Financial encyclopedia

2023-11-28

The Organization of Petroleum Exporting Countries and its allies (OPEC+) will hold a meeting on November 30th, and each meeting will have a significant impact on the global crude oil market, so it has attracted the attention of investors. What is OPEC? OPEC refers to the Organization of Petroleum Exporting Countries (hereinafter referred to as Oil Group). Its founding members are five major oil exporting countries. Up to now, it has developed into 13 member countries. In 2021, OPEC's combined crude oil production accounts for about 33.1% of the global total, and its crude oil reserves account for about 71.8% of the world's proven crude oil reserves. Among them, Saudi Arabia has the largest output and has a greater say. What is OPEC＋+? OPEC+ refers to the organization of oil exporting countries and some non-member crude oil producing countries, including 10 non-OPEC members. OPEC+ crude oil production accounts for 64% of the world. Thus, OPEC+ controls most of the world's crude oil production, while OPEC+ aims to adjust oil supply and price through coordinating policies. How does OPEC meeting affect oil prices? The goal of OPEC is to control oil prices by adjusting supply. If member countries are interested in raising oil prices, they can reduce production quotas to limit supply. On the contrary, if they want to reduce the price of oil, they can raise the production quota to increase the supply. Assuming that demand remains unchanged, oil prices will move in the expected direction. Although OPEC can only affect oil prices, oil prices are implicated in enterprise production and people's living costs, which in turn has a major impact on the economy. Therefore, every OPEC production reduction meeting deserves everyone's attention!

2023-11-21

KD indicator, also known as "random indicator", is composed of KD values and is one of the common technical analysis tools. It is often used to present the strength trend of the price, judge the relative level of the current price, and use KD to find the turning point of the price and find out the right time to enter and exit! K value: fast average, also known as "fast line", is sensitive and fast. D value: slow average, also known as "slow line", with slow response. Want to use KD value to judge the price trend, looking for a turning point, can be roughly divided into the following six situations: KD value > 80: The target is located in the overbought area, and the price performance is quite strong. KD value < 20: The target is located in the oversold area, and the price performance is quite weak. K value > D value: the target is in a rising market, which is suitable for partial operation. K value < D value: the target is in a falling market, which is suitable for short operation. KD Golden Cross: That is, when the K value breaks through the D value from bottom to top, it is a signal that the low point begins to reverse upward, so it is advisable to buy more. KD death cross: that is, when the k value falls below the d value from top to bottom, it is a signal that the high point begins to reverse downward, so it is appropriate to sell and go short. KD advantage Can quickly respond to price changes. Compared with other technical indicators, it is simpler. More accurate than the moving average KD defect Short-term variation and much noise. Easy to operate too frequently. Blind spots are produced during passivation. Investors should operate KD indicators with other technical indicators or fundamentals, and should not rely entirely on a single indicator.

2023-08-29

The Federal Reserve's meeting on interest rates in September is just around the corner. Investors are most worried about the rapid interest rate hike in the United States, which will lead to a "hard landing" of the economy and impact the economy and investment market. What are the hard landing and soft landing that we often hear recently? Soft landing refers to: After adjusting the monetary policy moderately, the economy returned to the moderate growth range moderately and steadily, and there was no large-scale unemployment or economic recession in the process, just like the plane slowed down and landed slowly. Although the interest rate hike did harm to the economy, the damage was not great, and the overall economy still held on to growth. The flatter the downward trend, the more ideal the soft landing would be. A hard landing means: The use of strong monetary policy tightening means to reduce communication leads to a rapid decline in economic growth, accompanied by a decline in people's income and unemployment, just like a plane landing at high speed. Simply put, the hard landing is due to poor economic health or excessive interest rate increase, which leads to more severe economic damage!   Definition of soft and hard landing (Federal Reserve of new york, USA) "Soft landing": The annual economic growth rate has remained positive in four quarters in the last 10 quarters. "Hard growth": In the next 10 quarters, the annual economic growth rate will be-1% or less. At the same time, American officials will use DSGE model to predict soft and hard landings. In December 2022, the Federal Reserve Bank of New York predicted that the average GDP in the next four years will be mostly positive, and the chance of soft landing is high.

