**China JUST Emergency Bailed Out Stocks & Real Estate!!!**
Summary
TLDRThe video discusses China's recent economic stimulus measures, including a significant injection of funds into the stock market and easing of real estate borrowing rules, which have led to a potential floor under the ongoing deflationary crisis. The Central Bank of China's actions have sparked a market rally, with the Hang Seng index rising sharply. The video also explores the implications for global markets, including potential inflationary pressures and the contrasting views on China's economic outlook.
Takeaways
- 📈 The Central Bank of China has initiated a significant stimulus package, including money printing and rate cuts, to counteract deflationary pressures.
- 🏠 Real estate prices in China have plummeted by 50% between 2018 and 2022, significantly impacting household net worth.
- 📉 The Hang Seng index had dropped by 46.7% from 2018 to recent times, indicating a substantial loss in market value.
- 💹 A sudden market upturn occurred with the Hang Seng index rising by 4.1%, potentially signaling a floor under China's economic downturn.
- 📊 The stimulus measures include reduced reserve requirement ratios for banks, eased borrowing and mortgage rules, and direct funds for stock market investments.
- 💰 Approximately $70 billion yuan is allocated for stock market investments, aiming to boost market confidence and valuations.
- 🏢 An additional 300 billion yuan is provided for companies to conduct share buybacks, further supporting stock prices.
- 🌐 The Chinese stimulus has global implications, affecting markets such as luxury stocks in Europe and commodity prices like oil.
- 📊 There are concerns that the stimulus could lead to higher inflation, as seen by the rise in oil prices and potentially impacting the US bond market.
- 🤔 There is skepticism about the effectiveness of the stimulus due to past experiences of Chinese consumers being cautious about taking on new debt.
- 📚 The speaker, Kevin, is launching a financial advice service at stockhack.com, offering personalized financial planning.
Q & A
What significant financial event recently occurred in China?
-The Central Bank of China, The People's Bank of China, initiated a broad stimulus package, which included cutting the reverse repo rate and loosening borrowing and mortgage rules, along with injecting funds into the stock market.
How much money did China's Central Bank inject into the stock market?
-The Central Bank injected approximately $70 billion yuan into the stock market to be used by stock brokers and investment funds.
What was the Hang Seng Index's performance after China's Central Bank's stimulus package?
-The Hang Seng Index rose by 4.1% following the stimulus package, and for the year, it was up by 13% as the market started to rise in anticipation of government support.
How has the real estate market in China been affected by recent economic policies?
-Real estate prices in China fell by 50% between 2018 and 2022, significantly impacting household net worth. However, the recent stimulus package included measures to ease borrowing and mortgage rules, potentially providing support to the real estate market.
What is the significance of the term 'stimulus cocktail' mentioned in the script?
-The term 'stimulus cocktail' refers to the comprehensive and simultaneous economic stimulus measures taken by the Central Bank of China, including rate cuts and money printing, aimed at various sectors such as the stock market, property sector, mortgage sector, and consumer loans.
What is the potential impact of China's stimulus on the US stock market?
-The potential impact includes increased enthusiasm for risk assets, as the stimulus could lead to a more favorable environment for stocks, especially those related to Chinese companies listed in the US.
What is the role of stockhack.com as mentioned in the script?
-Stockhack.com is a platform launched by the speaker where individuals can book an intro call or sign up for financial advice services, including real estate and equities.
How does the speaker view the current economic situation in China?
-The speaker views the current economic situation in China as potentially improving with the stimulus package, but also expresses skepticism due to past experiences of stimulus failing and the government's crackdown on negative commentary.
What is the speaker's stance on the future of inflation in the United States?
-The speaker is not heavily worried about inflation, believing that the market could become so loose that wage deflation and supply chain readiness might actually lead to price deflation rather than inflation.
What is the speaker's opinion on the current consumer confidence in China?
-The speaker suggests that Chinese consumers are 'gun-shy' due to past experiences with stimulus and economic policies, leading to skepticism about the effectiveness of the current stimulus package.
What are the potential implications of China's economic policies for global commodity prices?
-The potential implications include an increase in commodity prices such as oil, copper, and iron, as the stimulus could drive demand from the Chinese economy and potentially lead to inflationary concerns.
