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Interest rate cuts are expected repeatedly, and Goldman Sachs continues to look at more dollars.

The expectation of the Fed's interest rate cut is still uncertain, and the global easing cycle seems to have begun, and the dollar is expected to continue to be strong. According to media reports, the team led by Goldman Sachs strategists Kamakshya Trivedi and Joseph Briggs said in the report: "If the Fed remains stable and other regions choose to continue easing policies, then policy differences may keep the dollar strong for a longer period of time." The team also said that if other central banks around the world start to cut interest rates "earlier and more actively" than the Federal Reserve, it will help the United States achieve its inflation target. The report predicts that Canada, Britain and the euro zone will all cut interest rates in June. Since the beginning of this year, with the continuous fluctuation of the Fed's interest rate cut expectations, the US dollar has appreciated against G10 Group currencies, and the US dollar index has risen by 3.25%. Last April, the CPI data dropped significantly, and the market rekindled the expectation of interest rate cuts. However, since this week, many Fed executives have voiced intensively, and the overall tone tends to be "not in a hurry to cut interest rates", indicating that more evidence of downward inflation is needed. At the same time, European Central Bank President Lagarde said that interest rates may be cut next month, and the rapid growth of prices has been basically curbed. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

District Jinglin: Hong Kong has four growth paths and wealth management has potential.

Photo: Mr Au Jinglin pointed out that the continuous growth of Hong Kong's asset and wealth management market is very important to Hong Kong's economic development. In order to consolidate and enhance international finance centre's position and enhance its competitiveness, the Executive Director of the Financial Development Council, Mr Au Jinglin, delivered a special speech at the Annual Meeting of the Hong Kong Association of Independent Non-executive Directors 2024 yesterday, saying that Hong Kong can develop from four new growth paths, namely, an asset and wealth management center, an international sustainable financial center, a digital asset center and an international innovation and technology center. Mr Au Jinglin pointed out that Hong Kong's asset and wealth management market continues to grow, and the asset and wealth management industry is very important to Hong Kong's economic development and the global financial ecosystem. According to the report of Boston Consulting Group, Hong Kong is expected to surpass Switzerland to become the world's largest transaction bookkeeping center in 2027. By 2022, Hong Kong's total assets and wealth management assets (AUM) are about HK$ 30 trillion, of which 64% are from non-Hong Kong investors. Hong Kong is committed to expanding the family office business. Mr Au Jinglin said that Hong Kong is the first choice for the development of family offices in Asia, and the SAR government aims to attract at least 200 family offices by 2025. Hong Kong has a series of measures to attract family offices to settle down, which can be divided into eight projects. First, a new "entry plan for capital investors" is introduced; Second, provide tax relief, and family investment control tools managed by a single family office in Hong Kong will be exempted from profits tax; Third, to provide market-friendly measures, the licensing division of the CSRC will set up a dedicated communication channel to handle inquiries about family offices; Fourth, the Hong Kong Institute of Wealth Heritage was established, and the SAR government funded the establishment of a brand-new Hong Kong Institute of Wealth Heritage to provide personnel training services; Fifth, promote the art storage facilities at the Hong Kong International Airport, and study the establishment of exhibition facilities at the airport to benefit the family offices whose assets are invested in art; Sixth, develop Hong Kong into a charity center and simplify the procedures for charitable organizations to apply for tax exemption; Seventh, further expand the functions of the FamilyOfficeHK task force of InvestHK; Eighth, set up a new family office service provider network. Accelerate the construction of Web3 ecosystem As an international sustainable financial center, Mr. Au believes that Hong Kong, as a green technology and green financial center, can accelerate its development in five key directions, namely, building a green technology ecosystem, promoting the application and innovation of green finance, green certification and aligning with international standards, strengthening exchanges and cooperation with Greater Bay Area and international markets, and strengthening personnel training and education in the fields of green technology and green finance. In promoting Hong Kong to become a digital asset center, Mr Au pointed out that the SAR Government issued a policy declaration on the development of virtual assets in Hong Kong at the end of October 2022, clarifying the policy stance and guidelines set by Hong Kong for developing virtual assets industry and ecosystem, and was open and inclusive to institutions and companies involved in virtual assets business. For example, he pointed out that the CSRC recognized the virtual asset futures ETF so that retail investors could invest in regulated virtual asset products. Regarding the technology of the International Innovation and Technology Center, Mr. Au said that the SAR Government is committed to supporting the development of the third-generation Internet (Web3.0) ecosystem. In the 2023-2024 budget, it allocated 50 million yuan to accelerate the development of the Web3 ecosystem, including holding large-scale international seminars, so that industries and enterprises can better grasp the cutting-edge development, promote cross-sectoral business cooperation and hold more youth workshops. In addition, the SAR Government set up a task force on Web3.0 development at the end of June last year, aiming at providing suggestions on the sustainable and responsible development of Web3 in Hong Kong.

