Source: Brokerage China Author: Qu Hongyan Recently, China Yangtze Power hit a historical high and once again showed the slow bull stock trend of "tripling in ten years". The slow bull market has left behind many passers-by and brought good returns to the steadfast investors. It is "rare for those who triple in one year to be like carp jumping over the dragon gate, while those who double in three years are few and far between." On the other end of the investment world, however, violent collapses are also deafening, with many financial products suspected of "Ponzi schemes" ceasing payments, leaving investors with no hope of recovering their investments. Both positive and negative cases illustrate the importance of forming a suitable mentality towards money in one's lifetime; otherwise, sooner or later, you will divorce yourself from your money. "I call this the money mind, a person's IQ can reach 120, 140, or even higher levels, and perhaps some people's minds are good at doing one thing, while others are good at doing another. They can do things that most ordinary people can't do. But I know some very smart people who make very foolish decisions because they lack the money mind." Buffett once said so. The so-called money mind refers to believing in common sense, believing in compound interest, being cautious and rational, thinking independently, prioritizing security over return, not dealing with people with questionable character, not easily guaranteeing for others, not believing in windfall profits, and not trying to cross legal norms for extra benefits. In today's world of ubiquitous information, everyone's wealth may become the "prey" of those with ulterior motives. Only with the money mind, can one form good behavior habits and shield oneself from separating from one's wealth. Do not entrust your wealth easily. Wealth is easy to lose but hard to accumulate, and trust is a vital reason leading to the rapid loss of wealth. "Do not allow anyone else to manage your business unless you can watch their every move closely and understand their behavior; or you have strong reasons to believe in their character and ability. For investors, this criterion determines when you can let someone else make investment decisions for you." Graham's criterion written eighty years ago is so clear. Almost all the investors who lost their wealth in the financial products have violated the above two criteria. They did not have the ability to closely supervise the whereabouts of their funds, nor did they have sufficient reasons to believe in the character of the product issuers. They easily invested their own wealth solely based on others' glib tongue and a piece of commitment paper. They did not act as gatekeepers of their own wealth and ended up with nothing left even if the government punished the wrongdoers. "An ounce of prevention is worth a pound of cure." This is a phrase Munger often says. Destiny must be in one's own hands, and investors with a suitable money mind will try their best to find suspicious points in their investments to protect the safety of their principal. For example, whether the manager is trustworthy, whether the underlying assets are profitable, whether oneself can timely monitor the risks in the investment process, and whether the sales staff is obtaining large commissions. As long as any unreliable signs are found, these investors firmly will not invest their money. Do not desire to get rich quick. As in the capital market and anywhere else, making money is not easy, and desiring to get rich quick will lead to quick loss of wealth. In the capital market, the desire to get rich quickly often leads to investors over-allocating specific stocks, industries, or assets at the worst time. For example, buying high-risk stocks that can gain huge returns once an adventure succeeds, but the chance of success is very small, also known as "whispering stocks" by legendary fund manager Peter Lynch. "They often tell investors a story with explosive effects. These 'whispering stocks' have a hypnotic effect on people, and it is easy for you to believe that the story the company tells has an emotional appeal that can easily confuse you." This is like hearing a very tempting "sizzling" sound, making you salivate, but you did not notice that there is no steak on the grill. In the eyes of investors who lack the money mind, stable yield provided by blue chips such as China Yangtze Power cannot meet their demands. However, historical experience clearly shows that buying stocks lacking in safety solely based on imagined high yields is unwise. The long-term average investment return of general stocks is 9%-10%, which is also the average investment return of stock indexes in history, a benchmark to measure one's investment performance and the benchmark to measure fund investment performance.
Author: Zhou Le.

On November 25, Eastern Time, Neal Kashkari, a key "hawkish" representative of the Federal Reserve and president of the Minneapolis Fed, stated that considering a rate cut in December is reasonable. Meanwhile, "dovish" representative of the Fed, Chicago Fed President Goolsbee, also mentioned in his latest speech that he expects the Fed to continue to cut rates.

At a critical moment, the minutes of the Federal Reserve's November meeting and the Fed's favored inflation indicator—the PCE price index—will be released on Tuesday and Wednesday local time, which may provide the market with the latest clues regarding the prospects of the Fed's interest rate cuts.

Currently, Wall Street generally expects that the upcoming inflation data may show that inflationary pressures in the usa remain persistent. According to the cme "Fed Watch", the probability that the Fed will maintain the current interest rate unchanged until December is 44.1%, and the probability of a cumulative rate cut of 25 basis points is 55.9%.

