Essence of the Brokerage Morning Meeting | The Fed Still Does Not Want to Reveal Policy Bottom Line

Yesterday, the market hit a bottom and rebounded throughout the day, with the Shanghai Composite Index falling below 2700 points at one point. Overall, most stocks fell with few rising, with over 3600 stocks in the entire market declining. The turnover of the Shanghai and Shenzhen stock markets was 479.3 billion, a decrease of 45.4 billion from the previous trading day, marking the third lowest volume of the year. In terms of sectors, the lithography machine, diversified financial, coal, and real estate sectors performed well, while the consumer electronics, e-commerce, ST sectors, and electronic cigarette sectors saw declines. At the close of trading yesterday, the Shanghai Composite Index rose by 0.49%, the Shenzhen Component Index rose by 0.11%, and the ChiNext Index fell by 0.11%. During today's brokerage morning meeting, CMSC stated that the Federal Reserve still does not want to reveal its policy bottom line. Central China believes that the stock index is expected to remain in a volatile range in the future. CMSC: Federal Reserve Still Unwilling to Reveal Policy Bottom Line CMSC stated that the Federal Reserve still does not want to reveal its policy bottom line. Overall, there are three signals: 1) the Federal Reserve believes that the impact of the epidemic on employment and inflation has ended; 2) the era of forward guidance has temporarily ended, the Federal Reserve is not willing to reveal all of its policy bottom line, the significant 50 BP rate cut is to prevent significant fluctuations in US stocks and bonds that are already expected, and Powell's cautious attitude is also to prevent a situation similar to the reversal of the yen carry trade due to concerns about a hard landing of the US economy in early August; 3) in addition, the Federal Reserve also wants to prevent the collapse of the stock market due to a significant rate cut and massive capital outflows from the US capital market. Furthermore, until US economic data thoroughly deteriorates, even if the Federal Reserve cuts rates significantly, it may not significantly boost all non-US assets. However, it can be expected that the US dollar index may temporarily have difficulty strengthening, which can alleviate the pressure of depreciation on non-US currencies. Central China: Future Stock Indexes Expected to Maintain a Volatile Pattern Central China pointed out that the average price-earnings ratio of the Shanghai Composite Index and the ChiNext Index is 11.56 times and 25.29 times, respectively, below the median level of the past three years, indicating that market valuation is still in a relatively low range, suitable for medium to long-term positioning. The future stock indexes are expected to maintain a volatile pattern overall, while investors still need to closely monitor changes in policy, funds, and external factors. It is recommended for investors to focus on short-term opportunities in the real estate, financial, and home appliance industries. This article is reproduced from "Financial Association". GMTEight Editor: Huang Xiaodong.