Outlines
📉 China's Economic Shift and Market Response
The paragraph discusses a significant economic event in China, where the Central Bank, The People's Bank of China, initiated substantial monetary easing measures. This move was a response to a deflationary collapse China was on the brink of, with real estate prices and household net worth plummeting. The stimulus package included cuts to the reverse repo rate to encourage spending and investments, eased borrowing rules for real estate, and injected $70 billion into the stock market for brokers and funds to purchase stocks. The Hang Seng index reflected these actions positively, rising 4.1%, and was up 13% for the year. This intervention by the Chinese government aimed to provide support to both the stock and real estate markets, which had been suffering.
📈 Stimulus Impact and Global Market Reactions
This section of the script elaborates on the broad stimulus package announced by China's Central Bank, which was seen as a comprehensive and aggressive move targeting various sectors, including the stock market, property, and consumer loans. The script suggests that this stimulus could encourage consumer spending due to the availability of cheap loans. However, it also points out the wariness of Chinese consumers towards stimulus due to past experiences. The paragraph also discusses the global impact, with Alibaba and JD.com stocks rallying, and a potential positive effect on luxury stocks in Europe due to hopes of increased spending by Chinese consumers. Additionally, there's mention of a rise in oil, copper, and iron futures, which could lead to inflation concerns, affecting the bond market and Federal Reserve policy in the United States.
📊 Analyzing Alibaba's Valuation and Market Outlook
The speaker provides an analysis of Alibaba's stock in light of China's stimulus measures. Alibaba's stock is up significantly due to the unexpected stimulus, and the speaker calculates a PEG ratio of 1.4 based on expected earnings and growth rates, suggesting that the stock might be undervalued. The paragraph also discusses the broader implications for the Chinese economy and the potential for a central bank capitulation. There's also mention of a general rally in Chinese shares and how this could affect European luxury stocks and commodity prices, with Brent oil prices rising and concerns about potential inflation in the United States due to China's monetary policy.
🌐 Global Economic Concerns and Future Predictions
In this part of the script, the speaker expresses skepticism about inflation concerns in the United States, suggesting that the market might become loose enough to prevent significant price increases. The paragraph discusses the potential for stagflation, a deflationary recession, and the varying opinions of market analysts. It also touches on geopolitical issues and the Chinese government's recent actions, such as arresting critics and suppressing negative economic commentary. The speaker concludes by encouraging viewers to consider the information provided when making investment decisions and to visit stockhack.com for personalized financial advice.
Mindmap
Keywords
💡Deflationary Collapse
💡The People's Bank of China
💡Hang Seng Index
💡Money Printers
💡Real Estate Prices
💡Net Worth
💡Stimulus Package
💡Stock Market Rally
💡Inflation
💡Share Buybacks
💡Stock Hack
Highlights
China's Central Bank, The People's Bank of China, has initiated significant monetary policy actions.
The actions include money printing and cuts to the reverse repo rate to stimulate the economy.
Real estate prices in China have fallen by 50% between 2018 and 2022.
The average net worth of a Chinese household has fallen by $60,000.
The Hang Seng index was down 46.7% from 2018 to the day before the policy announcement.
The Hang Seng index rose by 4.1% in response to the Central Bank's actions.
The stimulus package includes measures for the stock market, property sector, and consumer loans.
The Chinese government is providing $70 billion for the stock market and companies to conduct share buybacks.
The stimulus aims to support businesses with higher stock valuations and underpin the real estate market.
The Chinese consumer has been hesitant to take on more debt due to past experiences with stimulus.
There is potential for a U-turn in China's economy that could alleviate the pain felt by Chinese stocks.
The stimulus could have implications for global markets, including those in the United States.
Luxury stocks and oil prices have risen on hopes of increased spending by the Chinese consumer.
There are concerns that the stimulus could lead to inflation, affecting the bond market and Federal Reserve policy in the U.S.
The PMI report indicates a moderation in orderbook growth and a deterioration in business expectations.
Some analysts are skeptical of the rally in China, fearing potential stagflation or deflationary recession.
The speaker advertises his financial advisory service, stockhack.com, offering personalized wealth planning.
The video concludes with a disclaimer about the nature of the advice provided and the speaker's affiliations.