Practice ESG concept with action and hope that carbon neutral hotel will be promoted to the mainland

Photo: Fu Hui Wan Chai Hotel became the first carbon neutral hotel in Hong Kong as early as 2010. With the global environmental awareness rising, ESG (Environmental, Social and Corporate Governance) has become the focus of attention from all walks of life. Regal Hotel (00078) is forward-looking in environmental protection and became the first carbon-neutral hotel in Hong Kong as early as 2010. Luo Baowen, vice chairman of Regal Hotel, admitted that when the relevant policies were introduced in the hotel in the early days, many people stayed in the hotel because of environmental protection. However, with more and more young people and large companies considering environmental protection as one of the factors for booking hotels, the Group's efforts on ESG have gradually gained recognition from all walks of life. I was asked why I pay more attention to ESG because there are many topics in society. In an exclusive interview with Ta Kung Pao, Luo Baowen explained the reason. It turned out that studying psychology at university made her particularly concerned about the mental health of the next generation and realized that the soul is closely related to environmental protection. Furthermore, as a dog lover, Luo Baowen takes his dog to country parks from time to time to enjoy the beautiful nature and cherish it more, so he hopes to contribute more to ESG and environmental protection. The 5R Principle of Regal Hotel Upgrade Symbol For this reason, Luo Baowen established the first carbon-neutral hotel in Hong Kong-Fuhui Hotel as early as 2010, hoping to help slow down climate warming in a professional and effective way. She has always attached importance to innovation and the best business model, hoping to introduce more low-carbon plans and provide climate care services in hotels. Luo Baowen also hopes to introduce "Fuhui Hotel" into the mainland, the Middle East and other Asian markets, set more net zero-carbon targets based on science and technology, and cooperate with the national double-carbon strategy to become a pioneer in the hotel industry with sustainable development, bringing different green tourism experiences to customers. In promoting ESG, Regal Hotel has introduced a number of measures, including: reducing carbon emissions, saving energy, strengthening energy and water conservation, implementing waste management plans and routines, exploring the use of renewable energy, and practicing the "5R principles", namely, reducing waste, reusing everything, Recycle, reforming waste and rejecting use. At the same time, the Group has upgraded a number of facilities, and plans to convert all lighting equipment into more energy-saving LED lighting equipment by 2028, equipped with dynamic and sunlight sensors; Upgrade all motors to high-efficiency models (IE3 or above) by 2030; Eliminate diesel power equipment and replace it with natural gas power equipment; Sign a performance-based contract with a professional contractor to implement an energy-saving plan for the hotel's cooling units; Monitor the energy consumption of restaurants and guest rooms to meet the operational needs, and turn off some lights during low utilization. Set up a fund to invest in environmental protection technology In addition to promoting environmental protection in hotel business, Luo Baowen has also set up an environmental protection technology fund "AlphaTrio Fund" with Asia as the core, in order to solve the most pressing environmental problems in the world with innovative eucalyptus. She admits that in the face of the uncertain macro environment, financing is very difficult at present, and investment needs to be cautious, and risks cannot be completely avoided. At the same time, she thinks that it is the best time to invest, because many start-ups are relatively easy to negotiate under the current market conditions. At present, the scale of the fund is about US$ 100 million (about HK$ 780 million), and it has invested in dozens of companies, mainly those that are optimistic about agriculture and food technology, clean energy technology and green building technology.

