrations and protests in various places accelerated the spread of the COVID-19 epidemic; At the same time, the States in the United States lifted the "home order" and gradually resumed work and production, increasing the possibility of a second outbreak.
According to the statistics of Johns Hopkins University, as of June 14, the number of confirmed cases in COVID-19 has exceeded 2.09 million, the number of inpatients in COVID-19, Texas has reached a record for three consecutive days, and the number of inpatients in nine counties in California has surged. Obviously, there are signs of a second outbreak in the United States.
Old worries have not disappeared, and new ones have come again. Concerns about the resurgence of the epidemic have become the last straw to crush US stocks. In addition, the market is at a high level and the valuation of individual stocks is on the high side, which will also restrict the US stocks from continuing to rise to some extent.
Since March 23, before the plunge in June 1 1, the three major indexes of US stocks all rebounded by nearly 40%. The short-term increase in the market is too exaggerated, the market bubble is rapidly formed, and the valuation of individual stocks is on the high side. According to the calculation of Industrial Securities, at present, almost all industries in the US stock market are overvalued. The valuation quantiles of industry, non-core consumer goods and real estate all reach 100%, and only telecommunications services and medical services are below 90%.
Due to the accumulation of a large number of profit-taking orders in the early stage, when the market uncertainty increases, the demand for profit-taking of funds rises, and when a large number of sell orders emerge, panic killing will be staged again.
The American stock market is like a balance. On the one hand, it is the economic stimulus policy of the Federal Reserve; on the other hand, it is the epidemic situation and economic fundamentals of the United States. In order to balance the balance and cope with the epidemic and economic recession, the Federal Reserve has continuously increased its policy weight, market confidence has increased, and US stocks have strengthened; However, when the space and effect of policy stimulus decreased, the epidemic situation repeatedly made the situation worse, and the balance began to tilt to the other end, and the decline of US stocks was inevitable.
The most important reason for the long-term bull market of American stocks in the past decade is that listed companies buy back a large number of shares, and the low interest rate environment provides the foundation for this. Listed companies buy back shares through low-debt financing, and fewer and fewer shares are circulating in the market, which not only pushes up the stock price, but also "inflated" the EPS and ROE of US stocks. However, this makes the debt ratio of listed companies in the US stock market generally high.
The quantitative easing policy introduced by the Federal Reserve this year has further pushed up the debt ratio of listed companies. Under high leverage, listed companies are more sensitive to financing costs and profitability, and their ability to resist risks may be weakened.
At the same time, the shareholders of listed companies in the US stock market are extremely scattered, and various institutions on Wall Street almost occupy the top ten shareholders of the company. Professional managers and capital are relatively eager for quick success and instant benefit, and the way of repurchasing stocks with high debt is the best embodiment. This will weaken the long-term competitiveness of American companies.
According to Huatai Securities, the rebound of US stocks since March this year may be driven by residents, foreign capital and leveraged funds. Among them, a large number of residents "bargain-hunting" US stocks through equity ETFs in the United States, and their enthusiasm for participation is very high. Public offering institutions continued to sell US stocks from March to May, and bought a large number of high-yield bonds and investment-grade corporate bonds since April. The influx of retail investors and the continuous withdrawal of large funds also mean that the market may not go far.
In the final analysis, the reason for the recent violent shock of US stocks is that the market risk appetite has turned sharply when the epidemic situation and economic expectations have been falsified, which has caused unfavorable factors such as the high debt ratio of US stocks that were originally concealed to surface again, leading to an increase in long-short differences. When the market risk appetite is high, the positive is amplified, the negative is ignored and the market rises; On the contrary, when the market risk appetite declines, the negative factors will be obviously amplified and the market will be adjusted.
At present, US stocks may be in the late stage, and the adjustment has just begun. However, there are different voices in this market. Some analysts believe that this round of rebound in US stocks began with the quantitative easing policy of the Federal Reserve, so the shift of monetary policy is a signal of the end of the market. Obviously, this signal has not yet appeared, and the Fed will continue to care for the market; In the long run, when the "ammunition" in the Fed toolbox runs out, we should worry about the arrival of a real big bear market.
Zhang Yidong of Industrial Securities cited this view in a research report in May, when he thought that the Fed's policy change would take place as early as the third quarter.
However, the present situation has obviously changed. With the second outbreak of the epidemic, the expectation of economic recovery in the United States is getting worse and worse, and the time for US stocks to turn down may be greatly advanced. If the Federal Reserve fails to introduce a stronger economic stimulus policy in time, the long-term downward trend of US stocks may have been established.
Compared with US stocks, the profitability certainty of A-share listed companies is undoubtedly higher. The domestic epidemic has been effectively controlled and the economy is recovering rapidly. At the same time, the valuation of A shares is generally low, which is expected to become a safe haven for global funds. Recently, A shares have changed the "old problem" of falling but not rising. Although the performance of the index is average, there are endless opportunities for individual stocks. The independent market of a shares is ready to come.
Risk warning: The views in this article are for reference only, not as a basis for trading. The fund is risky and needs to be cautious in investment.