According to a report by Cailian Press on the 10th, the three major indices continued to weaken, with the ChiNext Index falling more than 1%, the Shanghai Composite Index down 0.58%, and the Shenzhen Component Index down 0.83%. Sectors such as software services, gaming and media, consumer electronics, and photovoltaics saw significant declines. Nearly 4,000 stocks fell on the Shanghai, Shenzhen, and Beijing markets, with nearly 1,000 stocks dropping more than 3%.

The recent continuous decline in the stock market has suddenly brought a chilling sensation to many retail investors. Some joked, "I've been through this before, having lost half my investment back then. Now I'm back as a king, already down by half again." Others lamented, "The rise in the stock market is like picking up soil with a needle, while the fall is like sand being washed away by water."

For this decline, Xueyin had repeatedly and earnestly warned in the previous four articles. The three sell points mentioned in the early three articles were around the dates of the month, the month, and the month. In the most recent article, "Trump Returns to the White House," it explicitly advised, "On the day of the month, the state will announce significant positive news, and beginners can exit promptly after a big rise, as taking profits is the key." As a result, the stock market turned directly downward after hitting a high point on the day of the month with the announcement of the ten trillion yuan debt resolution news, and by the day of the month, the market had dropped points, with nearly 1. trillion yuan in funds flowing out.

From the beginning to the end of the trading days, many investors not only lost the profits they had made after being advised to enter the market by Xueyin on the 1st, but also saw their principal reduced in some cases of chasing strong stocks and selling at a loss. However, those readers who followed Xueyin's advice and exited the market no later than the 1st were fortunate to avoid a loss of around % over consecutive trading days.

When Blood Drink first advised to exit, someone in the background was indignant, claiming that they would never leave for the sake of national sentiment. Tragically, stock trading is first and foremost a market, and a market has its own inherent logic. Personal subjective emotions cannot sway the objective laws of market operation.

So, why did this round of the stock market experience consecutive days of decline?

【Reasons for Decline】

I. Incorrect Analysis of Trump's Economic Policies Towards China. After Trump took office, some experts believed that Trump's election would lead to rapid interest rate cuts, causing the dollar to weaken further. If this happened, the dollar would flow rapidly into China. At that time, the Chinese stock market would surge. Based on this theory, a few highly influential experts continuously advocated for a massive stock market rally, with specific predictions being: since Trump's election was on a certain date, the period from that date to next year's date would be a great opportunity for large-scale buying. This conclusion was widely spread through self-media platforms like short videos that quickly reached a nationwide audience. Ultimately, these followers became the biggest victims of the recent market decline.

This reasoning commits a fundamental error due to stereotypical perceptions of the Republican and Democratic parties. They assume that during the Republican administration under Trump, the party consistently advocated for interest rate cuts, thus naturally expecting that Trump's inauguration would immediately lead to rate cuts. In reality, a comprehensive review of history reveals that the periodic highs of the US dollar index were almost all achieved during Republican presidencies. For instance, during the presidency of Republican President Reagan, the dollar index reached its historical peak; in September , during the presidency of Republican President Bush Jr., the dollar index hit the second-highest record. Interestingly, these dollar index highs were all set in the second year of a Republican president's term. Therefore, even if one speculates that the dollar would cut interest rates under Trump's administration, it is highly unlikely to occur in the first year of his presidency, let alone the fact that there are still about two months left before Trump takes office. Thus, the experts' reasoning was flawed from the start, and the stereotype that the Republican Party and Trump's administration would cut rates misled them.

As predicted by Xueyin, the facts also showed that after Trump's victory, the US dollar index quickly rose, similar to the early days of the Bush and Reagan administrations. On the specified date, the US dollar index broke through, reaching its highest level in years. What surprised the market the most was that the rapid strengthening of the dollar occurred just after the Federal Reserve's降息 of basis points on the specified date. The strengthening of the dollar leads to the depreciation of other countries' currencies, including the Chinese yuan. The depreciation of the offshore yuan indicates that foreign investors are selling off the yuan, signaling a sell-off of yuan assets by foreign investors. Obviously, the immediate strengthening of the dollar after Trump's election and the sell-off of yuan assets by foreign investors all indicate that funds are continuously flowing into the dollar rather than entering China. This also demonstrates that after the Federal Reserve's降息 in the specified month, the influx of foreign capital into China has begun to recede, a result of the Federal Reserve's rapid打击 of interest rate hike expectations and the effectiveness of the US's quick shift in financial offense and defense.

Xueyin mentioned in a previous article, "What Impact Will the Fed's Rate Cut Have on China?", that the current small rate cut by the Federal Reserve is merely an adjustment to previous rate hikes and should not be seen as evidence of a comprehensive shift in U.S. monetary policy. Notably, the Federal Reserve is still committed to reducing its balance sheet, selling off -- billion dollars of U.S. Treasury bonds each month and significantly recovering U.S. dollars in cash. This means that the Federal Reserve continues to tighten domestic U.S. dollar liquidity. Under this operation, the trillion-dollar Treasury bonds on the Fed's balance sheet have been reduced to about trillion dollars. From January to the present, the Federal Reserve has withdrawn trillion dollars of liquidity from both domestic and international markets, leading to a global capital flow that is shifting from other countries to the United States and offshore dollar centers. As long as the Federal Reserve maintains its balance sheet reduction, global capital will continue to flow into the United States and dollar centers. As long as the United States continues to maintain a high interest rate differential with other currencies, this capital flow will be difficult to change. Once the Federal Reserve reduces its balance sheet to near trillion dollars, the U.S. economy will be the first to achieve a soft landing. In contrast, the Chinese economy is still in a high-altitude flight, far from reaching its target airspace, and achieving a soft landing will require further effort.

