Let me give you some valuable information about the Mid-Autumn Festival.
1. The August housing prices in 70 cities across the country were released. Except for Jilin, the remaining 69 cities all saw a decline. Moreover, regardless of whether it was first-tier, second-tier or third-tier cities, the month-on-month decline rate was significantly faster than in July, and there was no sign of bottoming out or stabilizing.
Regarding the bottoming out of housing prices, the main references are the Japanese and American models. The American model bottoms out in 2027, and the Japanese model bottoms out in 2040. Both are the result of comprehensive deleveraging after the bubble burst. History will not simply repeat itself, and we do not necessarily have to choose one of the two models of the United States and Japan. Perhaps our situation is different from that of the United States and Japan.
2. The next biggest global event is the Fed’s interest rate meeting on September 18, to be exact, at 2:00 a.m. on September 19, Beijing time, when the latest US dollar interest rate will be announced. I just checked the betting website and found that there are changes. The probability of a 50bp rate cut has prevailed, currently at 54%, while the probability of a 25bp rate cut is only 46%. These are the probabilities that gamblers have bought with real money, and the pool currently contains $45 million.
Among the big institutions, Morgan Stanley insists on a 50bp cut, while Goldman Sachs insists on a 25bp cut. There are still some differences between the institutions. If you look at the odds above, the gap is not very large, and it is a meeting with a lot of suspense. Because of the suspense, the market cannot price in expectations in a stable manner in advance, which means that whether it is 25bp or 50bp, it is likely to have an impact on the global financial market in the short term. As for whether it is a good impact or a bad impact, we will only know it in the early hours of Thursday.
The Fed's interest rate cut is a positive development that we have been waiting for for two years. It is finally coming true. The Fed will cut interest rates by about 3% in the next two to three years. Most currencies in the world will also follow suit. This gives the RMB a lot of room for maneuver. Our central bank can also follow suit and cut interest rates without worrying about exchange rate pressure. For example, the interest rates for existing mortgage loans have been reported two or three times this month. By then, it is estimated that there will be a result.
I think the average interest rate of existing mortgage loans should be reduced to a reasonable range of 3%-3.5%, and the interest rate difference with new mortgage loans should not exceed 0.5%. This will indeed impact the profitability of banks. There is no other way, and we can only make depositors suffer more and ask them to lower the deposit interest rate a little more. Some readers asked why banks should reduce the interest rate, which violates the contract. Have you read the report I forwarded last night? The number of houses for which mortgage payments have been suspended has increased sharply. If the interest rate is not reduced, all the houses will be rotten and left to the banks to deal with. The banks will be in trouble.
3. Microsoft plans to repurchase up to $60 billion of stock, and increase the quarterly dividend from 75 cents per share to 83 cents per share. In fact, this dividend rate is very low, less than 1% compared to the share price of 440. But the repurchase is powerful, and nearly 2% of the shares will be repurchased and cancelled in one go.
A-shares have been emphasizing dividends in recent years, but I said long ago that only repurchases can save the market. Many stockholders do not have a clear concept of the difference between dividends and repurchases. Dividends are beneficial to major shareholders, who can get more cash without trading equity, while repurchases are all injected into the secondary market, which is beneficial to shareholders who actively participate in transactions. Usually these shareholders are small and medium shareholders, because major shareholders cannot trade frequently.
These giant companies in the United States are light on dividends and heavy on buybacks, so their stock prices are well maintained. A-shares are heavy on dividends and light on buybacks, so their stock prices are in a mess. The essence is that A-shares are mainly state-owned enterprises and central enterprises that pay dividends. The major shareholders are all state-owned assets. They leave the market and withdraw funds every year after receiving dividends, and almost never feed back the stock price. This is actually no different from a disguised reduction of holdings.
I reduced my position in Apple some time ago. Currently, Microsoft is my largest position. These two companies are also the world's top two companies in my mind. I will post a quarterly K-line chart of them, and you will understand what Buffett means by value investment.
4. Midea's Hong Kong stock market was listed with an issue price of HK$54.8, and it opened up 8% to close at HK$59.1. This performance is OK, but according to the exchange rate, it is still significantly discounted compared to domestic A-shares, but not as exaggerated as some junk stocks. Midea Group has always been an A-share with the highest allocation of foreign capital. The purchase volume has hit the upper limit of the Hong Kong Stock Connect several times and has been suspended. Now issuing Hong Kong stocks will definitely divert some funds, which is definitely not a good thing for A-shares.
5. The China Securities Regulatory Commission punished PricewaterhouseCoopers with a maximum fine of 297 million yuan, and a total of 325 million yuan in fines and confiscations, which is lower than what foreign media reported before. In fact, the real loss of PricewaterhouseCoopers is the loss of a large number of loyal customers of state-owned enterprises and central enterprises, all of which were fed to peers who poached them. After this battle, PricewaterhouseCoopers' business position in China plummeted, but compared with the disaster caused by Evergrande to society, their punishment is insignificant.
6. The Russian Central Bank raised the interest rate by 100 basis points to 19%. News reports may have filters, but numbers will not. The 19% interest rate must be due to the serious currency depreciation in Russia. The three-year war has caused a lot of damage to Russia's already weak national strength. If it weren't for the world's largest manufacturing country supplying people's livelihood products, the Russian people might have been unable to make ends meet.
7. The United States imposed a 100% tariff on Chinese electric vehicles, a 50% tariff on solar energy, and a 25% tariff on some minerals. At the same time, the tariff on semiconductors was increased by 50%. This was rumored before, and the market has already included expectations, so it is not a major negative impact.
8. Hefei local authorities filed a case to investigate the Three Sheep. The biggest incident this time was that they sold 50 million mooncakes on live broadcast, claiming that they were Hong Kong Meicheng mooncakes. In fact, they were not sold in Hong Kong and no one bought them. They were produced in Guangdong, and they falsely advertised Hong Kong mooncakes. The price was not too high, 169 yuan for 3 boxes. Why do mooncakes have to be from Hong Kong to look high-end? This kind of consumer mentality is also weird.
For example, when I eat hairy crabs every year, I will deliberately choose hairy crabs that are not from Yangcheng Lake. The real Yangcheng Lake can only produce 2,000 tons of hairy crabs, while China produces hundreds of thousands of tons of hairy crabs claiming to be from Yangcheng Lake every year, and the authenticity rate is less than 1%, so whenever I see a Yangcheng Lake brand, I assume it is a scam.