Not only retail investors, but also these institutions are buying spot bitcoin ETFs.

Since the advent of spot bitcoin ETF, it has been the focus of investors' attention. Initially, these innovative products based on cryptocurrency mainly attracted the favor of retail investors. But the latest data shows that institutional investors are now flocking to join this investment wave. According to the media's analysis of public documents, as of the end of the first quarter of this year, about 1,000 investment companies have reported holding bitcoin ETFs in their 13F filing documents. This lineup is huge and diverse, covering powerful institutions such as hedge funds, pension funds and banks. The most eye-catching buyers include established hedge fund giants, such as Millennium, Point72 and Elliott. But it is not limited to this. From the Wisconsin Investment Committee to the Bank of Montreal, institutional investors are everywhere. Analysts believe that although the specific investment motives of these institutions cannot be confirmed at present, their enthusiasm for Bitcoin ETFs is a major signal in itself-it means that, for whatever reason, Wall Street has begun to take seriously the world's largest encrypted assets. Stephen Hollette, CEO of FRNT, said: The 13F document shows that the growth of Bitcoin ETFs cannot be attributed only to the purchases of retail investors in brokerage accounts. Obviously, portfolio managers, institutional investors and banks have at least begun to test the water to hold bitcoin. According to the 13F document, BlackRock's iShares Bitcoin Trust Fund (IBIT) is held by about 420 companies and is the most popular bitcoin ETF product at present. Fidelity Bitcoin Fund (FBTC) followed closely, with more than 230 companies holding positions. Other emerging bitcoin ETF products just launched in January, only 3 to 5 institutional investors participated on average. This huge contrast clearly shows institutional investors' preference for mature bitcoin ETF products. The investment logic of institutions in bitcoin ETFs is not single. For traditional wealth management institutions such as Legacy Wealth, Bitcoin is just a tool to diversify investment, and they will properly control its allocation ratio in total assets. But other companies, such as United Capital Management, hold these ETF products based on optimistic expectations about the long-term prospects of Bitcoin and its underlying technologies. Looking ahead, the enthusiasm of institutions to invest in Bitcoin may continue to rise. An encrypted asset observer analyzed that: This situation may continue to expand, because the investment allocation of new assets is usually carried out in stages. In addition, when the market picks up, investment interest will pick up again. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

"New Fed News Agency": The Fed may still not cut interest rates before September.