2023-08-22

Jackson Hole What is the annual meeting of global central banks? The annual grand meeting held by the Kansas City Fed in late August in Jackson hole, Wyoming, is a unique central bank meeting in the world, bringing together central bank presidents, Nobel laureates in economics, central bank officials, private economists, financial market participants, scholars, government officials and media practitioners. People get together to discuss important long-term policies. Jackson Hole Conference in 2023 The theme "Structural Transformation of the Global Economy" will be held from August 24th to 26th. Federal Reserve Chairman Powell will deliver a speech on economic prospects at the meeting at 10: 05 am local time on August 25th. What is the impact on the market? Different from the closed activities of the general central bank, media reporters attend the meeting together all the time and report the first-hand news, so that the world can immediately grasp the conference dynamics and expand the influence of the conference. All previous meetings have triggered a series of fluctuations in the stock market, debt market and commodities, so they have attracted the attention of global investors.

2023-08-15

Economic trends are unpredictable and changeable. We can still try our best to grasp the future economic trends through "leading indicators". What are the leading indicators? Leading Economic Indicators, also known as leading indicators, mainly predict the future prosperity direction and economic performance, and their data are not only good or bad. Representing the economic trend of the United States itself will also affect the global economy. By observing the trend of leading indicators, investors can take the lead before the economy changes. Seize the opportunity LEI (commonly referred to as LEI) is compiled by 10 leading economic indicators in the United States, some of which are different from the actual economy. Indicators show a reverse change relationship. Only by knowing which data the change is caused by can we correctly judge the future trend of the economy. The 10 indicators are: 1. Average weekly working hours of manufacturing employees 2. Number of new recipients of unemployment benefits 3. New manufacturing orders–consumer goods and related raw materials 4. New orders for manufacturing industry–excluding non-defense capital assets of aviation. 5.ISM new order 6. Building Permit-Number of new private housing units 7.S&P 500 stock price index 8. Leading credit index 9.10-year U.S. debt and federal funds interest rate spread 10. Average expectations of consumers for future prosperity Most of the indexes included in the leading indicators reflect the source of the economy, so they can predict the trend of the economy. Of course, the leading indicator is definitely not It is completely accurate and cannot be completely relied on, but it can be used as an auxiliary basis for investment decisions.

2023-08-08

Head-and-shoulder shape appears most in the chart shape, because both sides have been wrestling for a long time and the momentum of one side has gradually become clear, so it is a reliable reversal breakthrough shape. There are two types: head and shoulder top and head and shoulder bottom. head & shoulders top It consists of three different tops: the left shoulder, the head and the right shoulder, and the supporting position is connected in a line to form the neckline. The left shoulder has the largest turnover, followed by the head, and the right shoulder is thinner. When the price falls below the neckline, there will generally be a sharp and large decline. head andshoulders bottom It is the inversion of the top of the head and shoulders, and consists of three different bottoms: the left shoulder, the head and the right shoulder. The resistance position is connected into a straight line, which is the neckline. When the price rises above the neckline, there will generally be a strong increase. The vertical distance from the head to the neckline measures one to three times the height of the increase/decrease after the breakthrough.

2023-08-01

Flag-shaped, fluctuating market entry strategy Flag shape means that the price rises or falls sharply (flagpole) first, and then walks a short-term ascending or descending track (flag body) in the opposite direction. The shape is like a flag, which is divided into an ascending flag shape and a descending flag shape: Flag-raising shape When the price rises sharply (forming the flagpole position), a new dense area appears again. Connect the high and low positions of the dense area respectively and draw two parallel and downward inclined straight lines, which will form the flag-raising shape. When the grid price breaks through the dense area, it is a good opportunity for friends to enter the market. falling flag When the price drops sharply (forming the flagpole position), an upward-inclined dense area appears, which is the descending flag shape. After the flag appears, the price falls through the dense area, which is a good time for Danyou to ship. According to the height of the flagpole, the rising/falling range can be measured, so as to set the goal!

