Where Did the Cows Go? Swift Arrivals and Departures

Come and go in a hurry? Not really, is it?

The frenzied bull market in the early stage was somewhat frightening. After finally rushing into the market, it was met with a blow to the head. Does the current economic situation support a soaring stock market that never looks back? Everyone probably has their own answer. However, with the current fierce correction, has the bull left? In fact, it should not have. Many people simply believe that the current economic situation is not good and conclude that the stock market cannot undergo a fundamental change. But the development of things requires a process. It is undeniable that there are indeed some problems with the current economic situation, but we are introducing positive policies to change this situation. The change in the situation is not something that can be achieved overnight, but requires long-term accumulation. The essence of finance is credit. When people believe that the future will be better, the future will naturally develop in a better direction. The improvement of the stock market is an opportunity, an opportunity for change. When people make money from it, money will naturally flow back into society, consumption, and reinvestment, which can form a virtuous cycle, and the economic improvement can become a reality.

Are there any futures that can trade the broad market? Futures include stock index futures, among which the trading targets are broad market indices such as the CSI 300 and the SSE 500. They also have the leverage characteristics of futures, which can amplify risk and return rates. Trading and buying and selling are more flexible and more adaptable to the current complex and volatile market.

However, some of the current macro data still show that there is a long way to go. The September social financing data show that the growth rate of M2 has rebounded, and the growth rate of M1 continues to decline, and the scissors difference has expanded again. What are M1 and M2, and what is the M1-M2 scissors difference? M1 represents narrow money, which is the sum of cash and demand deposits of units, while M2 is broad money, which includes not only M1 but also highly liquid securities and other assets. From M1 to M2, the liquidity of "money" gradually decreases.

M1 reflects the actual purchasing power and can directly reflect the vitality of the market economy. The higher the growth rate, the more money in circulation, the more active corporate operations and financing activities, and more money flows into consumption and corporate expansion reproduction, making consumption and terminal markets more active. M2 reflects actual and potential purchasing power and can directly reflect the total social demand and the pressure of future inflation. The higher the growth rate, the more idle money there is, the less willing enterprises are to finance or the more difficult it is to finance, and more money flows into non-demand deposits, making investment and intermediate markets more active.

What is the M1-M2 scissors difference?

The M1-M2 scissors difference refers to the growth rate difference between M1 and M2, which can directly reflect the expectations of enterprises for the future economy. If the M1 growth rate > M2 growth rate, that is, the M1-M2 is a positive scissors difference, it indicates that the market has an optimistic expectation for the economy, with more money in circulation, more money flowing into the real economy, and stronger economic vitality. If the M1 growth rate

By the end of September 2024, the M2 balance reached 309.48 trillion yuan, with a year-on-year increase of 6.8%. The M1 balance was 62.82 trillion yuan, marking a year-on-year decrease of 7.4%, and the gap between M1 and M2 widened to 14.2%. The expansion of the M1-M2 gap indicates an oversupply of funds and insufficient demand for funds. In simpler terms, it means that consumer demand is lacking, with more money flowing into savings, government bonds, rather than returning to the market for consumption. The negative M1 for five consecutive months further illustrates the lack of motivation for short-term investment deposits by enterprises, which are instead shifting towards long-term deposits and the like.

The latest M1-M2 gap shows a negative form and is still expanding, indicating that the economic situation has not fully recovered, and people's expectations for the economy are relatively pessimistic, preferring to put money into fixed deposits. Therefore, continuously monitoring the M1-M2 gap is an important means of understanding the direction of the economy. However, at the end of September, policies were just introduced, with a significant shift in policy intensity, which greatly boosted market confidence and sentiment. Nevertheless, the market still needs time to digest, and it is crucial to observe the economic response to the policies. Trading in stock indices should be approached with caution.