S&P 500 Surges 742 Points, Dow Closes at 40,988.81
Abstract: The American policy is truly aggressive, all heavy hitters! Trump reveals his policy plans, tax cuts and low interest rates, support for TikTok and cryptocurrencies. As long as it is beneficial to the United States, all policies are supported and backed.
Main Text:
Rising U.S. stocks with interest rate hikes, and still rising with interest rate cuts
This is the advantage of a leading economic body, and it is also the reason why major countries strive to become leaders. Under the advice of Uncle Longgen, Jimmy chose to be the boss.
Market forecasts predict a 100% chance of the Federal Reserve cutting interest rates in September, leading to a significant surge in U.S. stocks, with the Dow Jones Industrial Average jumping by over 742 points and the S&P 500 index reaching new highs. However, these benefits are merely market expectations; behind them, Trump's active policy plans are the most significant highlights.
Media reports indicate that former U.S. President Trump recently discussed his economic policy plans in detail at a communication event. In this exchange, Trump touched on numerous heavy-hitting topics such as tax cuts, interest rates, increased oil drilling, and support for TikTok.
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Trump stated: Trump's economics equate to low interest rates and low taxes... This is a great incentive that can get things done and bring businesses back to our country.
In simple terms, it's about opening up further and further, and giving benefits over and over, as world powers have entered a value war. Ultimately, it's a competition over who has the larger market, as entrepreneurs also make choices. However, entrepreneurs generally opt to benefit from both sides, so it is expected that various loopholes will still emerge. These will continue to be a subject of ongoing contention.
The U.S. is considering stricter measures to pressure Japan and the Netherlands to restrict chip trade with China, the Ministry of Foreign Affairs states: We hope that the relevant countries will firmly resist coercion.
This issue will not have a solution in the short term and will continue to be a subject of ongoing competition. U.S. stocks remain strong, and the Dow Jones Industrial Average at 40988.81 points is also a sight to behold, as their constituent stocks are too strong, with companies almost all holding leading positions, which are generally difficult to shake.Interest rate hikes lead to a rise in U.S. stocks, and so do interest rate cuts. This upward trend signifies an increase in national and economic status. Currently, A-shares are trending towards an index-driven bull market, with the drawback being a temporary scarcity of leading companies, which results in insufficient index resilience. However, the index bull is a significant international trend and a market law. Recently, the A-share market has been receiving frequent positive news, but it still cannot escape a persistently weak trend, which is part of the transition process. In the future, one can refer to the U.S. and Indian stock markets; if you can find a company without competitors, you will prosper. Such companies generally experience a sustained, slow bull market rise, which is very strong. The market is currently transitioning, and this direction has just begun.
The Beijing Stock Exchange 50 (BSE 50) surges by over 7%! Policy dividends stimulate the market. In terms of market news, some media predict that some stocks of the Beijing Stock Exchange will be included in the All-A-Share Index, which implies that the included companies will receive ETF fund allocation and more financial support, thus driving today's significant rise. However, according to market laws, small-cap stocks will be challenging in the future; as long as there is internationalization, small-cap stocks will struggle. Leading companies grow larger, while smaller companies generally shrink, unless they are industry leaders without competitors, waiting for industry development to drive growth. Otherwise, small companies, under the pressure of oversupply and internal competition, generally cannot wage a value war. A single action by a quick-moving radish can even intimidate Didi's taxi services.
I still believe that A-shares are suitable for T+0 trading. After the last suspension of securities lending, the market still could not rise and relied on a large amount of funds to support ETF indices. This indicates that the market might still fear quantitative trading, but quantitative trading can bring significant commission income to securities firms, which is beneficial for the country. If quantitative trading is halted and the market still cannot rise, it would be difficult to reverse the decision. Therefore, T+0 can increase trading volume and fill the gap left by the suspension of quantitative trading. In this way, if the market does not rise after halting quantitative trading and opening T+0, there would not be much market impact. It is always necessary to try; if it can save the market and invigorate it, I think it should be considered.
Today's data shows that the trading volume of four Shanghai-Shenzhen 300 ETFs reached a high since March 5, totaling nearly 23.5 billion yuan; among them, the trading volume of Huatai-Pine Shanghai-Shenzhen 300 ETF reached 8 billion yuan. This is not surprising, as the overall trend is still the national team supporting the market, mainly buying ETFs to support the index, which can support the index and reduce the impact on individual stocks.
If this continuous buying without rising continues, I think there is a possibility of changing the rules, so no matter how I look at it, T+0 is likely to emerge. The market is in dire need of T+0 now, which is due to the high demand for the suspension of quantitative funds. These quantitative funds, with their returns not improving, continuously pull down the market, which is not beneficial for anyone, and no positive news is seen.
Huan Fang reveals the trading cycle. Currently, most of the funds in A-share quantitative strategies are a combination of short, medium, and long cycles. Overall, quantitative trading is about changing positions every 1 to 3 weeks (corresponding to an annual turnover of 35 to 105 times for both sides); but if we exclude the part that provides short-term liquidity (the proportion of funds is not high, but the proportion of trading volume is high), the turnover rate of most funds is lower. Quantitative investment always faces a natural law: as the scale increases, trading turnover naturally decreases.
Huan Fang Quantitative, known as one of the "Four Kings" in the quantitative industry, once had a management scale that soared to tens of billions, and due to market fluctuations, the current management scale is rumored to have dropped to over 40 billion. It is still a leading quantitative institution in the market. However, quantitative trading also has its drawbacks; it cannot perform well when the scale is too large. For example, Simons, known as the father of quantitative trading, has a return rate that exceeds Buffett's, but the scale is not even a fraction of Buffett's.Magic Square Discloses the Quantitative Fund's Stock Selection Model
Actually, it's quite simple, just like how your software selects stocks. The only difference is that you don't have the massive funds they have to exploit the market. It's all about stock selection, first choosing the good ones, and then exploiting them. In this situation, if the stocks aren't exceptionally good, they are easily exploited to the point of collapse.
Domestic regulation considers investor trading behavior as high-frequency trading if a single account has a maximum of 300 orders per second for submission and cancellation; and a maximum of 20,000 orders per day for submission and cancellation. At this speed, no one can achieve it manually, right? It's like brushing likes and popularity online; brushing popularity is not compliant, and logically, the volume of transactions should not be considered compliant either.
Responding to the Scale of the Quantitative Market
There is no precise data on the scale of quantitative institutions at present, only vague estimates. Considering quantitative private funds, public quantitative funds, and overseas quantitative institutions, the overall scale should reach over 1000 billion; if we include the volume of transactions by institutions and individual investors using algorithmic trading applications, the scale is even larger.
Overall, the market's weakness is not due to quantification; Magic Square attributes the market's weakness to the market itself. The issue is that people are not complaining about the market being weak, but rather that the market was already weak, and your quantification is repeatedly exploiting it. This leads everyone to believe that the market could have been less weak, and it's the quantification that has made it so weak.
For all these contradictions, in the end, only practice can resolve them. Right or wrong, just suspend the quantitative funds and try. You will know the effect.
For quantitative funds, there are indeed places to go. If quantification relies on high-frequency exploitation, they can be directed to the futures market. Our country's futures market is also vast enough to accommodate quantification at the trillion level, and its impact on the stock market is relatively limited. Although some views believe that stock index futures suppress the market, I think we should take it step by step, first see the effect, which is reasonable. It's much better than spending tens of billions every day to support ETF funds and passively protect the market.
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