2023-07-25

The strength of the US dollar index has a wide influence. The factors that affect the US dollar index are roughly as follows Hedge demand For example, in the short period after the FED raised interest rates/the Black Swan incident occurred in the global economy, funds would quickly flood into US dollar assets to hedge, resulting in a short-term surge in the US dollar index. Raw material demand The price of raw materials (such as gold and crude oil) is denominated in dollars, so when the dollar rises, the price of raw materials will fall, and vice versa. Foreign exchange reserves of central banks (in US dollars) When the demand for foreign exchange reserves in dollars rises, the dollar index will rise, and vice versa. Comparison of economic growth between the United States and other countries; Especially in the euro zone, the euro is the largest component currency of the US dollar index. When the economic growth of the United States is stronger than that of the euro zone, funds will be transferred from the euro zone to the United States, which will strengthen the US dollar and devalue the euro. FED interest rate policy When the United States raises interest rates, in order to pursue higher returns, it will attract overseas capital inflows, thus pushing up the dollar.

2023-07-18

What is the dollar index? The US Dollar Index, DXY) is an indicator to observe the trend of the US dollar against the world currencies, and the exchange rate of the US dollar against other major currencies in the world is used as an indicator to calculate. It can reflect the strength of the dollar itself. How to interpret the dollar index? The value of the US dollar index is not the price of the US dollar, nor the exchange rate, but the degree of rise and fall relative to the base of 100. Assuming that it rises from 100 to 120, it means that the US dollar has appreciated by 20% relative to the six currencies during this period, which means that the US dollar index has strengthened. And vice versa. How to affect the global market? International trade price At present, the US dollar is a global currency, and most international commodity transactions need to be bought and sold in US dollars, including gold and crude oil. Therefore, the trend of the US dollar also affects the prices of gold, crude oil and dollar-denominated trade commodities. Affect the exchange rate of various countries When countries exchange money, they often change it into dollars first and then into dollars. From the change of the US dollar index, we can also quickly see the changes of other countries relative to the US dollar.

2023-07-11

The fluctuation range of prices in dense areas becomes narrower and narrower, and gradually loses elasticity. The trend line will form a triangle. When it enters the tip of the triangle, it means that the consolidation stage is over. There are three forms of triangle: Symmetrical triangle price is formed by two convergent trend lines with similar angles. Ascending triangle The price consists of a resistance horizontal trend line and a rising support trend line. descending triangle The price is formed by a horizontal support trend line and a downward resistance trend line. Admission/exit trading opportunities: When the price hits the top and falls back, it is an opportunity to sell. When the price hits the bottom and rebounds, it is an opportunity to buy. When the price breaks above the triangle, it is an opportunity to buy. When the price breaks below the triangle, it is an opportunity to sell. note: The rising triangle most often appears on the way to the market, which is a favorable finishing form; The falling triangle mostly appears on the way down, which belongs to the consolidation form of profit and light. When you reach the tip of the rising triangle and make an upward breakthrough, it is the end of the finishing pattern, and you can enter the market immediately. The goal is the height of the triangle after the breakthrough.

2023-07-04

Federal Reserve Chairman Powell often stressed that "the central bank is firmly committed to the goal of restoring the inflation rate to 2%". Why is it a "2%" inflation rate? When the inflation rate is higher than 2%, people's money will depreciate rapidly, which will affect people's living standards. However, if the inflation rate is too low, the possibility of falling into deflation will increase and the risk of economic recession will increase. Moderate inflation can encourage enterprises to invest, create a stable employment environment and promote sustained economic growth. Members of the Federal Reserve have also said that 2% is the best way to meet their two requirements of "price stability" and "employment maximization", and these two requirements are in line with the orders given to them by Congress. Before 2020, we have been pursuing the "symmetric inflation goal of 2%". This means that when the market data shows that the inflation rate exceeds 2%, monetary policy will tend to tighten, and vice versa. After 2020, it will be changed to Average Inflation Targeting. It is to tolerate inflation exceeding 2% for a period of time until the average inflation rate reaches 2% during this period. The adjusted policy goal can keep the market environment in an ultra-loose environment for a long time.

