Another day of being ruthlessly toyed with by the market...

Is AI · Political lobbying secretly influencing market trends?

Today’s market is very strong, bouncing back forcefully from a near-collapse state.

Currently, the market lacks continuity.

This morning felt like death, in the afternoon it seemed like I could survive another day, but tomorrow might bring another crash.

Oil prices are inherently highly volatile assets that test trading difficulty. Now, with oil prices restrained, other assets are moving inversely with high volatility.

Everyone is watching the White Eagle and Persian Cat—who can hold on until the end?

At the same time, caution is warranted regarding the tail risks from escalating conflicts, such as high oil prices and inflation.

As yesterday’s time traveler investment advisor said, “The recent theme is waiting for the dip.”

What safe-haven assets?

Only oil prices can hedge against other assets.

When oil prices rise, gold, equities, and bonds all fall; when oil prices fall, other assets may rise.

First, high oil prices influence inflation expectations, and inflation expectations influence long-term bonds.

Since the Middle East heated up on February 28, the 30-year Treasury ETF Boshi (511130) has had a range return of -1%.

Rising oil prices have sparked concerns about imported inflation, causing market sentiment to fluctuate.

From an economic data perspective, February’s CPI year-over-year increased by 1.3%, the highest in nearly three years, while PPI decreased by 0.9% year-over-year, narrowing the decline by 0.5 percentage points from the previous month, with three consecutive months of narrowing declines.

From internal fundamentals and potential external inflation, the environment for negative inflation in bonds has improved. If inflation truly takes hold, long-term bonds won’t withstand it.

Second, gold is no longer a safe haven.

This is the most counterintuitive point.

Before the war, gold was touted as a safe haven.

But once the conflict started, gold prices actually fell.

Why?

During the Russia-Ukraine conflict in 2022, early in the outbreak, risk aversion dominated, and gold prices hit new highs.

But as the conflict pushed oil prices higher, the rising oil prices eventually transmitted to U.S. inflation, prompting the Federal Reserve to shift monetary policy to aggressive rate hikes.

The dollar strengthened, interest rates rose, and gold came under pressure.

Recently, the dollar index has been very strong. The day the dollar index bottomed at the end of January coincided with the peak of this gold cycle.

Now, the market is also worried about the Fed’s interest rate policy. There’s a Federal Reserve rate decision tonight—let’s wait and see.

Third, U.S. stocks.

Since the beginning of this year, U.S. stocks have felt quite weak, but looking back, the S&P 500’s retracement is only about 5%.

From 1950 to now, the average annual retracement of the S&P 500 has been about 13.6%, nearly 14%.

So, the current pullback isn’t significant.

The domestic U.S. stock ETF’s retracement feels even larger, possibly due to a premium discount, as the intra-market QDII’s premium is no longer high.

It all depends on whether Iran can hold out longer, potentially causing big swings in U.S. and global equity assets to create buying opportunities.

That’s beyond my control.

Fourth, dividends and cash flow.

Benefiting from the HALO trade, the safe-haven effect since the conflict began has been decent.

This morning, as resources stocks declined, the retracement in cash flow and dividend quality was mostly over 1%.

Fortunately, it rebounded afterward. Let’s see if it can continue, maybe we’ll see it again.

Fifth, tech stocks—rising one day, falling the next.

Since the Strait of Hormuz blockade, concerns about helium transportation have increased.

Helium is used in semiconductor cooling materials, and Qatar is a major producer. But Qatar’s helium must be shipped through the Strait of Hormuz—no alternative route exists.

If the conflict lasts more than two weeks, supply disruptions for helium users could last months, while demand from AI data centers remains high.

Storage chips are inherently cyclical, and with the widespread demand from AI centers, the boom is already strong. Now, supply issues have emerged.

I don’t know how this storage cycle will unfold.

Hengke’s situation is more complicated.

Tencent Music’s earnings report caused a 25% plunge due to fierce competition from ByteDance’s Qishui Music.

I know ByteDance doesn’t accept the narrative that it’s becoming a short position on Hengke.

But for Hengke’s shareholders, ByteDance’s shadow is everywhere, making it hard not to consider.

I also compared Hengke and Tencent Music’s trends: at the end of 2023, Tencent Music stabilized and rebounded before Hengke did. In October last year, Tencent Music peaked and started to adjust first, then Hengke entered a technical bear market.

I wonder if this recent plunge in Tencent Music is another early warning for Hengke.

Whether Hengke can hold up depends on Tencent and Alibaba’s upcoming earnings.

Of course, it also depends on whether oil prices will cooperate.

Sixth, does Trump regret being dragged into this by Israel?

I believe he definitely does.

The assassination operation in Venezuela built up significant political capital, but now, with Iran, there’s a risk of losing it all. Inflation is rising, and the stock market is unstable.

Allies are not providing support—no escort through the Strait of Hormuz, which is embarrassing.

Yesterday, U.S. National Counterterrorism Center Director Kent resigned—

He wrote, “Out of conscience, I cannot support the ongoing Iran war. Iran does not pose an immediate threat to our country. It’s clear that this war was driven by pressure from Israel and its powerful lobbying groups in the U.S.”

Now, Biden and the U.S. are tied to the Jewish lobby, and their strategic plans are being disrupted.

It all gives me the feeling of a mighty Cao Wei being usurped by the Sima clan.

This feeling is very subtle.