Rebirth 79: I opened a bank in the United States

Chapter 935 Abnormal Rise Caused by Dollar Value Fluctuation
The value of the entire market is inflated!
When that thought comes to mind, self-doubt inevitably sets in.

Is it true that the entire market is overvalued?In other words, where did the sudden money and the sharp increase come from? !
Before thinking about this problem, there is another thought that can't stop popping up, that is.
Take the opportunity to short this market!

In the hearts of almost every trader, or those who are interested in the securities market, there is almost a common idol and spiritual mentor: Jesse Livermore!

The ups and downs of Livermore, the greatest achievement in his life is the legend of almost shorting the entire US stock market before the 29-33 Great Depression!
And today, Carter seems to smell a hint of the smell of 50 years ago.
"General, I think I need to go to Japan!"

"Going to Japan now? What happened?"

"Everything is planned as normal. On June [-], that is, five days later, at the Jamsil Sports Complex, a symbolic DPP referendum will be held for Roh Tae-woo. If there is no accident, it is only a matter of time before Roh Tae-woo takes over. But I. Something happened in the business, Japan’s communication efficiency will be higher, I need to go there to deal with it! Don’t worry, if there is a need here, I will come back immediately!”

After asking for leave from General Livesey, Carter called his traders and analysts to meet up in Japan, and took a national defense flight to Japan for transit.
Until two days later, Carter rented a hotel in Fukushima.In the conference room, Carter got the data he wanted
"The beginning of the recent bull market started in 82. It should be the return of Latin American funds into the stock market!"

In 1982, it was a year when US interest rates went up.The overnight lending rate, the five-year and ten-year treasury bond rates all hit record highs in a year.
It was also the year when the Reagan administration gave up cutting fiscal spending and instead issued bonds in an attempt to stimulate the economy by expanding total social demand, or to ensure that the U.S. economy would not be directly hacked to death by Volcker.
Looking back at the data report in his hand, it was not difficult for Carter to figure out why the U.S. economy was sluggish in 82, but the stock market began to rise, and the reason for the Mavericks appeared:
High interest rate treasury bonds will attract dollars back.After a large amount of dollars are bought into national debt, the money goes into the pocket of the government
Then, the Reagan administration is using this money to increase defense spending, to engage in "Star Wars projects", and to invest in related companies
The economic effects that these upstream and downstream companies that get money can drive are temporarily ignored.Just look at one question, those companies that make money, how do they spend the money they make? !

The real economy is sluggish, or even regressing; although bank interest rates are high, there are also many banks that have gone bankrupt due to thunderstorms. On the one hand, there are concerns about the safety of funds, and on the other hand, the inflation rate in 82 was not low.
At that time, the market did not have much confidence in Volcker's ability to beat inflation!

Even if there is no problem with the bank itself, it still faces an embarrassing situation where it might even lose money!
And the safety is a little bit guaranteed, and the national debt with a little loss at most. Sorry, the front has been sold out!
At such a point in time when physical investment is not good enough, and banks are too afraid to deposit it, investing in the stock market and bond market seems to be the only place for those surplus funds to go!

"Our analysis also believes that this is the case, and then it is driven by the first funds. As a result, more people see that the stock market seems to be making money, at least more reliable than depositing in banks, and then more and more funds are pouring in. entered the stock market”

"But this still can't explain, this year's abnormality!"

Things in the past make sense.

From 82 to the end of 86, in the past five years, the U.S. stock market has been rising, but it has never been so exaggerated since the beginning of this year.
"Even if it's a fanatical speculator, it's impossible for his emotions to appear for no reason?! Or, even if there is such an emotion, where did the extra funds come from?!"

"The source of the emotions should be the panic caused by the rapid depreciation of the dollar after the Plaza Accord! People urgently need a way to ensure that their assets do not depreciate! The stock market that continues to rise may become a depression for capital."

"I also think so. The depreciation of the dollar has been too fast in recent years! It may have been okay at the beginning, but last year, Finance Minister Baker declared twice in a row that he would not let the dollar continue to depreciate, but at the end of the year a new round started depreciated, and has not seen a time to stop.”

"People can't help it anymore! In other words, people can't believe that the U.S. government will guarantee the value of the U.S. dollar! Then, if you keep the U.S. dollar in your hands, or deposit it in the bank, there is a high probability that you will encounter the reality of asset shrinkage. when a rising stock market"

Analysts of the Black Flag, you speak out your thoughts
From how quickly they could find a possible direction, Carter understood that they must have done their homework on the way here.But this.
"It makes sense! More and more money is pouring into the stock market, which will lead to stronger liquidity in the stock market. The rising stock price will attract more capital inflows, and then form a false prosperity!"

In addition to this point, Carter also thought of a possibility: Japanese capital!

It is still the old-fashioned "J effect". After the Plaza Accord, Japan's annual surplus of US dollars has not decreased, but has increased more than before!Judging from the total value of Japan's export trade, the US dollar surplus has increased by nearly 19%, which is too big!

Ordinary people, ordinary companies, and ordinary small financial institutions will still face the pressure of dollar depreciation, and urgently need to find a safe haven for assets to minimize their own losses caused by the depreciation of the dollar currency.Those Japanese.
There is a huge amount of dollars in their hands, and every depreciation of the dollar is a huge loss that cannot be ignored for them!

Perhaps these Japanese, who have a large amount of U.S. dollar currency in their hands, are also the driving force behind this year's abnormal reaction?
"Who is in charge of the Japanese market? Have you noticed the recent changes in the Nikkei?"

"It is also rising rapidly!"

A trader stood up in response:

"Not only the Nikkei Index, but also the London Times Financial Index, Paris City of Finance, Frankfurt, Sydney and other exchanges have recently experienced unusually violent increases. Mr. Black, after receiving your warning, we began to focus on observing The past trading records of these exchanges.”

"Trading records show that, except for our U.S. stock market, which started a large-scale rise in 82. In other places, the rapid growth that broke through the box range all appeared during the period from the end of 86 to the beginning of 87."

"This time point is basically consistent with Secretary Baker's hint that the dollar can continue to depreciate! We have enough reasons to suspect that this time the global stock market surge is related to the instability of the dollar value. The difference may only lie in the strength of the correlation. Weakness makes a difference!"

(End of this chapter)