This week is the week of a popular draw. U.S. mid-term election results in which the second round of quantitative easing and the Fed has almost the same time announced the results of great impact on the future of the dollar, of course, the impact on the international market is also great, it will inevitably affect China’s stock market.

Monday, we spent an exciting day: A shares, opening to go, the Shanghai Composite Index rose more than 70 points in one fell swoop to stand above the long-term trend line of pressure, most of the global stock market closed out the red disk, only the U.S. stock market punch high drop Gaokaidizou the Nasdaq even closed out Yinxian.

If we know that the United States on Monday announced a series of economic data is good, indicating economic recovery accelerated, then the more difficult to understand: Why is the U.S. stock market every good choice, “retreat” mean? Obviously, the U.S. market is still vacillating between the key U.S. stock market is facing, the dollar is also facing a critical point. So, how to get the future? It depends on the U.S. mid-term elections after the political options, depending on whether the Fed in flagrant implementation of the “weak dollar policy”, depending on the Sino-US summit, the leaders of the consultation G20.

The overall situation to be determined, some good economic data, of course not enough to dispel market concerns on the future direction of the United States, this reasoning, between the two erupted again in 11 months after the currency war, has not ruled out the possibility of a trade war.

Key to answer these questions, which will be announced on Wednesday, as the Federal Reserve is scheduled to announce on Wednesday the scale of the second round of quantitative easing to tell us Americans want to do.

At present, some people still do not understand the scale of the Fed and the second round of quantitative easing outside the United States have anything to do, but do not understand the strong or weak dollar policy and choose the future of the RMB Gan. Therefore need to be carefully answered.

The Fed’s monetary policy is related to the global liquidity management. U.S. Treasury Secretary at the G20 meeting of finance ministers recently there have been commitments: adhere to the strong dollar policy, resolutely engage in weak currency competition, will not seek a weaker currency to gain through international competitive advantage. The above statement is true, the world countries, especially China, are seen.

The U.S. hopes the U.S. government how to get in the end, will not choose a weak dollar policy, to see the Fed on Wednesday announced how much the scale of quantitative easing.

On Wednesday, the Fed has consulted the major Wall Street brokerage institutions, hope that they predict the Fed the size of the second round of quantitative easing, the results of most brokerages forecast the scale of this round of quantitative easing would be in a trillion dollars, of which Goldman Sachs forecast that the Fed may release of up to two trillion dollars in market liquidity. Forecast of China’s major institutions present round of quantitative easing, the Fed will be 1 trillion size of ~ 15,000 billion.

And I think that was true, that up to sell the stock, selling dollars. Why? Because when the scale beyond the trillions of dollars, it means the Fed issued a declaration of open war to fight currency, global competition will inevitably weak currency, the world economic order will therefore be chaos. The key is that between China and the U.S. will lose basic trust, not only slow the RMB appreciation will not cooperate with the international community, and China will be forced to sell U.S. Treasury bonds.

Because the U.S. real economy did not need so much liquidity to stimulate the U.S. economy does not need so much liquidity. How much the future of the Federal Reserve to buy treasury bonds, mainly to see the United States, the number of commercial banks, the Fed is willing to sell. The so-called quantitative easing, the first step to achieve the purpose of replacement of assets, commercial banks will be difficult to replace the flow of assets to the Federal Reserve Notes in exchange for cash loans for future liquidity reserves.

However, the problem is not the U.S. economy the Fed does not provide liquidity, but the U.S. commercial banks do not need more liquidity, do not want to lend. So the market worries that the Fed to stimulate the domestic economy as an excuse to release more liquidity, the results may not be the real economy the United States access to credit, access to recovery of kinetic energy; the contrary, the large number of “excess” liquidity will turn to international financial markets, especially money market, triggering a global asset bubble and the dollar plummeted. Therefore, most analysts would exceed the needs of the U.S. real economy of scale as a scourge of quantitative easing.

The Fed in the end will be what to choose? I think that will not exceed a trillion dollars. This is the bottom line. U.S. Federal Reserve and trustworthy national strategic needs, the United States needs cooperation with the international community.

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Category: Business Management
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