When it comes to the Chinese stock market or the fundamentals of China's economy, a group of domestic economists can come up with ten thousand reasons for ordinary people not to be optimistic.

First, they argue that the decline in housing prices has suppressed consumer demand, then they point out that the large scale of local debt poses risks, and finally, they mention the layoffs in major internet companies, which they say dims the hope for technological innovation.

In conclusion, they define it as: Chinese assets are cheap now and will be even cheaper in the future, while dollar assets are expensive now, so they will be more expensive in the future.

The A-share market, which has just welcomed a rise, seems to have faltered amidst a chorus of pessimism and risk warnings.

Can China's economic growth rate of 5% be achieved? Can it give rise to a bull market in A-shares? Where are the risk points in the US economy?

U.S. debt will reach 100 trillion

Last night, after the United States released the latest economic data, the Federal Reserve's observation tool showed that the probability of a 25 basis point rate cut in November has risen from 76% to 87%, and the market is pricing in expectations of a recession.

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Contrary to this, the yield on the 10-year U.S. Treasury bond has soared to 4.11%, while the yield on the two-year U.S. Treasury bond has fallen to 4.01%, with the long-term and short-term spread turning bearish.

This means that the Federal Reserve may stop cutting rates after a brief reduction. Bond pricing often reflects the true state of the fundamentals more accurately.If future U.S. Treasury yields continue to rise sharply, it implies that the Federal Reserve would have to raise interest rates again to attract long-term capital to purchase U.S. Treasury bonds.

U.S. national debt has grown from $426 billion in 1971 to approximately $36 trillion today. During this period, the debt has increased by 82 times, while GDP has only grown by 26 times. The ever-widening gap between debt and GDP means that an increasing amount of debt is needed to create artificial economic growth. Moreover, the debt-to-GDP ratio has risen from 39% in 1971 to 122% today. At this growth rate, by 2036, U.S. federal debt will reach $100 trillion.

A $100 trillion debt implies the risk of high inflation and high default risk, and to sell Treasury bonds, only higher interest rates will be used to attract investors. However, holding high-yield bonds means taking on greater risks.

Through this series of data analysis, we seem to be able to conclude that those Treasury bond investors may believe that the United States has already or is about to fall into a state of stagflation. The current data is contradictory, and asset prices are distorted. After the United States lowered interest rates, U.S. Treasury yields rose instead of falling, reflecting the bond market's concern about the credit of U.S. debt, and the deeper logic is a vote of no confidence in the sustainability of the large bubble game of the U.S. dollar and U.S. debt.

Perhaps time is the best golden needle to puncture the bubble.

Is it cheap now, and even cheaper in the future?

In 2023, China's car sales reached a record 30 million units, and the vigorous purchasing power of the domestic market provided strong support for the sprint of the automotive industry.

However, the new car sales in the U.S. and European markets have not returned to the pre-pandemic level. Volkswagen of Germany is planning to close the factory in Brussels, and it cannot be said that the overall contraction of the automobile market is unrelated to the high-interest macro environment.

Now, China's manufacturing industry accounts for 40% of the global market, which is the same level as the United States after World War II. If China does not work for a week, the world will fall into a huge paralysis.Facing this economic growth, domestic economists, in concert with the containment efforts of Europe and America, use the term "involution" to describe China's industrial upgrading.

The success of China's automotive industry in going global is defined as being cheap, hurting the market of free economies in Europe and America.

The energy revolution in the photovoltaic industry, which has been sold overseas and has almost met the global market demand, is defined as overcapacity.

In contrast, the U.S. stock market's asset pricing for overseas companies, Apple's mobile phones have not innovated or updated for ten years, with sales getting worse year by year, yet the stock price keeps reaching new highs.

Microsoft's stock price has doubled from 2023 to the present due to the hype around the concept of OPEN AI.

However, it is unknown that the number of industrial robots installed in 2023 is seven times that of the United States, even though China's population is four times that of the United States. This proportion is far disproportionate compared to the adoption rates of other major industrial countries; in fact, the number of industrial robots installed in China exceeds half of the new industrial robots worldwide.

But even now, with such strong national strength, even though China launched an intercontinental ballistic missile into the Pacific Ocean last month, it still cannot withstand the pessimistic hearts of Chinese economists.

What would the United States be like without Wall Street?

If someone publishes a book titled "You Can Still Make Billions in Private Equity Without Investment Skills, Just by Marketing," I would definitely buy it and read it carefully, as it would be real valuable knowledge.Following the American way of thinking, the rise of China is bound to affect American business interests.

After China introduced the C919, the order volume for Boeing aircraft in the United States plummeted.

Once China developed its own semiconductors, American chips had to be sold at a discount.

When China's automotive industry ventured overseas, the American Motor City turned into a ghost town.

So in the future, if China's capital market gains control over the global asset pricing, where will Wall Street go?

Will it have to move to Hong Kong to rely on the Chinese government for sustenance?

The financial market and the dollar hegemony are now the last fig leaf of American power. If this leaf is torn off, people around the world will be able to see the true nature of American banditry.

For China, the industrial upgrading brings strong competitiveness to the country, but the balance sheet recession causes the wealth of the Chinese people to gradually shrink.

That's why we are working hard to make the Chinese people wealthier.