Macroeconomics

Two-Pronged Defense: When the Market Is Bullish, You Should Be Even More Cautious What Is a Two-Pronged Defense Strategy The two-pronged defense is our core investment strategy, which we have been implementing for over a month. Its core logic is to simultaneously guard against two extreme market sentiments: preventing forced sell-offs at market bottoms caused by excessive pessimism, and preventing chasing the market at highs driven by excessive optimism. At the onset of the crisis, global markets experienced a collective downturn: U.S., Japanese, South Korean, and European stocks, as well as A-shares, all fell in unison; gold prices dropped sharply in the short term; and oil prices soared. At that time, our primary objective was to prevent investors from becoming overly pessimistic. We highlighted opportunities for a U.S. stock market rebound, executed three rounds of position increases at the bottom of the gold market, and took profits on WTI crude oil positions above $110. ...

April 2026: A Make-or-Break Moment for Global Markets On March 30, I summarized the four most critical analytical frameworks currently shaping the market. Let me cut to the chase. Why April Is the Critical Window That Will Determine the Year’s Direction Back in late 2025, I identified three key dates: January, April, and October 2026. At that time, the war in the Middle East had not yet broken out, and my assessment was based entirely on financial fundamentals. Now, with the added variable of the war, the significance of April has been amplified to the extreme. ...

Wall Street’s short squeeze on gold has completely failed this time; there isn’t enough time or room left to push prices lower. If the U.S. actually implements YCC in the future, these institutions might just flip their positions and go long. This failed short squeeze isn’t a tactical issue at all; it’s because the fundamentals of the U.S. dollar and U.S. Treasuries are absolutely rotten. Coupled with the broader trend of deglobalization, the world is dumping dollar assets and buying gold—demand simply can’t be suppressed. It is highly likely that gold will reach $3,700 in the coming months. Even if a liquidity crisis were to occur in the interim, it would only be a temporary pullback; the long-term trend remains unchanged. ...

The core drivers of this round of the A-share market rally are Supply-Side Reform 2.0 and policies aimed at combating internal competition. During the first wave of Supply-Side Reform 1.0 in 2015, demand was stimulated through the monetization of shantytown renovation, while prices were raised by eliminating outdated production capacity. By applying pressure on both the supply and demand sides simultaneously, many of the issues at the time were resolved. The current approach to Supply-Side Reform 2.0 is essentially the same: on the supply side, we continue to cut overcapacity and raise prices, while on the demand side, we rely on policies such as large-scale infrastructure projects and childbirth subsidies to boost domestic demand. Between 2024 and 2025, a wide range of measures—including debt swaps, local government bond arrangements, fiscal and monetary policies, consumption stimulus, and industrial regulation—were employed, but the results were generally lackluster. The public isn’t swayed by empty promises; they only trust tangible infrastructure stimulus—things they can see and touch. On one hand, no one is willing to believe in abstract policy concepts; on the other, the economic rhetoric from top leaders is too obscure—it’s so dry it could put you to sleep—so naturally, acceptance is low. If they could speak as bluntly as Trump, the effectiveness of policy communication might be much better. ...

The Significance of the M1-M2 Spread In the June social financing data released in mid-July, the growth rate of M1 has already reached a clear inflection point and is rising rapidly. If M1 growth continues to outpace M2 in the coming months, forming what is known as the “golden spread,” it will essentially confirm that the liquidity environment is improving. In recent years, those bearish on China have constantly harped on the “liquidity trap” and “deflation”—this data directly contradicts their claims. ...

The Fundamental Differences in Core Contradictions Today is July 30, 2025. This episode wasn’t originally part of the update schedule, but since I’ve received so many similar questions recently, I’ve decided to dedicate this episode to analyzing current hot topics. This episode focuses on three key areas: the Chinese economy, commodities, and the U.S. economy. Due to space limitations, the section on the U.S. economy may be split into the next episode. ...

The Ideals and Reality of the Pennsylvania Plan The United States’ vision for the Pennsylvania Plan essentially centers on achieving economic revitalization through the reshoring of manufacturing, aiming to replicate China’s path of high growth, high inflation, and high income from the 1990s. The core logic behind this vision is that restoring manufacturing capacity will enable the replication of China’s economic miracle of that era. However, whether analyzed from the supply side or the demand side, this goal is simply impossible to achieve. The global economic landscape of the 1990s was entirely different from today’s: the world before 2008 was an era of extremely robust demand and severe supply shortages. In particular, after China’s reform and opening-up, the entry of one billion people into the global market generated an unprecedented surge in demand. At that time, a large portion of the population had not yet achieved a moderately prosperous life, and demand for industrial goods such as home appliances and automobiles was in an explosive growth phase. The scale of this growth is something the current world cannot replicate. ...

The Core Contradiction of the Global Economy: Artificial Overheating of Demand vs. Actual Shortage of Demand Currently, global economies—including the United States—are universally facing the dilemma of insufficient effective demand. While the market presents the illusion of artificial demand overheating, there is in fact a severe oversupply on the supply side. What the U.S. economy needs most at present is capacity reduction, not policy stimulus that encourages businesses and households to increase leverage and expand production capacity. Trump’s current policy direction not only undermines the service sector—the backbone of the U.S. economy—but also encourages industrial firms to increase leverage and expand capacity, a strategy strikingly similar to policies of the Hoover era. ...

Criteria for Assessing the Middle East Situation: An Analysis of the Nature of the Attack on Iran’s Nuclear Facilities At present, there is no reliable evidence to prove that the United States has completely destroyed Iran’s nuclear facilities. The criterion for determining whether the attack was successful is simple: as long as the United States is still willing to negotiate with Iran, it means the nuclear facilities have not been destroyed. Conversely, considering that Israel has already assassinated most of Iran’s nuclear scientists, if the nuclear facilities were destroyed as well, the U.S. would have absolutely no reason to continue negotiations. ...

Opening Update: Vietnam Joins the BRICS Cooperation Mechanism On June 18, 2025, Vietnam officially became the tenth member of the BRICS Cooperation Mechanism, marking a further expansion of the global emerging markets bloc. This development will reshape the industrial chain landscape in the Asia-Pacific region, introduce new variables into regional economic cooperation, and serve as a key indicator for observing future geo-economic trends. Gold Market: The Underlying Logic of Lease Rates and Arbitrage Mechanisms Behind recent fluctuations in gold prices, the Gold Lease Rate (GLR) serves as a key indicator. Its formula is GLR = SOFR – GOFO, and it essentially represents the arbitrage balancing mechanism in the gold market: ...