Transcripts
what just happened in China is
absolutely insane a bazooka of insane
and it comes right at the same time as
quick note we just launched stock
hack.com so if you want to book an intro
call with us or sign up for actual
Financial advice with myself and my team
go to stock hack.com licensed Financial
advice and I cannot wait to help you
with real estate and equities oh boy
what the heck just happened in China and
what does that mean for the United
States the US Stock Market the us bond
market and inflation in the United
States we got to talk about this because
as of just a week ago China was
essentially on the verge of a
deflationary collapse and just yesterday
well technically today in China the
Central Bank of China The People's Bank
of China turned on the drum pow money
printers this is like Co in the United
States maybe not to the same magnitude
they spent uh closer to uh well let's
just say under a couple hundred billion
dollars compared to the many four to
five trillion dollars we may have spent
in America but China just did something
really really important they may have
created a floor under the deflationary
disaster that's been going on in China
think about this for a moment real
estate prices between 2018 and 22 have
fallen by
50% the average net wor worth of a
Chinese household has fallen by
$60,000 and the average net worth of a
Chinese household isn't as high as the
average net worth of a United States
household so this is a
disproportionately large hit especially
since 60k on average across the board
it's actually quite a big chunk on top
of that the Hang sang index from 2018 to
yesterday was down 46.7
% which basically means over 6 years
it's lost lost nearly 50% of its
value well yesterday everything changed
and there might finally be a floor under
the pain in China the hangang index was
up
4.1% and this is all in response to
Central Bank actions by The People's
Bank of China which we'll go through in
just a moment but it's worth noting this
means the hangang index is now up
13% for the year as the market started
rising in anticipation of some
government bailout and it appears the
Chinese government has just bailed out
markets keep in mind that the H sang is
uh sort of their um Dow Jones if you
will or maybe their S&P 500 it only
represents about 82 companies but those
companies make up about 58% of the
Chinese market cap that's why a lot of
folks use that as a reference and people
are calling this a stimulus cocktail the
Central Bank People's Bank of China
basically unveiled this broad stimulus
package on the 24th of September and
they conducted multiple cuts and money
printing moves at the same time which is
actually pretty rare because we've seen
cuts to the reverse repo rate before
cutting the reverse repo is just a fancy
way of trying to encourage people who
are in money markets or savings or Banks
to get out there and spend their money
invest their money or lend their money
and at the same time as they did this
they cut down payment requirements for
Real Estate they loosened some borrowing
and mortgage rules as well for uh other
second home purchases making it easier
to go buy a second home they reduc down
payments for second homes they also
printed money for the St stock market to
use the stock market is getting $70
billion of funds to basically go buy
whatever you want and that's going to be
stock Brokers and investment funds that
basically get stimulus checks to go buy
stocks so generally the Chinese
government doesn't directly provide
stimulus checks to the consumers they
usually provide it to companies this is
just the nature of a centrally planned
economy the problem with with that was
people previously thought and and expert
economists thought this as well that if
you stimulated manufacturers directly
they would just hire more people and
expand their
operations and enable them to lower
prices for manufacturing even more and
basically create this Doom Loop of
deflation and so what the Chinese
Central Bank did instead is they said
okay well let's figure out how to prop
up the stock market and maybe the real
estate market so that way not only can
we support those business is with higher
stock valuations but we could also
support and put a floor under the pain
of the real estate market so a $70
billion uan or or sorry 70 billion yuan
or $70
billion uh essentially gift uh they're
technically called loans but you know we
saw that as well these forgivable loans
there's not an indication that these are
going to be forgivable loans but let's
just say they're they're basically like
candy uh and they're loans to funds and
Brokers and insurers to buy stock
plus an additional 300 billion yuan for
companies to conduct share BuyBacks so
basically companies in China can utilize
the Chinese money printer and investment
companies and companies themselves can
go prop up their own stocks with really
really cheap money Goldman Sachs says
it's really rare to see these sort of
simultaneous cuts and honestly it's
actually indicative of growing concern
that oh my gosh maybe things in China
are actually way worse than we
previously considered and you're finally
getting a China that's acting on the
economic Doom that they have been facing
Bloomberg says that this package is
quote incredibly comprehensive and they
say it's aggressively targeted at the
stock market with measures as well for
the property sector mortgage sector and
even Consumer loans a lot of people
think that consumers are likely to
respond to this by going out and
spending money because they'll be able
to pick up cheap loans as well that's
unclear at this point mostly because
when we've seen stimulus from the
Chinese government before the Chinese
consumer tends to be very gun-shy mostly
because when you get uh stimulus from
China people in China understand that
