How to escape the top of this round of bull market? Watch out for these two signs

For the macro environment in which this round of market is located, there has been a general consensus inside and outside the industry:That is, global release of water and zero interest rates are the macro tone and one of the driving forces for this round of market conditions.Because of this unprecedented flood, all assets, including digital currencies, have strong bullish expectations.

Some time ago, the chairman of the Federal Reserve made it clear in his latest speech that raising interest rates may not start until 2023. This can be regarded as the greatest comfort to market sentiment.

But despite this, a series of recent situations have made more and more people question this.

A few days ago, Brazil, Russia, Turkey and other countries have started to raise interest rates, and Turkey's interest rate hike even immediately led to the collapse of the national currency exchange rate and stock market. Yesterday, it was reported that Canada, a developed country, may withdraw from the easing policy.

Why did the financial policies of these countries start to tighten?

Because on the one hand, all countries in the world are beginning to feel uneasy about the inflation caused by the skyrocketing assets caused by this water release; on the other hand, with the launch of vaccines, the economies of all countries have a tendency to recover, which will further lead to a rise in inflation; In the end, many scholars pointed out that the United States may start raising interest rates or tightening policies in advance (rather than in 2023).

Once the U.S. starts to tighten policies and the global dollars flow back, the first to suffer are those developing countries that rely on foreign debt. This includes Brazil, Russia, Türkiye, etc.

Therefore, instead of waiting for the United States to start tightening policies and being forced to be sheared, these countries might as well start raising interest rates now. The damage of raising interest rates on the national economy is obvious to all. So this is really a bitter medicine that has to be taken.

So for the United States, the initiator of this round of water release, how do scholars estimate its future direction? I agree with the following view:

The United States will continue to release water, and after the previous 1.9 trillion US dollars, there will be several trillion (some say 4 trillion) US dollars in infrastructure plans, and it will continue to maintain zero interest rates.

In addition, with the gradual promotion of vaccination in the United States, it is very likely that large-scale vaccination will be obtained in June or even the second half of the year, so that life and work will gradually return to normal.

Under the condition of continuous stimulus and return to normal, the US economy is gradually on the right track and rebounded strongly. Next, inflation accelerated, exceeding the 2% target set by the Federal Reserve, and even surpassing 2% to 2.5% and maintaining it for a period of time. But the price is that inflation may hover at a high level for a period of time, eventually forcing the Fed to raise interest rates earlier.

Once the Fed raises interest rates, all the asset feasts in the world will come to an end, and the bubble will begin to collapse. Digital currencies may not be spared either.

So when is this point in time? It may be at the end of this year or the beginning of next year.

For this set of previews and speculations, I think the key is to understand its logical main line and development process, and grasp its key nodes:One is the inflation rate in the United States, and the other is when the Fed may raise interest rates.

Once the inflation rate in the United States reaches 2%, we will start to be vigilant and prepare our own exit plan; once it exceeds 2% and lasts for several months, the peak of this bull market may be just around the corner;Once the Federal Reserve officially raises interest rates, we can no longer have any illusions about the bubble, and we have to make the final move to clear positions.

The evolution of this macro environment is the fundamental bottom line for us to grasp the current round of bull market cash. We can cash out before this, which is nothing more than earning a little less; but we can’t be crazy and war-loving after this, otherwise we may have to wait for another reincarnation on a high hill.