2023-06-27

The Federal Reserve will publish the latest bitmap and economic forecast after the interest rate discussion, and the market often uses bitmap to predict the pace of interest rate increase.   What exactly is a bitmap? Each point in the bitmap represents a central bank governor's prediction of short-term interest rates. If the economy develops according to the expected path, the federal benchmark interest rate will be average in the next three years. Members will also provide a reference for the long-term interest rate, which stands for the so-called "neutral interest rate". The neutral interest rate represents the point where interest rates will neither stimulate economic development nor limit economic growth. The bitmap can let us know where the largest distribution is and FOMC members' views on the interest rate trend in the next few years, so that the market can bring enlightenment to the future interest rate. There are blind spots in bitmap. These points are anonymous, and no one knows which member is which point. In addition, the Federal Reserve rotates voting members every year, so not all members have the right to vote, so it is impossible to judge from the bitmap. Assuming that most members think that the interest rate will rise to a higher range, but they do not have the right to vote, and those members who have the right to vote are not expected to be so radical, the final result of interest rate discussion is likely to be more conservative. Attention of investors The market is changing rapidly, and people's expectations will change quickly. In addition, the bitmap is not a promise. With the change of economy and the development of financial market, the interest rate forecast will change at any time.

2023-06-20

After the meeting on interest rates, the Bank of Japan maintained an ultra-loose monetary policy. The yen's new low in seven months is certainly exciting for many Hong Kong people who are going to visit Japan, but why did the yen depreciate? There are three main reasons: monetary policy Under the influence of loose monetary policies such as QQE (quantitative qualitative monetary easing with negative interest rate) and YCC (yield curve control), a large amount of funds flowed to the market, which led to the important reason why the yen was easy to depreciate and difficult to rise in the past 10 years. margin For the foreign exchange market, one of the most important reasons that affect the strength of the exchange rate is the spread between the two countries. Since 2022, the FED has raised interest rates six times, with a cumulative increase rate of 375 basis points. The higher the interest rate in the United States, the more attractive the interest rate products will be, and more money will be attracted. However, Japan still hopes to maintain a loose monetary policy to promote inflation, which leads to the continuous widening of the spread between the United States and Japan and the depreciation of the yen. Capital flow direction CFTC will announce every week the investors' open positions in yen futures (Chicago and New York Futures Exchange) last week. If it is less than 0, it means that the market is generally bearish on the yen, and vice versa. Although the scale is not large enough to affect the trend of the yen, yen investors will use this data as a basis for operation, and then form an expected psychological impact on the future.   Has the yen fallen to the end? We need to pay attention to whether Japan continues to be loose, whether the United States continues to raise interest rates, and whether the trade deficit increases.

2023-06-13

Since the beginning of this year, the yield curve of the United States has shown the most serious inversion in more than 40 years, and the market is worried that the economic recession is coming. What is debt interest upside down? Generally speaking, the longer the maturity of a bond, the greater the risk and uncertainty it bears, so the higher the bond interest rate will be. On the contrary, the shorter the maturity period, the lower the bond interest rate will be. When we reduce the long-term bond income from the short-term bond interest rate to less than zero, it means that "the bond interest rate is upside down". The market most often uses the spread between the yields of 2-year and 10-year US government bonds as the bond interest rate. Observation index of upside down. Earlier, the Federal Reserve published a study, which pointed out that they used the three-month period and Lebanon 10 years ago as a reference. It is worth mentioning that if these two figures are used as a reference, every time there is an upside down, there will definitely be a recession within three to eight quarters, which is extremely informative. Normal: long-term bond yield > short-term bond yield Abnormal: short-term bond yield > long-term bond yield A sign of economic recession? A few months after each debt-interest inversion, the American economy will experience recession. For example, in the internet bubble in 2000 and the financial tsunami in 2008, debt-interest inversion occurred, followed by a stock market crash and a great recession, which is why the market interprets debt-interest inversion as a signal of economic recession. How should investors respond? Assuming that this theory is still feasible, investors should be careful of the possible recession risks, pay more attention to asset allocation, and lay out more diversified assets. Gold with a safe-haven role is naturally a choice for many investors.

