Biden submitted a $6 trillion "money throwing plan", and the market is quietly starting
On Friday, U.S. President Biden proposed a $6 trillion budget. Once the budget is passed, the amount of water released will be no less than this year.
It seems that the U.S. government has no intention of curbing the release of water. This method of drinking poison to quench thirst has become addictive.
As soon as the news came out, U.S. stocks rose sharply. In addition, the precious metal market is also quietly starting. In my opinion, a very important indicator is the trend of gold.
In this big release, gold began a major adjustment after hitting a record high of nearly US$2,100 in August last year, and fell below US$1,700 in March this year. There is a voice in the investment market that gold has lost its safe-haven and anti-inflation properties, and cryptocurrencies such as Bitcoin are quietly replacing gold. But since March, gold has started to rise slowly again, and this rally has also begun to accelerate recently.
If we combine the reaction of U.S. stocks, we can see that this shows that funds in various markets are beginning to see a fact that may become increasingly difficult to refute: that is, the U.S. government’s release may not be able to stop.
Recently, officials of the Federal Reserve have made different voices on different occasions, which once made the market speculate whether the current loose policy will change? However, combined with the new budget proposal proposed by the US President and the fact that he directly names and competes with China in infrastructure, scientific research, and manufacturing on more and more occasions, I think that on the whole, the loose policy is very difficult. It is difficult to change in the short term; even if there is a change, the monetary policy may at most be tightened, but the fiscal policy continues to be loose, and the combined effect of the two is still loose.
Since it is loose, the dollar must continue to look for various investment channels.
I wonder if you have noticed two recent trends,One is that the exchange rate of RMB against the US dollar continues to rise, and the other is that A shares have quietly stood at 3,600 points.
As of the time of writing, USD/RMB has reached 6.37. Many people think that this is a hedging strategy launched by the country to counter the printing of US dollars—to allow the RMB to appreciate. On the one hand, it protects our country from being cut leeks, and on the other hand, it transfers inflationary pressure back to the United States. Because at this moment, only our country in the world can well control the epidemic and ensure the normal operation of the manufacturing industry. This is the capital for the continuous appreciation of the renminbi.
In my opinion, apart from the above reasons, there is another important reason for the continuous appreciation of the RMB: foreign capital is also flooding into the domestic market in search of investment targets. The most obvious thing is that the A-shares, which have been scolded by shareholders, have quietly stood at 3600 points. After reaching the current high point of 3731 points in February this year, A-shares began to go down all the way, and hovered between 3300 and 3400 points for nearly 3 months, and then began to accelerate their rise recently, standing at 3600 points point.
Foreign capital is increasing its position in A shares substantially.
Therefore, regardless of the recent trends in multiple markets such as US stocks, gold, RMB, and A-shares, I think the market is quietly starting to respond to a new round of release.Although everyone knows that this water-losing game is unsustainable and will cause disaster, before the game is over, everyone can only do their best to find targets in various markets and protect their assets.
Then let’s talk about digital currency, I think it is even more impossible to miss this game. Even the frothy investment targets like the U.S. stock market have been flooded so fiercely, how can digital currency be let go by capital?
The question now is not whether there is a bubble in the market at all, but that the funds that are close to zero cost have to do everything possible to find a way out, eager for returns.
I am even more convinced that for digital currencies, the second half is beginning.But will it come so soon? I don’t think so. Judging from the trend of gold and A-shares this year, it took nearly 3 months or even longer for the two markets to start to build up their current gains, so the digital currency market may take some time. Digest the emotions in the early stage, and then go into battle lightly, and then show off your glory.