The CPI of the United States slowed down slightly in April, and the year-on-year increase of core CPI was the smallest increase in three years since April 2021. The data was generally in line with expectations. Three consecutive CPI reports before the April report showed that the price pressure in the United States exceeded expectations, which led to a sharp withdrawal of the market's expectation of the Fed's interest rate cut. The latest CPI report undoubtedly relieved investors and the Federal Reserve a little, and the expectation of interest rate cuts in the market rekindled. Traders in the swap market recently believe that the probability of cutting interest rates by 25 basis points will exceed 80% by the time of the Fed meeting in September. Many Wall Street analysts also hold a similar view, that is, the inflation data in April is enough to cut interest rates from September, even if it can't make the Fed cut interest rates in July. On Wednesday, the market reaction was obvious. US debt and US stocks rose in response, rising sharply during the day. The S&P and Nasdaq 100 hit record highs, and the US dollar fell. However, Nick Timiraos, a well-known financial journalist known as the "New Fed News Agency", and his colleagues poured some cold water on the optimism of the market. In their latest article, they pointed out that the Fed may not cut interest rates before September, and the April report is not enough to change much. Timiraos pointed out that Wednesday's inflation data should give Fed officials a sigh of relief because it shows that prices and economic activities have not accelerated again. Another report on Wednesday showed that retail sales in the United States were flat in April, confirming this hypothesis again. Timiraos quoted industry insiders as saying, "This is a very gratifying report. This is consistent with the view of soft landing. " Despite this, Timiraos still said that as far as the April CPI report itself is concerned, the data is not enough to change the Fed's expectation of whether and when to start cutting interest rates. The significance of April CPI data is that it keeps the possibility of interest rate cuts later this year, and calms some people's concerns that the Fed may need to further open the door to interest rate hikes. In his speech yesterday, Federal Reserve Chairman Powell played down the prospect of raising interest rates, but did not completely rule out this possibility. Timiraos said that most economists currently expect the Fed to cut interest rates this year, but there are differences on when to cut interest rates. Since two CPI reports may be needed to boost officials' confidence that inflation can return to the low level before the COVID-19 epidemic, the Fed may not cut interest rates before September. Wall Street has previously said that even if inflation falls, it may still not satisfy the Fed. Overnight, in a speech in Amsterdam, Federal Reserve Chairman Powell said that the first quarter data reduced his confidence in the cooling of inflation, so the Fed could not give whether or when to lower interest rates. Timiraos pointed out that millions of Americans still face enormous price pressure. Gasoline prices have pushed up overall inflation, while housing costs continue to rise. However, the year-on-year increase in rents has slowed down compared with a month ago, indicating that a key factor contributing to inflation is slowing down. In April, the cost of groceries and vehicles also decreased slightly compared with that in March, and the price increase of medical care slowed down. Timiraos quoted Powell's recent speech in the article: We didn't expect this to be a smooth road, but these figures in the first quarter were higher than anyone expected. This tells us that we need to be patient and let restrictive policies work. Two years ago, Fed officials were very worried that if employment did not drop sharply, the extremely high inflation we saw might be difficult to reduce, but this did not happen. This is a good result. But people are not happy because they pay a high price, even though the inflation rate has slowed down. You tell people that inflation is slowing down, but they think they don't understand this, because the price of everything they buy has not dropped. There is nothing wrong with them. Timiraos also mentioned that the preliminary results of a survey released by the University of Michigan last week showed that American consumer confidence fell sharply in May. Americans have a gloomy outlook, partly because inflation and interest rates are expected to remain high, which puts pressure on household budgets and keeps mortgage interest rates at a high level. Some economists and Democrats worry that keeping American interest rates at the highest level in more than 20 years may weaken employment growth and plunge the economy into recession. Although the American economy is in the leading position among developed economies, the worry about inflation has become a thorny political issue facing President Biden. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

Bet on weaker inflation! Dollar bears surged

Before the US CPI was released in April, foreign exchange traders generally expected the dollar to fall. The data in the options market shows that traders have been accumulating bearish bets on the US dollar, and the one-week US dollar risk reversal index fell below parity. This is the first time in two months, which also means that the market expects weak CPI data to put pressure on the US dollar. On Tuesday, Federal Reserve Chairman Powell reiterated that raising interest rates is unlikely to be the next move of the central bank, which made traders re-focus on the prospect of monetary easing this year, and the dollar faced downward pressure. Kyle Chapman, a foreign exchange market analyst at Balinger, pointed out that the weak data may ignite the hope that the Fed will cut interest rates in the summer, thus weakening the yield advantage of the US dollar. Economists predict that the US CPI will slow down to 3.4% in April from 3.5% in the previous month. If the inflation data meets or is lower than expected, it will consolidate the expectation that the Fed will cut interest rates twice this year. The Bloomberg dollar spot index fell on Tuesday because Powell called for patience with inflation. Data from the Commodity Futures Trading Commission for the week ending May 7 also showed that traders were withdrawing a large number of bets on the dollar. Historical data show that the dollar usually falls after inflation data cools down. In the past year, inflation data was lower than expected for three times, and the dollar fell significantly at the end of each trading week. In contrast, the market is particularly optimistic about the prospects of the euro. The relative premium of common currency call options, that is, the bet that the euro will appreciate next week, has risen to the highest level since February. Howard Du and Vadim Iaralov, strategists at Bank of America, said that European investors had completely closed their long positions in dollars in the past month. Therefore, before the US inflation data was released, the company was bullish on the euro against the US dollar. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

After Big bounce, the financial reports of Ali and Tencent came!

