In the Early Hours of April 17, Fed Chair Powell's Speech at the Chicago Economic Club Was Like a Bombshell, Shaking the U.S. Stock Market—The Dow Dropped 1.73%, the Nasdaq Plummeted 3.07%, and Tech Giants like Nvidia and Tesla Suffered Significant Losses, with Nvidia Dropping Over 10% at One Point. The Trigger for This Plunge Was Powell's 'Hardcore' Statement on the Trump Administration's Radical Tariff Policy: 'The Fed Will Not Intervene to Rescue the Market During Volatility; We Choose to 'Observe Without Compromise' Regarding Stagflation Risks Caused by Tariffs.'
1. Powell's Three Key Signals
1. Market Volatility, Fed 'Stands Aside'
Powell Clearly Stated That Market Expectations for the Fed to Intervene to Calm Volatility May Be Incorrect. When Asked Whether He Would Intervene in a Stock Market Crash, He Responded Candidly: 'My Answer is No.' He Believes the Market is Digesting the Uncertainties Brought About by Trump's Tariff Policies, and Volatility is Inevitable. This Statement Shatters the Market's Fantasy of Fed 'Market Rescue' and Conveys the Fed's Caution and Restraint in the Current Complex Situation.
2. Inflation Control: Beware of 'Persistency' Risks
Powell Stated His Responsibility is 'To Ensure Price Increases are One-Time Events, Not Evolving into a Persistent Inflation Process.' He Pointed Out that the Intensity of the Trump Administration's Tariff Policy Exceeds Expectations and May Bring Persistent Inflationary Pressure. Currently, the U.S. Core PCE Inflation Rate Still Lags Behind the Target, Combined with Tariff Impacts, the Inflation Situation is Not Optimistic. The Fed Will Closely Monitor to Prevent Short-term Shocks from Evolving into Long-term Inflation Expectations.
3. Cryptocurrency: Mainstreaming and Regulatory Framework Development
In Powell's Speech, Cryptocurrency Unexpectedly Became a Highlight. He Stated that Cryptocurrencies are Gradually Becoming Mainstream, and Establishing a Legal Framework for Stablecoins is a Good Approach. This Statement is Seen as a Positive Signal for the Cryptocurrency Market; If the Regulatory Framework Becomes Gradually Clear, the Digital Asset Industry May Welcome a Healthier Development Environment.
2. Market Turbulence: The 'Ice and Fire' between U.S. Stocks and the Cryptocurrency Market
1. U.S. Stock Market Plunge: Eroded Confidence and Stagflation Worries
After Powell's Speech, U.S. Stocks Plummeted. The Dow and Nasdaq Both Fell, with Tech Giants Experiencing Severe Market Capitalization Losses. The Market is Concerned About the Stagflation Risks Caused by High Interest Rates and Tariffs, Leading to Uncertain Corporate Earnings Prospects and Eroding Investor Confidence. Powell's 'Indifference' to Market Rescue Further Amplified the Market's Perception of the Fed's Difficult Balancing Act Between Inflation and Growth.
2. Cryptocurrency Market: Short-term Pressure, Long-term Optimism
In the Short Term, Market Risk Appetite Decreases, and Cryptocurrencies, as Risk Assets, Are Also Affected. However, in the Long Run, Powell's Recognition of the Mainstreaming of Cryptocurrencies and His Positive Attitude Towards Regulatory Frameworks Provide a Shot of Confidence to the Market. If Regulations Gradually Loosen, the Cryptocurrency Market May Welcome New Development Opportunities, Attracting More Capital Inflows.
3. The Fed and Trump: Economic Predicament Under Policy Games
Powell's Tough Statements Reflect Policy Differences Between the Fed and the Trump Administration. On the Surface, Powell Chooses 'Anti-Inflation' Over 'Job Preservation', but in Reality, He is Protecting the Fed's 'Institutional Credibility': Yielding to Political Pressure and Cutting Rates Early Could Repeat the 'Out-of-Control Inflation' Scenario of 2021; Maintaining Independence is Both a Legal Mandate and the Last Line of Defense Against the U.S. Falling into the 'Monetization of Fiscal Policy' Trap.
The Deeper Contradiction Lies in the Fact that Trump's Tariff Policy is Essentially a 'Bet Against Globalization,' which Completely Conflicts with the Fed's 'Data-Driven Decision-Making' Bureaucratic Logic. When Tariffs Become a 'Political Weapon', Central Banks Must Use 'Rule-Based Weapons' for Hedging—This is Not Powell's Personal Choice, but the Self-Defense of the Fed's Century-Old System.
Powell's Tough Stance Reveals the Harsh Reality of the U.S. Economy: Amid Political Polarization and Policy Fluctuations, the Fed's 'Technical Control' is Failing. The Real Crisis is not Inflation or Recession, but the Collapse of Market Trust Caused by 'Policy Games'. When Tariffs Become 'Schrodinger's Hammer', and Whether to Cut Rates Turns into a Political Bargaining Chip, Investors Must Consider: In this 'Fed vs. Trump' Century-long Game, Who Will Ultimately Get Hurt?
