Hong Hao: In the next 3-6 months, the US stock market is likely to have more than a 10% correction. The spring offensive of A-shares depends on how policies are implemented.

5-10% A Global developed countries are selling government bonds because inflation expectations are rising rather than falling. It's hard to see the bond market performing well in a strong inflation scenario. Only the price of Chinese bonds continues to hit new highs and yields hit new lows, mainly because domestic inflation expectations are extremely weak, if not non-existent. In the next stage, we will see that the inflation level in the US may rise due to factors such as the restructuring of the global supply chain, tariff wars, and an aging population. Inflation could rise from its current low of 2% to 4%. This will represent a new economic model. In the short term, US bonds are oversold. In the next 3-6 months, we will also see a fairly significant adjustment in the US stock market, which is inevitable. As for the magnitude of the adjustment, every year the US stock market experiences a correction of around 10%, and I believe this correction will be even larger this time. Regarding the so-called spring offensive of A shares, it depends on how our policies are implemented. Why is the price of Chinese bonds hitting new highs while developed markets are selling government bonds? Global developed countries are selling government bonds mainly due to rising inflation expectations, especially given the warming job market. The UK is facing an unusual situation, with fiscal issues fermenting and a sudden collapse of the UK pension market in 2022 due to concentrated bond purchases. The UK bond market is on the verge of collapse, with the Bank of England having to intervene by purchasing bonds. Overall, it's hard to see the bond market doing well in a strong inflation scenario. The only exception is the price of Chinese bonds, which continues to hit new highs and record low yields, mainly due to the extremely weak, if not nonexistent, domestic inflation expectations. Recent popularity of a graph shows a rapid decline in the yield of Chinese 10-year government bonds, following a similar trend to Japanese government bond yields in the 1990s. This raises concerns, as Japan experienced a bubble burst and numerous problems related to population, economic growth, asset prices, and the yen exchange rate emerged. While there are similarities in the price trends, the historical context behind these trends may not be entirely similar. The inflation level in the US is expected to rise from 2% to 4%. In a high-interest rate environment, the government needs to refinance. Treasury Secretary Janet Yellen has borrowed large amounts of short-term bonds rather than 10-year bonds during her term, possibly due to an expectations of rapid decline in inflation. However, current 10-year bond yields are approaching around 5%, while 2-year bond yields are around 4.4%-4.5%. Yellen's strategy may not be accurate, as evidenced by historical inflation patterns from the 1970s caused by two oil crises leading to high inflation peaks. The expectation is that this current inflationary period will last longer. In the next stage, we may see inflation levels rise due to factors such as the US restructuring the global supply chain, tariff wars, population aging, and the uncertain impact of AI. This change in inflation patterns will require different fiscal management methods. The US may face refinancing pressure next year, and whether they can reduce the fiscal deficit through policy adjustments remains to be seen. In the future 3-6 months, US stocks will experience a correction of over 10%. In the short term, US bonds are oversold, with outflows reaching record levels over the past two months. The bond market sentiment is very pessimistic, as many believe that inflation will not decrease. Generally, oversold sentiment in the bond market will lead to a short-term technical rebound, which will in turn alleviate pressure in the stock market. High bond yields are detrimental to high-growth stocks, so a rebound in the bond market could help cushion the US stock market. Given the recent declines in the market, with Tesla dropping by a third from its peak, a short-term technical recovery is likely for the US stock market. Looking at various indicators like divergences, concentration of portfolios, and exaggerated valuations, it's possible that this correction will be much larger than the usual 10%. The spring offensive in A shares will depend on how policies are implemented. We are waiting for Trump's tariffs, but his focus seems to have shifted to Greenland, Canada, and Mexico. Without clear policy direction, those relying on the fundamental market are not aware of the seriousness of the situation. If policies fail to materialize, a significant 5-10% drop in the market may occur. Without positive policy news, A shares will not see a stable market. A stable spring rebound will only occur with positive policy implementations. So, the success of a spring offensive really depends on how our policies are implemented. With effective policies, we can expect a strong spring offensive.What medicine.Greenland is a place with relatively large reserves of rare earth elements in the world, and at the same time, it also has a large amount of graphite reserves, so it is understandable why Trump wants this thing, because currently the largest rare earth production in the world comes from China. If you are doing semiconductors, it is impossible to do without rare earth elements. If China cuts off the supply to you, you will be finished, this can be understood. Many people do not know that Canada and Mexico are actually the first and second largest trading partners of the United States, with China being the third largest trading partner. So how should this trade war be fought? It is about being tough on your top three trading partners, which is also very difficult to understand. But this unpredictable behavior is his negotiation advantage. Let's see how he handles it, but whether there will be a spring offensive depends on how our policies are implemented. This article is reprinted from "Investment Workbook Pro", GMTEight Editor: Li Fo.