In recent days, the Hong Kong stock market has risen strongly and has recovered all the declines since last September. As of yesterday's close, the Hang Seng Index and the Hang Seng Index stood at 19,000 points and 4,000 points respectively, with strong signals. In this round of "big counterattack" of Hong Kong stocks, the performance of Kewang stocks is very bright. The data shows that the Internet ETF of Hong Kong stocks, the leading Internet company in Hong Kong stocks, rose 2.5%, setting a new high in the year. Since late April, the ETF has risen fiercely and has set a new high in the year for seven times. On this occasion, Hong Kong stocks and China Stock Exchange will usher in a peak period of performance disclosure. After the Hong Kong stock market closed today, Alibaba and Tencent announced their latest results, and JD.COM and Baidu will also "relay" tomorrow. Weight accounts for more than a quarter of the MSCI China Index. Can the latest achievements of these four Internet giants add another "fire" to the sweeping rise of Hong Kong stocks? On May 9, Goldman Sachs released the performance forward-looking research report of Tencent and Ali. It is estimated that Tencent's Q1 operating profit in fiscal year 24 will increase by 15% year-on-year, and game revenue will decrease by 3% year-on-year. Alibaba's Q4 EBITA in fiscal year 24 will decrease by 8% year-on-year (note: Alibaba's fiscal year is from April 1st to March 31st of the following year), and GMV will increase by 6% year-on-year. Tencent: Net profit increased by more than 20% year-on-year, and game revenue stabilized. The report predicts that Tencent Q1' s game revenue will decrease by 3% year-on-year, advertising revenue will increase by 19% year-on-year, and adjusted total revenue will increase by 15% year-on-year. The report also pointed out that considering tencent games's strong revenue in March and April, the year-on-year growth rate reached double digits, which may bring obvious visibility to its game revenue. Boosted by the video number advertising revenue, the report believes that Tencent's financial technology department stabilized in the first half of the year and the cloud computing department continued to recover. The profit growth rate of Q1 and Q2 of the company will remain above 20% year-on-year; The compound annual growth of the company will be the main driving force of the stock price in the second half of this year. The repurchase plan will be the focus of Tencent's financial report. The company previously promised to buy back 100 billion yuan in 2024. So far, the company has completed about a quarter of the repurchase plan. According to media reports, as the technology company with the highest market value in China, any change in its commitment to improve shareholders' returns will have a wide impact on the China market. In addition, the report also lists the information points worthy of attention in Tencent's latest financial report: Sustainability of domestic game growth. In particular, the revenue and revenue guidelines of its the glory of the king and Peace Elite. The growth momentum of wechat /Wechat online advertising. Video number advertising business (advertising, pricing, e-commerce GMV), and the timetable plan to tie the income level of other short video platforms. Business services/cloud growth. Judging the growth prospect of cloud service revenue during the year, focusing on public clouds and other SaaS/AI drivers. Cost control and operating leverage. The inflection point of income is gradually emerging, and the company needs to further streamline costs to achieve a high-quality revenue growth model. Since the beginning of this year, the share price of Tencent Holdings (ADR) has risen by over 30%, with a price-earnings ratio of 17 times. Ali: GMV resumed positive growth, while Taotian EBITA turned down. The report predicts that Alibaba's Q4 GMV (total merchandise transaction volume) will resume positive growth, increasing by 6% year-on-year, CMR (customer management income, about equal to advertising fee+commission) will increase by 2% year-on-year, and Taotian EBITA will drop by 2% year-on-year. In addition, the report predicts that the loss of Ali International Digital Business Group (AIDC) in Q4 will increase from 400 million yuan in the same period last year to 3.5 billion yuan. Considering the effectiveness of the business strategy change of Ali management, the report said that the growth of GMV may be transformed into the accelerated growth of Ali CMR in the second half of the year. The report believes that the following information should also be paid attention to in Ali's latest financial report: When Taotian GMV grows and its market share is stable. Whether the "customer first" strategy can be transformed into a stable market share within 1-2 years, when to launch the "all-site promotion" marketing tool to more businesses, and when Taotian MPV will have an inflection point. It is expected that the performance from April to early May and during the promotion activities of June 18th Shopping Festival will be the key to the growth of Q2 performance of the company. EBITA guidelines for Taotian fiscal year 25. As the company's Q3/Q4 Taotian ERITA may decline in fiscal year 24, investors will pay attention to the reasons (such as the high year-on-year base/the impact of investment strategy) and whether the management will take stabilizing Taotian EBITA as one of the performance targets in fiscal year 25. Operation of international e-commerce platform. The influence of AIDC loss expansion on profit; In order to reduce losses, Temu has switched from full custody mode to semi-custody mode in the United States and other developed markets, and is concerned about whether AliExpress will follow suit and make strategic changes. In the second half of the year, cloud computing accelerated again and became the driving force for growth. It is expected that cloud services will resume growth as the negative impacts brought by the departure of big customers and the reduction of private/hybrid cloud investment subside. Shareholder returns. Concerned about the repurchase and dividend policy, the company previously promised to buy back $12 billion in 2024. So far, the company has completed the repurchase plan of 48 US dollars. Since the beginning of this year, the share price of Alibaba has risen by more than 9%, and the price-earnings ratio is less than 7 times. Goldman Sachs believes that a lower valuation means that Ali's share price still has room to rise. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