Latest Statement from the Fed

On November 25, Eastern Time, several Federal Reserve officials delivered recent speeches, releasing a series of policy signals.

Among them, the President of the Chicago Federal Reserve, "dove" Goolsbee, stated that the Federal Reserve is expected to continue lowering interest rates, moving toward a neutral rate stance to achieve the goal of neither restricting nor promoting economic activity.

Goolsbee said: "I see no reason for the federal funds rate to not continue to fall unless there is some compelling evidence that the economy is overheating."

Goolsbee added, "As for the speed of interest rate cuts, it will depend on the outlook and environment. I think the overall situation in recent months is that inflation rates are often below expectations, but far higher than the Federal Reserve's 2% target."

He indicated that his forecast for the neutral interest rate is close to the official median estimate—the Federal Reserve's official neutral interest rate estimate for September of this year is 2.9%. The neutral interest rate is the real interest rate that supports the economy in achieving full employment and maximum output while keeping inflation unchanged.

Meanwhile, the "hawkish" representative in the Federal Open Market Committee (FOMC), Minneapolis Federal Reserve President Neel Kashkari, also released "dovish" signals during an interview that day.

When asked whether the Federal Reserve should lower rates by 25 basis points in December, Kashkari stated, "It is reasonable to lower rates again at the December meeting. As far as I know, we are still considering a 25 basis point cut in December, which is a reasonable consideration for us."

However, Kashkari mentioned that the resilience shown by the U.S. economy in the face of rising rates indicates that the neutral interest rate may be higher than expected.

In addition, Kashkari also stated that President-elect Trump's one-time tariffs "will not have a long-term inflation impact"; only if they provoke retaliation from global trading partners is there a possibility of exacerbating long-term inflation.

"Geopolitical risks are the primary factor affecting the economic outlook," he added.

Regarding employment, Kashkari said, "I have some confidence that the unemployment rate is slowly declining, and the labor market remains strong."

The latest statements from Goolsbee and Kashkari are clearly more "dovish" compared to remarks from several recent Federal Reserve officials. Recently, several Federal Reserve officials, including Chairman Powell, have stated that a cautious approach is necessary for any future interest rate cuts due to the ongoing rebound of the usa economy and the recent strong inflation data.

Important minutes are coming.

On November 26, 2023, at 3 AM Beijing time (Eastern Time), the Federal Reserve will release the minutes from the FOMC meeting held on November 6-7. At this meeting, the Federal Reserve decided to lower the benchmark interest rate by 25 basis points.

Analysts believe that these latest meeting minutes may include descriptions of inflation data, economic outlook, and future rate cut pace, which are of considerable interest to the market.

HSBC economists noted in their report that the Federal Reserve's November meeting minutes may also show discussions among Federal Reserve decision-makers about the potential economic impacts of the usa election results.

Following the release of these meeting minutes, the inflation indicator favored by the Federal Reserve—the October Personal Consumption Expenditures Price Index (PCE)—will be released on November 27 at 8:30 AM Eastern Time.

With Trump's victory in the usa election, the risk of inflation returning is putting more uncertainty on the federal reserve's interest rate cut cycle. Therefore, as the last significant inflation report before the December policy meeting, the performance of this data is likely to influence the final policy decision.

Currently, wall street generally expects that the upcoming latest inflation data may show that price pressures in the usa remain stubborn, reinforcing the federal reserve's cautious attitude towards future rate cuts.

The median forecast from economist surveys indicates that the usa's October PCE price index may rise 2.3% year-on-year, higher than September's 2.1%; the October core PCE price index, excluding food and energy, is expected to rise 2.8% year-on-year—this would be the largest year-on-year increase since April.

The report is also expected to reveal that household spending in the usa at the beginning of the fourth quarter has been strong, with steady income growth. Adjusted for price changes, personal spending is expected to increase by 0.4% month-on-month, down from 0.5% last month. Personal income is expected to increase by 0.3% month-on-month, unchanged from the previous value.

Currently, with Trump continuing to promise to advance tax cuts and increase tariffs after the election victory, wall street is generally worried that inflation pressures in the usa will increase again in the coming year.

This has also led to a cooling of market expectations for federal reserve rate cuts. According to the cme 'federal reserve watch', the probability of the federal reserve maintaining the current interest rate unchanged until December is 44.1%, while the probability of a cumulative 25 basis point rate cut is 55.9%. The probability of maintaining the current interest rate unchanged until January next year is 33.7%, while the probability of a cumulative 25 basis point rate cut is 53.1%, and the probability of a cumulative 50 basis point rate cut is 13.2%.

Editor/Jeffy