**China JUST Emergency Bailed Out Stocks & Real Estate!!!**

Summary

The 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

00:00

📉 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.

05:01

📈 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.

10:01

📊 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.

15:01

🌐 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.

Keywords

💡Deflationary Collapse

A deflationary collapse refers to a severe and prolonged decrease in the general price level of goods and services, leading to negative economic growth. In the video, it is mentioned that China was on the verge of such a collapse, indicating a significant economic downturn[^14^].

💡The People's Bank of China

The People's Bank of China is the central bank of the People's Republic of China, responsible for implementing monetary policy and regulating the country's financial and banking systems. The video discusses how this bank has turned on the money printers, similar to the US Federal Reserve's actions, to inject liquidity into the economy[^14^].

💡Hang Seng Index

The Hang Seng Index is a stock market index that represents the performance of the largest companies listed on the Hong Kong Stock Exchange. It is used as a reference for the overall market performance in China. The video highlights a significant increase in the Hang Seng Index as a response to China's central bank stimulus measures[^14^].

💡Money Printers

The term 'money printers' is often used colloquially to describe the process of a central bank increasing the money supply, typically through quantitative easing or other monetary policies. In the video, it is mentioned that China's central bank has turned on the 'money printers' to prevent a deflationary collapse[^14^].

💡Real Estate Prices

Real estate prices refer to the cost at which land, buildings, and related property rights are bought or sold. The video discusses a significant drop in real estate prices in China, which has impacted the net worth of Chinese households[^14^].

💡Net Worth

Net worth is the value of an individual's or household's assets minus liabilities. The video script mentions that the average net worth of a Chinese household has fallen significantly, which can affect consumer spending and economic stability[^14^].

💡Stimulus Package

A stimulus package is a government plan to stimulate economic growth, often involving spending increases and tax cuts. The video describes China's central bank unveiling a broad stimulus package to support the economy[^14^].

💡Stock Market Rally

A stock market rally is a period of sustained increase in stock prices. The video discusses a potential rally in China's stock market as a result of the stimulus measures taken by the government[^14^].

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. The video raises concerns about the potential for increased inflation due to China's economic policies[^14^].

💡Share Buybacks

A share buyback is when a company repurchases its own shares from the market, which can increase the price of the remaining shares. The video mentions that Chinese companies are provided with funds to conduct share buybacks, indicating a strategy to support their stock prices[^14^].

💡Stock Hack

Stock Hack seems to be a service or platform mentioned in the video for providing financial advice and investment strategies. It is used as an example of a service that can help individuals navigate complex financial decisions related to stocks, bonds, and real estate[^14^].

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

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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

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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

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broker and becoming a stock broker this

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