Morgan Stanley also shouted! On Wednesday, the US CPI will be

On Wednesday, heavy US CPI inflation data will be released. Last month's CPI, which exceeded expectations, rose more than expected, hitting the market's interest rate cut expectations. Will CPI continue to rise in April and suppress interest rate cut expectations? Seth Carpenter, chief economist of Morgan Stanley, pointed out that housing inflation accounts for 40% of the core CPI and 18% of the core PCE. Therefore, no matter how housing inflation goes, the whole CPI data may follow. The bank believes that the current rent data is very weak. Despite the surge in immigration last year, the vacancy rate of multi-family apartments is approaching an all-time high, and housing inflation has released a downward signal. On Wednesday, the US CPI will be "significantly lower than expected": In the past three months, there has been "no further progress" in fighting inflation. For PCE inflation, commodities have promoted a large part of the growth, and computer software, video tapes and clothing have contributed to two-thirds of the acceleration of inflation. Inflation is special, not universal. In fact, using the weight of CPI, core commodity inflation has been negative for two months in the past three months, and there is room for more direct decline. The supply chain has basically recovered, and the first quarter GDP data shows inventory correction. Inflation in services other than housing also shows some inflationary pressures. In the past few months, the portfolio management and investment advice of financial services have brought surprises. But these components are noisy and related to the fluctuation of stock price to some extent. Inflation in auto insurance has been more persistent, but insurance companies are catching up with the higher costs faced in the past few years. This impulse does not reflect the current economic situation, and it is beginning to fade on its own. Morgan Stanley also pointed out that the previous seasonal adjustment factors led to higher inflation data in the first quarter than the actual situation, which will be corrected later: Our American team recently found that seasonal adjustment may have exaggerated inflation in the first quarter of this year, which indicates that there will be a correction in the future. Taking all these factors into consideration, inflation should fall this year ... When inflation falls, the Fed will start to cut interest rates. Standard Chartered Bank analysts also said earlier that housing inflation may go down soon and drive down core inflation. I also agree with this view in a recently released report. Wednesday's CPI report will be crucial to the timing of the first rate cut. Since the beginning of this year, the market once priced interest rate cuts of 25 basis points for nearly 7 times, but now the pricing is only slightly lower than twice, and the start time of interest rate cuts has been postponed to September. Morgan Stanley predicts that CPI will increase by 0.29% month on month in April, rental inflation will slow down, core commodity prices will drop slightly, and the upward trend of service inflation will be slightly reversed. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

Bowman, governor of the Federal Reserve, said: I don't think there is any reason to cut interest rates this year.

