Unstoppable, the real cycle is beginning
This week, the market value style and cycle sectors outperformed by a large margin, the main line of inflation gradually emerged, and our “true cycle” is gradually becoming the “new consensus” of the market. We mentioned in “Layout the Real Cycle”: The real cyclical market has never been the cornerstone of steady growth, nor the underlying logic of the supply and demand gap brought about by sanctions on Russia. The real cycle is actually:The resonance of “green inflation” and “population reversal” has brought about a large supply-shock inflation, and overseas central banks, which are known to deal with short-cycle credit fluctuations, lack effective measures to balance inflation and growth, which makes the credit of major countries in the world.currencyThe system is being hit, ultimately causing the appreciation of physical assets relative to overseas credit currencies.Steady increaseChangheThe Russian-Ukrainian conflict is only a catalyst on both sides of supply and demand, not the essence of the problem。
After the “two sessions” government work report, the rise in global commodity prices is further clarified
From a domestic perspective, in the government work report released this Saturday, 2022 was setgross domestic productThe target of 5.5% year-on-year growth is at the upper edge of market expectations, higher than WindanalystThe consensus estimate (5.32%) was also higher than the previous consensus target of 5%.This verifies what we have repeatedly mentioned: the actual situation between China and the United Statesinterest rateThe difference gives us more room to trade up inflation in exchange for a recovery in demand. We are also concerned about the uncertainty of the means and space in achieving the 5.5% target, so the future of the sector that depends on the elasticity of volume growth is relatively vague, but the elasticity of future inflation that can be determined may be much stronger than economic demand itself.A proof is: in the fourth quarter of 2021, the 120-day moving average of the South China Industrial Products Index has not retreated, and when demand has bottomed out recently, the index has hit a record high.。
Investors who are bearish on commodity prices with the Fed’s “interest rate hike” need to be self-consistent
If investors believe that this round of interest rate hikes is consistent with the economic cycle in the past two decades, the historical pattern shows that in the early stage of interest rate hikes, global commodity prices are also in an upward channel.Commodities tend to be the best performing assets even throughout the rate hike cycle.If investors believe that this round of demand is not strong and more like “stagflation”, then the experience of the United States in the 1970s tells us that in the face of supply shocks, it is difficult for the central bank to deal with short-term credit cycle fluctuations to adjust the initial supply inflation. effective response, which eventually led to the formation of a positive feedback mechanism for inflation expectations,Concerns about the value of credit currency have led to a widespread and unstoppable rise in the price of physical assets throughout the society, and inflation has made it more difficult to alleviate the supply contradiction and the previous period.interest rateUpstream is resolved.More research also shows that the U.S. out of the “stagflation quagmire” is not entirely due to ultra-tight monetary policy, and factors such as technology and immigration also play a crucial role. However, the good luck of the “great detente” era started after the 1980s in major developed countries is running out.
Compared to September 2021: the cycle “flowers” are similar, but the “people” are very different
Some investors are worried that the rise of stocks in this cycle will see a sharp sell-off after the sharp rise in August and September 2021 in the short term.The reality is that it was the lessons from August to September that caused a large number of investors to not participate enough: from the perspective of transaction popularity (as represented by the ratio of the average daily turnover to the free-float market value), compared with August and September 2021, the There are many differences; the presentstock fundParticipation in most cyclical sectors (measured based on net worth correlation) is also much lower than in August and September 2021; the two financial investors with the most trending transaction characteristics did not even show enthusiasm in September 2021. When our perception is forming a “new consensus”, we are actually more “cautious” than investors in the whole market, but we still see a better time to participate than August-September behind the similar stock price performance today: China It is now at the low point of the economic cycle rather than the high point; investors have learned the lesson of the time and the whole market has not been “overheated” and crowded. In the face of the unstoppable global inflation trend, investors should recognize that the conflict between Russia and Ukraine is only a phased conflict, and the market is far from over. If the market retreats due to the geopolitical situation, it will be a good time to enter the market.
“The New Mainline Can’t Wait” and “The Real Cycle”
Some investors who wait and see are still waiting for a new main line in the market, but in fact, the new main line in the market has been established, and the real cycle is beginning. We understand the underlying logic of investors’ concerns about assets that “rely on price judgment”: the past inflation center has moved down, and the best price judgment strategy is to avoid such assets. However, the environment has been changing, the upward movement of the inflation center has been established, and the appreciation path of real assets is very obvious. Therefore, avoiding assets that rely on price judgment should not be a wise choice, and inertial thinking needs to be broken. Assets that were used to be considered “high-quality” in the past deflationary environment also need to be re-judged, and the main line of “waiting hard” for some investors may leave for a long time.The order we recommend at the moment is: Inflation trade is the most certain, buyNonferrous metals (copper, aluminum, gold), crude oil (oil transportation, oil and gas mining), coal;The probability of demand recovery is increasing, layout:Bankreal estate and construction.
risk warning: The implementation of the stabilizing growth policy was less than expected, and overseas imported inflation exceeded expectations.
(Article source: Yiling Strategy Research)