2023-06-06

The United States will hold a FOMC interest rate decision-making meeting on June 15th. When evaluating the economic environment in the United States, FOMC members will refer to the "Beige Book" published by the Federal Reserve about two weeks before each FOMC meeting. (This time was announced on June 1st) What is a beige book? The official name of the Beige Book is "Summary of Comment on Current Economic Conditions". Because the cover of the report is bound in brown, it is called Beige Book. The Beige Book was collected from interviews with local entrepreneurs, economists, market experts and other professionals by 12 federal reserve banks in their respective districts, which integrated their views on the current economic situation in each district. Therefore, the content of the Beige Book is the view of the business community on the boom, not the official view of the Federal Reserve on the current economic situation. The purpose of the Beige Book Report is to enable FOMC members to understand the economic situation of various regions, including the current situation of consumption, employment, manufacturing and real estate. What effect does the beige book have on the market? The contents of the Beige Book usually do not directly affect the financial market, but it may affect the decision of FOMC members on the direction of interest rate policy. When the contents of the Beige Book report reveal that the current economy is obviously declining, FOMC's decision may tend to cut interest rates; On the contrary, if the economic outlook is obviously optimistic, it may be biased towards raising interest rates.

2023-05-31

After the Hang Seng Index fell to 19,000, it hit a three-month low, fulfilling the curse of "five poor and six unique"? As an investment proverb in the stock market, "five poor, six absolutely and seven turning over" means that the stock market fell in May, bottomed out in June and rebounded in July. The data shows that since 2000, there is a nearly two-thirds chance that Hong Kong stocks will fall in May, and the "five poor months" do have a tendency to be weak. The reason why HSI had a big opportunity to go low in May: After the performance period in March, many blue chips were eliminated in May one after another, and some blue chips were eliminated and then dragged down the Hang Seng Index. After the peak performance in March, if the performance is satisfactory, the speculative performance funds have boosted the market in April, and there will be a performance window in May, arbitrage activities or lack of new good news support, and the funds will be temporarily withdrawn. If the corporate performance in March is generally worse than expected, the weak market situation may continue from April to May. Another reason that may make the stock market weak in May is that the two sessions in China are generally held in March, and the relevant policies to support the economy have been decided and introduced one after another. May is usually the off-season of policies, so the stock market also lacks upward momentum. Some psychologists have analyzed that this may be the "self-realization prediction" of investors, which prompted the market to fall. When people have a preconceived judgment, it will affect their behavior until this judgment is realized. Although the trend of Hong Kong stocks in May has indeed been weak over the years, as for whether it will be "six unique" or "seven turnaround". Relying on slogans to formulate strategies is too simplistic for the market. No matter what products you invest in, there are different internal and external factors behind it, so we should pay more attention to fundamental, technical and policy changes.

2023-05-23

The Hong Kong Monetary Authority launched the "Digital Hong Kong Dollar" pilot scheme. Six selected companies from the financial, payment and technology sectors conducted the first trial this year, and conducted in-depth research in six areas: Full payment Programmable payment Offline payment Token deposit The Third Generation Internet (Web3) Transaction Settlement Tokenized asset settlement "Digital Hong Kong dollar" is a kind of digital currency (CBDC) of the central bank, that is, legal tender issued by the central bank in digital form, which belongs to the direct liabilities of the central bank as well as physical banknotes, and is also equipped with all basic functions, namely payment, stored value and accounting unit. The biggest difference from the current electronic payment is that (such as fast revolution, Octopus, Alipay, etc.) Deposits in "electronic payment instruments" are recorded in the books of financial institutions such as banks or issuing operators. The "Digital Hong Kong Dollar" is guaranteed by the HKMA, There will be no losses due to the bankruptcy of electronic payment service providers. Raymond Yue, president of the HKMA, said Although the HKMA has not decided whether or when to launch a "digital Hong Kong dollar", it is a good opportunity for the HKMA and the industry to jointly explore innovative use cases and prepare for the possible launch of a "digital Hong Kong dollar" in the future.

