stimulate.
Editor’s note: This article is from WeChat public account “Glonghui APP” (ID: hkguruclub) , author : Gumin.
These days have witnessed two miracles in US stocks. The first is the violent rebound of the three major US indexes, of which the Dow Jones Index has the largest single-day increase in history! (11.3%)
The second miracle is that in the case of this epidemic, the number of confirmed diagnoses in the United States has exceeded 50,000, and the rate of increase in the number of confirmed diagnoses in the United States is comparable to the sharp decline in the stock market. There are still more than 20,000 on the weekend, 30,000 on Monday, 40,000 on Tuesday, and 50,000 today on Wednesday. Statistics are not over.
Comparison of the two, on one side, the epidemic is rising rapidly, and on the other side, the stock market is violently rebounding. The departure of the two also constitutes another great miracle of the overnight market.
On the news, there are two factors in this wave of rebound:
(1) The “unrestricted QE” announced by the Federal Reserve has finally come into effect. The expectation of liquidity tightening is cleared. The market is no longer worried about insufficient money. As long as there is not enough money, the Federal Reserve will ask for it;
(2) Turn to optimism that the two parties in the United States have reached an agreement on a $ 2 trillion economic stimulus package.
But more fundamentally, in my opinion, the large-scale liquidation of leveraged disks caused by the previous sharp decline has greatly reduced the momentum of the decline. This is often a sign of the first wave of decline after the market peaks.
1 Global risk aversion sentiment cleared
The last round of plunge was triggered by the epidemic and the impact of crude oil prices. The initial decline was caused by a risk aversion, but then as the decline deepened, many leveraged positions broke out, and U.S. stocks formed liquidity black holes and global flows. Sexual crisis.
With the last drop of Hong Kong A shares and the substantial outflow of funds from the Shanghai, Shenzhen and Hong Kong markets in the Asian session last Thursday, the first round of decline in vix that night signaled the start of panic.
During the slump, the liquidity black hole of U.S. stocks attracted global funds to return to the United States. As a result, stock markets in major financial centers around the world suffered severe sell-offs, while global funds flowed back to the United States and exchanged for US dollars, causing a short-term surge in the US dollar index. As panic cleared, the dollar index fell from its highs.
From the perspective of A-shares, from March 11th to 19th, 7 days of northbound capital outflows at a rate of nearly 10 billion yuan per day, corresponding to the period when US liquidity black holes absorbed global funds. After this, Kitakami funds began to return to A shares, and today and yesterday have continued to flow in for two days.
Northbound funds are generally considered to be funds held by global investors through the Shanghai-Hong Kong Stock Connect / Shenzhen-Hong Kong Stock Connect that hold A shares, and are also considered smart funds. At the beginning of the Xiaoyangchun market in 2019, the most obvious sign was the massive inflow of funds to the north, and then retail and domestic funds poured in.
The trend of gold directly and clearly reflects (1) the black hole of liquidity of US stocks —> (2) the liquidity crisis is resolved —> (3) the three stages of falling demand for safe havens.
In the Asian trading hours yesterday, the Nikkei, South Korea ’s KOPSI, and India ’s SENSEX index all rose sharply. The Nikkei rose more than 8%, and India was also around 7 points.
