This round of encouraging stock market growth, driving consumption, and boosting financial morale may only be superficial work. The deeper work is to reduce debt.

This is something that both Dongda and Xida have to face. After several years of economic competition, a large amount of internal debt has been generated that cannot be digested, which will lead to economic stagnation and financial difficulties.

So, what can the rise of the stock market bring? In the end, it can help state-owned enterprises and local governments resolve the huge debt system accumulated in recent years.

Therefore, based on this inference, I believe that this round of stock market cycle can be divided into three stages:

1. The stock market surges and continues to rise. Foreign capital waits and sees or a small amount of foreign capital enters the market. The core of the performance is that the daily trading volume is maintained at 1-3 trillion.

2. Retail investors rush into the market, foreign capital slowly enters the market, the national team takes over the market, and state-owned and local enterprises begin to issue additional stocks to cash in on debt. The core of the performance is that these actions may be reported in key media, and the daily trading volume is maintained at 1-2 trillion transactions.

3. Institutions have left the market, state-owned and local enterprises have completed share issuance and cashing out debts, the stock market has entered a downward trend, and retail investors have gradually been trapped. As for the future market, it depends on the support of later economic data.

Therefore, based on the situation before the holiday and the expectations after the holiday, I judge that we are still in the early stage of the first stage.

According to the latest data disclosed by the highest agency, the statutory debt balance of Dongda local government is 41 trillion yuan, excluding municipal investment bonds. If municipal investment bonds are matched with local debts at a 1:1 ratio, then the current total amount of local debt should be around 80-85 trillion yuan.

According to this logic, if we want to complete the debt conversion of 80 trillion yuan of local government debt, we need to increase the stock market to about 1.2 times the GDP. Currently, the expected GDP of Southeast University in 2024 is about 130 trillion yuan. In other words, the current stock market needs to be pulled up from the current 90 trillion yuan to about 155 trillion yuan.

Many people may ask, is the only purpose of boosting the stock market to pay off debts?

In fact, it is not. Debt reduction is just basic work. If it goes smoothly, it can change the economy, boost the economy, and stabilize the bull market stage of the stock market in the long term, which is also a good thing.

But the core issue is, if we turn the valuation of the stock market into value, the current stage is the stage of flooding the stock market. There is too much water, but more fish are needed in the future, so the current rise is unreasonable and can be regarded as a valuation increase.

Two things to note: whether to use this as a signal to exit the market is up to you to decide.

1. Data on additional issuance of local enterprises. If the data on additional issuance of local enterprises turns from a peak to a decline, it means that debt repayment is coming to an end and we need to pay attention to risks.

2. Closely observe the attitude of the top leaders towards OTC leverage. Once the market is overheated, the enthusiasm of retail investors will inevitably drive OTC leverage crazy, especially in a loose economic environment. Excessive leverage will naturally increase the original risk of the market and will also divert water. Once this happens, the top leaders will definitely take certain containment actions.

Once we start to crack down on this type of over-the-counter leverage, it means that the risk has reached an unbearable level. We must pay attention to this point because once leverage is cracked down on, many large capitals and institutions may begin to withdraw in stages.

Back to the cryptocurrency circle, here are three major US economic events that may affect the cryptocurrency market this week that need attention!

Consumer Price Index (CPI)

The highlight of this week's U.S. economic data will be the release of the Bureau of Labor Statistics (BLS) on Thursday, October 10.

Consumer Price Index (CPI) data for September.

Economists expect overall inflation to rise 0.1% in September. If the data released on Thursday is better than expected, it would indicate that inflation may pick up again in the coming months. This could limit how quickly the Federal Reserve can further reduce its policy rate and, more importantly, reduce the likelihood of further gains for Bitcoin.

Producer Price Index (PPI)

The Bureau of Labor Statistics will also release the core producer price index (PPI) for September this week. This data determines price increases at the producer level. Its impact on financial markets comes from the fact that it measures inflation at the wholesale level.

A rise in the PPI indicates rising production costs, which could lead to higher costs for the energy and hardware needed to mine and process cryptocurrencies. Therefore, Friday’s rise in the core PPI could have a negative impact on Bitcoin and cryptocurrencies.

Third quarter earnings

As an additional surprise to U.S. economic data, the third-quarter corporate earnings season kicks off this week. Large financial companies such as JPMorgan Chase (JPM), Wells Fargo (WFC), and BlackRock (BLK) will report on Friday, which could also move the market.