Today is January 14, 2025. A fan sent me a private message asking me what I think about the depreciation of the RMB and the sluggish stock market. I gave my opinion: There are two factors for the sluggish RMB. The unexpectedly strong US economy has led to the market's low expectations for the Fed's interest rate cut this year. The current 4% US dollar interest rate is still a high interest environment. The world's major economies, except Japan, are all cutting interest rates. The US dollar index has broken through 110, a two-year high. The US dollar is so strong that the RMB naturally appears weak. This is the first factor. The second factor is that Trump threatened to impose high tariffs on Dongda after taking office, which will make RMB products have no price advantage. If you want to keep the price advantage of RMB products, you must weaken the RMB. For example, before the tariff is not imposed, a product with a cost of 100 RMB is sold to the American people for 20 US dollars. At the exchange rate of 7.2, it costs 13.9 US dollars and sells for 20 US dollars, and each product still has a profit of 6.1 US dollars. If Trump sets a 60% tariff after taking office, the product will rise to 32 US dollars. The price of the product will not have an advantage and no one will buy it. This will have a very big impact on exports. What should I do? Lower exchange rates and lower profits. If the RMB exchange rate against the US dollar drops to 7.8, the cost of a commodity of 100 RMB is 12.82 US dollars, and then the price of the commodity drops to 14 US dollars. After taking into account the 60% tariff, the price is 22.4 US dollars. Compared with the American people, the price has only increased by 10%, and the commodity price is still competitive. At the same time, for merchants, although the profit of a commodity has dropped from 43.9% to 8.7%, at least there is no loss, and there is still profit. If the RMB exchange rate against the US dollar continues to fall, the profit of commodity exports can be higher. On the contrary, if the exchange rate does not fall, export commodities will not make money at all. This is also the reason for the sluggish A-share market. The market is an expected market. When market makers and institutions believe that exports will be very poor and the economy will be very bad if Trump takes office, they will naturally sell stocks, and only retail investors can watch themselves being deeply trapped. Let's talk about the US stock market. The US stock market has been hit hard by the Los Angeles wildfires. The Nasdaq has now filled the CME futures gap, which was the gap that opened when Trump was elected in November. So I think it is a very good buying opportunity for the US stock market now. There are multiple factors: 1.Black swans like the Los Angeles wildfires don’t happen every day. 2. The big gap in CME was filled. 3. After three years of high interest rates, banks have long been unable to bear it. The Federal Reserve has always been a tough guy with a soft heart. 4. Trump is a businessman president. He is very happy to see macro-monetary easing. He put pressure on Powell in the last term, and Powell did it.