2023-05-16

The U.S. government cannot make ends meet. Borrow money by issuing bonds, etc. Statistics As of October 2022, US debt has accumulated to $31 trillion. At present, the ceiling of US debt issuance is $31.4 trillion. Us treasury secretary yellen estimates the "limit" of debt default The earliest will be in early June 2023. Once the US debt defaults, A large number of US debt in the hands of multinational banks and central banks will be reduced or even sold, triggering global financial panic. It will also cause a chain reaction, The credit rating agencies will downgrade the U.S. government bonds, The borrowing costs of the government, enterprises and people have risen. Yellen also warned that the debt will be used against the dollar. The role of global reserve currency has caused "negative impact" Once the US debt default is not resolved within 3 months, The problem will evolve into a long-term problem, which will plunge the American economy and trigger a general depression. "doomsday scene" The White House Council of Economic Advisers also pointed out By then, 8.3 million people will be unemployed, The stock market will plummet by 45%. If it is necessary to raise the debt ceiling, it must be approved by the government and Congress. However, in recent years, the debt limit issue has evolved into Chips and weapons of partisan wrestling The "time limit" is approaching, It also depends on the current progress of congressional negotiations. Do a good job of defense and wait and see.

2023-05-09

Global "dollarization" plans abound. RMB Cross-border Settlement Payment System (CIPS) is a cross-border settlement system developed by the People's Bank of China. By the end of last year, there were 1,360 participating institutions covering 109 countries or regions. Petroleum RMB China proposed to the Middle East Gulf countries to settle oil and gas trade in RMB, and Saudi Arabia, the largest oil producer, also indicated that it was open to settlement in currencies other than US dollars. South American Dollar (SUR) The South American common currency mechanism jointly promoted by Argentina and Brazil, the new currency "SUR" (meaning "South") is still in the initial stage, and it is expected to become the second largest common currency after the euro in the future. Mir payment system Officially operated by Russia, the payment and settlement system was launched in 2015. "Mir" means "world and peace" in Russian, and it has business in Turkey, United Arab Emirates and other places. Gold stable coin Russia and Iran are reported to be organizing a stable currency based on gold reserves as a means of settlement for third-party trade. Bric currency The five countries (Brazil, Russia, India, China and South Africa) are also studying the establishment of a BRICS currency trading system. The new currency intends to use gold and rare earth as the consideration of issuing currency. There is an opportunity to shake the global dominant position of the US dollar and realize "dollarization". Central banks around the world have substantially increased the proportion of gold reserves. According to the quarterly report of the World Gold Council last Friday, the global central banks' purchases of gold reached a record level of 1,136 tons last year, and China's gold buying tide lasted for five months. Since November, the country has bought 120 tons of gold, and its total gold reserves have risen to 2,068 tons. China is building an international reputation for the RMB. In the long run, more and more countries will join the front, which will make the dollar lose its dominance, and we need to take precautions as soon as possible. It can also be noted that the trend of dollarization will not disappear soon, which also provides long-term support for gold.

2023-05-04

The Federal Reserve raised interest rates by 1/4% after the meeting, and stated and deleted the wording of continuing to raise interest rates, which meant that the interest rate hike cycle was over. At the end of each interest rate hike cycle, there will always be some scripts in history, and one article will let you know the changes in the past 30 years. 1. At the end of each interest rate hike cycle, most interest rates remain at a high level for about half a year, and the Fed will start to cut interest rates. 2. When interest rate reduction is started, the rate of interest rate reduction will be faster and more than the rate increase period. For example, after raising interest rates by more than 1% in 1999, interest rates have been reduced by more than 5% since 2001. After raising interest rates by more than 4% in 2004, interest rates were reduced by 5% in 2007. In the 16-year interest rate hike cycle, how much is increased and how much is reduced, because the Federal Reserve reduced the interest rate to zero that year. 3. After the end of the interest rate hike cycle, a catastrophe occurred in a short time. For example, the September 11th incident in 2001, the financial tsunami in 2008 and the COVID-19 pandemic in 19 years. 4. High interest rates will crush emerging and traditional industries. For the last two times, the interest rate reached 5.25 or above, until 2000 and 2007. At that time, the high interest rate triggered the technology bubble and the real estate market explosion respectively, which both triggered the global stock market crash and the financial tsunami.