Macro Analysis Section
First, let's summarize the main points of Fed Chairman Powell's speech from early yesterday morning:
1 Interest Rates: High uncertainty, waiting for clear signals before adjusting policy stance.
2 Economy: Still robust, strong imports in the first quarter caused a drag, GDP growth compared to last year has slowed down.
3 Inflation: The impact of tariffs continues, which may push up inflation. The March PCE year-on-year is expected to be 2.3%, core PCE 2.6%
4 Employment: A decrease in research funding is expected to lead to a rise in the unemployment rate, currently remaining balanced overall.
5 Tariffs: The increase in tariffs far exceeds expectations, with very high uncertainty.
6 Crypto: Gradually becoming mainstream, a legal framework for stablecoins needs to be established, and some regulatory easing in banks is expected.
Currently, Powell states: Do not expect the Fed to intervene in the market in the short term; his responsibility is to maintain long-term inflation expectations. Therefore, the opportunity for a rate cut in May is very slim and may be postponed until June...
Yesterday, gold reached an all-time high, currently maintaining at $3335/ounce. The reason is naturally the weakening of dollar support, the strong dollar period may end. The escalation of international trade tensions and concerns about global economic growth have once again driven safe-haven demand. As long as uncertainty remains, gold will continue to strengthen. Every time gold prices rise, crypto generally falls, but this time is different, especially with Powell's effect on the market.
Summary:
The Federal Reserve no longer chooses a neutral signal in response to the turmoil caused by tariffs and has shown a strong stance of not lowering interest rates in the short term. Given the current situation in the U.S. and the massive selling of U.S. Treasury bonds, the weakening of the dollar index is indeed unexpected. However, from a personal perspective, the current economic turmoil in the U.S. appears to stem from international trade, while internally it is a political struggle among parties. Although Powell is an outsider, he does not indulge.
After all, the precise timing of selling bonds to buy stocks, this wave of divine prediction by Trump and his faction is thought-provoking. Trump, along with other politicians, collectively shorted capital. Now, Powell's decision not to lower interest rates is being clarified; 'unwilling to dress Trump’s private desires in public clothing'—Trump's various manipulations will ultimately lead to the Fed intervening only when the market is under extreme pressure.
Therefore, after Powell's comments yesterday, U.S. stocks continued to decline. Fortunately, cryptocurrencies were praised and have not yet been affected by the stock market.
However, it still does not mean that the level of 84000 can continue to stabilize in the future. It depends on the recent changes in tariff policies. However, the outlook remains bearish. Short-term tariff policies may change due to the attitudes of other countries, but the long-term tariff stick has not been put down.
Let's talk about Trump's favorable weapon: 'Tariffs'. As of yesterday, the U.S. has taken retaliatory measures, raising tariffs on China to 245%. It can be said to be an empty strategy. From the perspective of trade resources: the U.S. is the one experiencing shortages, and ultimately the U.S. itself will not be able to withstand it. Once the inventory is exhausted, renegotiation will occur.
The U.S. operates according to the laws of capitalism. Using this essence, capital will exert internal pressure when anxious. The 90-day period is a cooling-off period, which is a backdoor. The ultimate outcome is to force the restoration of normal tariffs, aligning with their interests.
It is anticipated that the old Trump wants to short the U.S. capital. The current U.S. is already a mess; it not only needs internal competition but also needs to engage in international geopolitical competition. Although it hasn't really caused significant harm yet, negative sentiment has already spread worldwide. Risk assets remain uncertain in the short term, just like Powell's remarks on crypto, which are merely a temporary emotional regulator for the current market and have not injected fresh blood into the crypto market.
Thursday, April 17