On Friday, Bowman, the governor of the Federal Reserve, who has the right to vote in the Federal Reserve FOMC, said that she thought it was inappropriate for the Fed to cut interest rates in 2024, and pointed out that inflation in the United States continued to be under pressure in the first few months of this year. For the quarterly economic forecast report (SEP) submitted by Fed officials, Bowman revealed in the interview: As far as I am concerned, the interest rate cut in 2024 has not been included in my economic forecast. I still expect to maintain the current interest rate level for a longer period of time, which remains my basic position. Bowman said that after several months of disappointing inflation data, it will take her longer to be confident that inflation will return to 2%, which is a prerequisite for interest rate cuts. "So my expectation is that there will be several months of progress and maybe several meetings, and then I may feel comfortable with cutting interest rates." She also said that there is an exception to her above interest rate policy expectation, that is, if there is an economic shock, it will lead the Fed to solve this problem through monetary policy. Bowman urged Fed policymakers to act cautiously and carefully when moving towards the 2% inflation target. "The most important thing is that we should achieve the goal of 2% carefully, so as to maintain credibility in the fight against inflation." Bowman believes that the American economy has positive momentum and points out that consumer spending has been strong. In his speech, Bowman also emphasized the risks of commercial real estate in the United States, especially office buildings, because the COVID-19 epidemic caused more people to work remotely. She said that although the default rate has generally remained at a low level, the loan default rate of commercial real estate in some banks has increased: We may see a decline in the value of real estate, a decrease in the cash flow of rental income or other circumstances that may lead to the impairment of commercial real estate loans or portfolios of some banks, especially if these loans expire and are refinanced at higher interest rates. In its semi-annual report released on the same day, the Federal Reserve warned that the loans overdue rate of commercial real estate would rise. The Federal Reserve said that as the loans overdue rate related to office buildings continues to rise, banks are preparing for further losses. The overdue rate of some commercial real estate loans has soared above the pre-COVID-19 epidemic level. The focus of Fed officials is to improve the speed, intensity and flexibility of supervision as appropriate. Bowman also mentioned some signs, such as the low liquidity of the US Treasury bond market. She said that in the end, the liquidity of the US Treasury bond market may amplify or mitigate the impact on the financial system. Since the beginning of this week, many senior Fed officials have said that it will take longer to maintain high interest rates. On Friday alone, many officials spoke intensively: Dallas Fed President Logan said that in view of the disappointing inflation data so far this year, it is still too early to consider cutting interest rates, and the current restrictive degree of Fed policy is uncertain. "I need to see some uncertainties on the road solved. We need to maintain a very flexible policy and continue to pay attention to the data to be released and observe how the financial situation evolves." Logan also mentioned that he hoped all banks would acquire and test the application of the discount window tool. Atlanta Fed President Bostic said that the Fed is still expected to cut interest rates this year, and it is expected to cut interest rates by 0.25 percentage points this year. Bostic is one of the senior officials of the Federal Reserve, who poured cold water on many interest rate cuts this year. Baldin, chairman of the Richmond Fed, said that the current US economic situation requires the Fed to be thoughtful and patient in its monetary policy actions. With appropriate monetary policy, inflation in the United States will fall back to 2% in time. I hope to see that the inflation progress is sustained and extensive. The demand of American economy is steady, but not too hot. Minneapolis Fed President Kashkali said that in the wait-and-see mode, he will identify whether the progress made in cooling inflation in the United States has stalled. He mentioned that it can slow down the economic growth of the United States or embrace immigrants, and science and technology allow workers to participate in the job market for a longer period of time. Chicago Fed President Goolsbee said that FOMC monetary policy is relatively restrictive. If the rebound in inflation means overheating, we must keep inflation down to 2% at all costs. The housing market remains a major inflation challenge. We've had ups and downs in inflation, and now we're waiting to see, but there's not much evidence that American inflation is stagnant at 3%. For the Fed, what matters is long-term inflation expectations, not short-term inflation expectations. After senior officials of the Federal Reserve, especially director Bowman, made hawkish speeches, the yield of US bonds accelerated on Friday. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

The most concerned data in the market! Standard Chartered: Next week, the CPI in April in the United States may send a "surprise" to cool down.