wait a minute we've been through this
game before maybe not as comprehensive
as this but we've been through this
before where we've trusted China and
we've taken on more debt or we've taken
on loans and then all of a sudden what
happens you end up getting rug pulled
with some kind of new lending
restrictions this was sort of like hey
go real estate develop and uh build a
bunch of real estate and then we're
going to come out with a three red lines
policy and restrict your real estate
lending which drives companies into near
bankruptcy and consolidation so Chinese
are definitely gunshot but let's just
say this is this is a good at least
start to a U-turn in China that could
potentially put a floor under some of
the pain that Chinese stocks have seen
even those listed in the United States
for example Baba stock is rallying on
this JD is expected to move higher on
this there's a lot of enthusiasm around
this uh people are calling this now an
increasingly friendly environment for
risk assets especially since you now
have China stimulating and you're
getting a larger cut from the Federal
Reserve which we've got to talk about
what this potentially means uh for uh
liquidity and uh risk and bonds in the
United States which we'll do in just a
moment but I quickly want to mention
before we keep going here on China
quickly want to mention that uh stock
hack.com is now live so if you want an
actual financial adviser in my office
working directly with me about your
financial situation to help you get to
the next level of wealth by figuring out
how are we going to balance your
investments in stocks and bonds and uh
you know crypto with potentially
investing in real estate getting your
first rental property if you want a
Financial Consultant on your team go to
stock hack.com the service actually goes
live on October 1st but we are already
scheduling people to make sure that they
are in line to get help as soon as
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signing up over at stock hack.com you
can either sign up directly or if you'd
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questions about the service hey is this
going to be useful for me you can book a
consultation call as well to evaluate if
this is right for you so just go to
stock act.com and you get to learn a lot
more anyway a lot of folks are saying
that uh this is not the kind of rally in
China to fade the last time Chinese
shares rallied this much Chinese shares
ended up going higher for the subsequent
seven trading days getting an average of
another 5.4%
before then consolidating and then
moving higher yet again so a lot of
investment managers are looking at this
and saying okay I will listen to what
you are saying analysts and wall
streeters and I will buy the dip on
China whatever dip is remaining and
there's plenty of dip remaining in China
I mean you look at a company like
Alibaba Alibaba in the pre market at the
moment is sitting up 5 % it was up 2%
yesterday on stimulus hopes and the
stimulus that we got here substantially
greater than expected uh and if you look
at sort of the average growth here
really your your next FIB here FIB level
should be around 118 for this stock so
you could really see Baba finally
recovering a lot of folks have been very
opposed to the stock because the Chinese
consumer has just gotten worse and worse
and worse rightfully so the economy has
ENT potentially been collapsing in China
and so this at least sets the stage for
a start to Central Bank capitulation in
China and the turning on of the money
printers in China it's worth doing a
quick analysis just of the valuation of
baba baba is now about a $95 stock it
has earnings of uh expected at about $9
per share which puts you at about a 10.4
PE ratio with a 10.4 PE ratio
if you compare this to the growth that
the company is expecting to have uh over
the next uh 4 years which it's it's not
a clean Road up but it's it's a little
bit of a bumpy road but um you've got
about a 7.5% expected growth rate
annually over the next four years so if
you take 105 divided by about 75 you're
only sitting at about a 1.4 PEG ratio a
lot of people see that as okay a
consumer stock with the potential of
some Revenue from cloud-based services
and artificial intelligence data centers
H maybe uh maybe now is the time to buy
obviously we saw a massive rally in
China on this but we also saw stocks in
Europe on this we saw luxury stocks up
on this like caring lvmh Ares all on
hopes of strengthen spending from that
Chinese consumer you've also seen oil
jump on this as well as copper and iron
Futures which are you know copper and
iron being Industrial Metals but gold is
also moving up on fears that this might
cause some more inflation which we're
going to talk about that and what that
means for the bond market in the United
States and the Federal Reserve here but
Brent is up
2% as of my last check here and what's
remarkable is it's actually fall to a 3
and 1/2 year low just about a week ago
uh September 9th so about 2 weeks ago we
were at a 3 and a half year low on oil
because of concerns that the Chinese
economy was truly in recession well now
oil is spiking which could also Drive
some of the inflationary concerns in the
United States now investors obviously
some of them are going to be skeptical
going into this but again people think
maybe this is a floor and that's why
you're seeing so much
enthusiasm at a moment when consumer
confidence has been near record lows job
concerns have been massive in China and
have really started flowing over to the
United States and people see this as
finally some relief avoiding the
continued demand destruction that's been
occurring some people call this a policy
bazooka uh that is likely to keep
feeding this self-fulfilling rally but
