CICC: Whoever becomes the Federal Reserve Chair will find it difficult to shake the normalization of balance sheet expansion

Deep Tide TechFlow News, February 4th, according to Jin10 Data, reports that China International Capital Corporation (CICC) research reports state that we believe, given the current dollar liquidity system’s operational rules and the strong constraints formed by the large fiscal trend, choosing who will be the Federal Reserve Chair is unlikely to significantly impact the normalization of the balance sheet. Although the Fed began expanding its balance sheet at the end of December last year, with marginal improvements in liquidity, narrow liquidity (reserves) remains well below the “ample level” lower limit. Both the dollar liquidity volume and price indicators still indicate a relatively tight state since the pandemic, which we believe is the fundamental reason for the recent panic selling in the market. Under debt pressure, election pressure, and financial market stability concerns, the choice of who becomes the Fed Chair may not make much difference, and an expansion of liquidity trend is likely. The bull market in global assets may continue, and this year we remain optimistic about the Chinese and U.S. stock markets benefiting from the trend of dollar liquidity improvement (especially Chinese stocks, which are significantly underweighted by global active funds), as well as gold, silver, and copper.