Nevertheless, the concentrated breakthroughs in technology such as semiconductors, artificial intelligence, new energy technologies, and solid-state batteries in China will inevitably lead the country to emerge from the economic downturn in the shortest time possible. The Chinese stock market will also experience a bull market that attracts global attention once again! Currently, Wall Street analysts have already advised U.S. investors to invest in the Chinese and European stock markets amid the uncertainty risks following Trump's inauguration.

Currently, tactically, the Federal Reserve has recognized that cutting interest rates would allow China to intercept and repatriate capital flows. Therefore, on the specified date, Federal Reserve Chair Jerome Powell, while speaking to business leaders in Dallas, continued to deliver hawkish remarks, persistently dampening expectations of a rate cut. This has led to a continuous decline in market expectations for a Federal Reserve rate cut in the coming month. If the Federal Reserve's balance sheet reduction proceeds smoothly, it is highly likely that the U.S. will cease interest rate cuts by the beginning of the year and maintain high interest rates. By then, under the impact of a "strong dollar + low oil prices," economic difficulties in other countries will intensify, leading to an increase in international capital seeking safety in the dollar. The Federal Reserve aims to complete its balance sheet reduction to $1 trillion by the fourth quarter of the year. Once the U.S. economy achieves a soft landing after the balance sheet reduction, the U.S. will seize the opportunity to trigger a global economic crisis, stirring up a storm of geopolitical turmoil!

For China's stock market, as long as the Federal Reserve continues to maintain its monthly $X billion balance sheet reduction and persistently suppresses expectations of interest rate cuts, international capital inflows will be significantly discounted, and capital inflows from abroad into China will gradually dry up or even reverse. With the loss of external liquidity injections, the internal entropy (disorder) within the closed stock market will only increase without decrease, ultimately leading to a situation where everyone is selling, as vividly demonstrated by the stock market from month to early month.

II. Deviations in the Expectation of the Ten Trillion Plan. On the date, the state released a ten trillion debt resolution plan aimed at addressing local debt issues. China's allocation of such a significant amount to resolve local debts is actually in response to the Federal Reserve's rapid balance sheet reduction plan. The U.S. has reduced its debt by one-seventh in just two years. The Federal Reserve's balance sheet reduction can be seen as the U.S. itself resolving its debt, with much of the funding coming from abroad. China is also accelerating its debt resolution, which means the Chinese government is also conducting a Chinese version of "balance sheet reduction" on local and central government assets and liabilities. Both China and the U.S. are resolving debt and reducing their balance sheets, essentially aligning their financial strategies. Since balance sheet reduction naturally involves withdrawing liquidity from the market, it inevitably leads to a decline in stock markets. The U.S. is no exception; after Powell's speech on the date, U.S. stocks suffered a significant drop. On the date, following the announcement of the ten trillion debt resolution plan, the Chinese stock market also experienced a sharp decline. The simultaneous debt resolution in both China and the U.S. results in high-risk stock markets declining concurrently, illustrating the adverse effects of debt resolution and balance sheet reduction on stock markets.

Debt resolution is not about easing monetary policy; it involves using real money to purchase bonds, which temporarily strengthens the short-selling forces. Unlike the US stock market, which benefits from significant foreign institutional investments, the Chinese stock market lacks such support. Therefore, while both markets may experience declines, the US market might fall by a certain percentage, whereas the Chinese stock market could see a larger correction. China's massive debt resolution initiative aims to address local government debt, boost the national economy, revitalize real estate investment, and quickly extricate the country from slow economic growth. This is a policy that benefits both the nation and its people. At the same time, this measure is positive for the bond market but inadvertently increases selling pressure in the stock market. The erroneous analyses of so-called experts exacerbate this decline. They equate debt resolution with the trillion-yuan stimulus of 2008, leading to a mismatch in analysis that is widely propagated through short videos and other media, amplifying investors' expectations for increased capital in the stock market. This has turned a positive for long-term economic development into a significant negative for the stock market. As a result, the stock market, after hitting a high at the opening on a certain day, began a sustained downward trend, while the liquidity accumulated in the stock market leaked out, facilitating debt resolution.

III. The Perfect Timing. How is Xueyin able to accurately predict that the stock market will decline on a specific date? Besides knowing that experts' misinterpretation can lead to the disappointment of expectations on the day policies are introduced, there is an important time point that cannot be overlooked. At the end of each month and the beginning of the next, local and national budgets are about to be exhausted. At this time, debts increase and there is an urgent need for funds to alleviate the debt, prompting major players in the stock market to sell stocks for cash.