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Overnight, last night and this morning, US stock investors staged a victory escape. As soon as midnight passed, the bell struck and the market turned around and plummeted. Until 4 o'clock in the morning, it ended with a decline.
Figure: US stocks S&P 500 on Friday
The market fell against the good news, so it is called a runaway victory-this is learning to accept it when it is good-and it also confused many analysts.
At 8:30 last night (for the convenience of narration, the time of this article has been converted to Beijing time), the US non-agricultural employment data for July was released. Employment growth was lower than expected and the unemployment rate was better than expected (lower than expected numbers).
Chart: U.S. July non-agricultural data - employment
Chart: U.S. July non-agricultural data - unemployment rate
Analysts like to selectively ignore some of the tangles of statistics and add a little personal preference to them. In any case, the media began to play up the possibility that the Fed will raise interest rates in September.
According to the CME Fed Watch tool, the market’s forward estimate that the Fed will maintain the status quo and not continue to raise interest rates in September has risen from 82% to 87%. Correspondingly, the estimate for a 25bp rate hike has dropped by 5%.
Figure: CME US interest rate hike outlook
Atlanta Fed President Raphael Bostic also said publicly that job growth is slowing and that further rate hikes do not appear to be necessary. But this guy has no voting rights in the Federal Reserve FOMC this year (2023), and his talk is just talk.
If the Fed stops raising interest rates in September, it will be good. So it is said that it is against the good news, first pretending to rise, and then plummeting, and fleeing in victory.
It's not just this good news that the market is bearing. JPMorgan jumped out and raised its forecast for the US economy. In mid-July, it was still posting that the U.S. economy was in a "recession at the end of the year" (recession):
Figure: 2023.7 mid-year outlook
On August 4, this statement was withdrawn, arguing that although the Fed raised interest rates to a 22-year high, it is still unlikely to trigger a recession, and renamed it "subpar growth" in 2024.
Chart: Withdrawal of Recession Forecast
While JP Morgan ("JP Morgan") was busy upgrading the outlook for the US economy, Morgan Stanley ("Morgan Stanley") downgraded the rating of Big A. This has made many stockholders who are looking forward to the gratification of the big A's recent gains and are eager to get rid of their traps. Someone even posted on the Internet that Morgan Stanley's Shanghai office was inspected. But this is actually far-fetched. Check Morgan Stanley Securities China Company, it is a procedural routine determined by lottery long ago, not a stress reaction because of overseas Morgan Stanley's small actions.
Picture: Dalmo said "Go quickly"
However, Morgan Stanley's phrase "go fast" is not necessarily for Chinese investors, but more likely for overseas capital. After all, the big A sesame has blossomed steadily recently, and a considerable part of the credit should be attributed to the influx of northbound funds that are frantically buying bottoms.
Picture: Northbound funds (the time window in the red box is from the market launch to the opening of Morgan Stanley)
There is a classic scene in the movie "Lust, Caution": the untrustworthy Lao Yi takes Xiao Wang to buy a big diamond ring "Pigeon Egg". In an instant, the bottom of my heart suddenly received a soft blow, so the vermilion lips trembled slightly, and said "quickly" to Lao Yi in a low voice. Old Yi was taken aback for a moment, then he got out of the stairs and rushed into the car with lightning speed.
Figure: Go fast
In June of this year, someone with good deeds counted the record of the global asset management giant Blackrock in the big A, and the results were astonishing: from 2021, Blackrock entered the big A market and became the first approved Over the past two years, 10 of the 12 funds sold by BlackRock have lost money since the foreign public offering of funds, 4 of which lost more than 20%, and the worst loss exceeded 30%. [1,2]
Figure: BlackRock China Performance
This asset management giant, which manages 9 trillion US dollars in assets in the global market, which exceeds the sum of all domestic public funds, is really at a loss.
References:
- [1] Meet the gods and kill the gods! The best asset management company in the United States has lost money in A shares https://new.qq.com/rain/a/20230607A08UVQ00
- [2] Acclimatized? BlackRock, the first foreign-funded public offering, lost all 12 products, and the first product lost more than 30% https://cm163.com/news/a/I65FMPMH0519B826.html
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(Public account: Liu Jiaolian. Knowledge Planet: Reply to "Planet" from the public account)
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