Last month, the March CPI of the United States accelerated year-on-year, with the growth rate higher than expected for five consecutive months, and the three-month growth rate of core CPI was higher than expected, which hit the market's interest rate cut expectations. After last week's meeting, Federal Reserve Chairman Powell denied that the next step was likely to raise interest rates, but the signal sent showed that the timing of interest rate cuts was even more uncertain. Nick Timiraos, a journalist who is known as the "New Fed News Agency", later wrote that the market's determination of the Fed's tendency is not so important, but more importantly, the economic and inflation data. After the Fed meeting, the April CPI to be released next Wednesday is the first heavy inflation data. Will CPI once again exceed the expected growth, which will hit the market's confidence in interest rate cuts? Steven Englander, chief foreign exchange strategist of standard chartered bank, pointed out in a recent report that if we closely observe the housing cost, especially the index related to housing inflation in CPI-the owner's equivalent rent (OER), we will find that there is reason to optimistically predict that housing inflation may go down soon, and it will also push down the core inflation. After the meeting last week, Powell showed confidence that the decline in housing costs in the future may reduce core inflation. As shown in the figure below, Englander made a regression analysis of the actual and predicted OER, and found that "Powell's optimism may be reasonable", because the analysis showed that "based on the stable regression that has been proved in recent years, the OER will drop sharply in the next few months". Englander's analysis is based on the experimental series of new tenant rents and all tenant rents constructed by researchers from the Federal Reserve and the United States Bureau of Industry and Statistics (BLS). Even if it is estimated from 2012 to 19, regression can give a good out-of-sample prediction of OER. As can be seen from the chart, the regression results show that the OER increase in the first quarter of this year is an abnormal phenomenon, and the downward pressure will resume in the next few months, and the downward pressure "may be sharp". The average OER inflation predicted by Englander in the second quarter only increased by 0.29% month-on-month, which is not far from the general range from 2015 to 2019, and is slower than the OER growth rate of 0.48% in the first quarter of this year. This is a very important change, because the weight of OER in the core CPI reaches 33%, so the slowdown of OER's predicted growth rate will reduce the core CPI by 0.06 percentage points, which means that if more CPI components are cooled down by inflation, the growth rate of core CPI may be lower than the expected level of 0.3%, and the growth rate will slow down to 0.2%, or even lower. Englander's analysis OER tracks the lagging private sector market rent data, which has recently declined. He believes that OER inflation will continue to be weak in the next few quarters. He concluded that this slowdown in OER will encourage people to expect inflation to resume its downward trend, and the decline will be enough for the Fed to start cutting interest rates. At the same time, Englander pointed out that there are two risks of mistakes in his conclusion. First, the experimental data of BLS and the Federal Reserve on the rents of new tenants and all tenants are released quarterly, so his judgment on quarterly changes may be correct, but his judgment on monthly changes may be wrong. Last year, BLS changed the calculation method, which means that OER is currently estimated based on a small sample of single-family rental houses, which brings the possibility of random fluctuation of OER data. Second, the large demand for single-family housing may lead to a disproportionate increase in rents and will continue to do so. However, most homeowners will lock in a lower mortgage interest rate and will not face an increase in housing costs. Englander mentioned that he noticed Powell's remark last week: Considering the current situation of market rents, I still expect that these rents will be reflected in measurable housing service inflation over time. Englander pointed out that Powell's confidence in housing inflation surprised him in view of the high OER inflation in the first quarter. Moreover, Powell seems to be surprised that he no longer focuses on the so-called super-core inflation-services that exclude food, energy and housing rents, but instead focuses on reduced rent inflation as a sufficient reason to cut interest rates. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.


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