think for a moment what this means for
the United States yesterday ghouls be
talked about many Cuts coming in the
United States that we are potentially
hundreds of basis points away from
neutral after this discussion we
actually saw bond yields fall as the
bond market rallied but that was was
quickly faded on thoughts of uhoh but
what if China stimulates more and what
if at the same time we're
overstimulating in the United States
people are now making the argument that
somehow a 50 basis point cut which
Milton fredman refers to as the central
Banker in the shower in other words it's
like oh it's it's it's too cold it's too
cold they turn up the heat oh oh it's
too hot it's too hot like they're making
these rapid changes of uh temperature
that they might honestly be screwing
things up which the central Bankers are
generally pretty good at screwing things
up but what you've got is now fears that
oh my gosh what if we actually reignite
inflation combined with oil prices going
up and the Chinese consumer getting
propped up take a look at yesterday's
PMI report yesterday's PMI report said
that growth disparities persisted there
was a moderation in orderbook growth and
a deterioration in business expectations
for the year heading uh ahead to a 2year
low in other words business expectations
went to a 2-year low uh for the year
ahead possibly because of election
uncertainty or possibly because the
economy is actually starting to get hit
pretty hard in the United States
optimism deteriorated sharply in the
United States however there's also some
concern that we started to see prices
actually move up a little bit and this
you could see in uh in some of the
charts that they give here the prices
chart you're starting to see this slight
expansion here this above 50 reading in
prices for manufacturing output prices
Services output prices Services input
prices and Manufacturing input prices
are leading some to say uhoh could the
Federal Reserve actually be creating
stagflation now I think most of the
inflationary concerns are Looney but
markets are pricing them in I'm of a
believer that we're going going to be in
an environment where markets become so
Loosey Goosey that jobs become so
readily available that we're actually
going to have massive wage deflation and
that Supply chains are so loose and
ready to support the additional demand
and Supply impetus from whatever Source
whether it's China or the United States
or whatever that prices might actually
deflate rather than inflate especially
of course if there's a recession so I'm
personally not heavily worried about
inflation but markets today are looking
at this and saying okay this is
interesting if China's going to print
money that could cause inflation because
y'all just shot oil prices up and you
got ghoul or some like to say fools be
who wants to go for Mega Cuts that's all
just going to cause inflation you even
got people like Jamie Diamond who are
like um geopolitics are getting worse
and I'm going to take a cautious outlook
here on the future of what's going to
like happen in markets So Jamie
Diamond's not really all in on this sort
of rally but a lot of people are a lot
of people see this continuing so we'll
see you've got people on all sides
you've got Bulls saying stocks are going
to all-time new highs you've got Bears
saying we're going to have stagflation
you've got Bears saying we're going to
have a deflationary recession that's
more of the camp that I'm in by the way
uh and you've got frankly China that's
[Music]
like this is a crazy environment
that we're in a lot of people keep an
eye on companies like JD Alibaba luxury
stocks and some of the Chinese related
companies worth also noting that uh
China some people are like oh China
won't allow stimulus to fail bro
stimulus in China has been failing for
the last four years all of a sudden one
day is turning all these analysts on
their head going oh it's going to be
great but keep in mind China also
arrests people who have a different
opinion like they literally just
arrested uh Zing ping I'm sure I screwed
that up he was criticizing xiin ping
he's a Chinese Economist and a deputy
director at the Cass Institute of
economics and he was arrested for
criticizing you know Shing little man uh
and this really comes amid what they're
calling Broadley you know observers are
calling Broadley a Crackdown a negative
commentary on the Chinese economy on
Chinese economy keep in mind they also
sto publishing youth unemployment
because it got so bad they didn't want
people to think it was actually that bad
so they just mon no
evil crazy so you know I don't know how
much I trust China uh but let's just say
from a trade point of view there could
be a lot of enthusiasm around China in
the near term and what's crazy is you're
actually seeing people rotate away from
India on this towards China but with
that said thank you so much for watching
go check out stock Haack for actual
personalized Financial wealth planning
from my team directly in coordination
with me we'll be looking at your
situations together as a team and
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portfolio learn more over at stack.com
we are so excited to help you out thanks
so much and we'll see you soon goodbye
and good luck why not advertise these
things that you told us here I feel like
nobody else knows about this we'll we'll
try a little advertising and see how it
goes congratulations man you have done
so much people love you people look up
to you Kevin PA there financial analyst
and YouTuber meet Kevin always great to
get your
take even though I'm a licensed
financial adviser licensed real estate
broker and becoming a stock broker this
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تصفح المزيد من مقاطع الفيديو ذات الصلة
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