Powell's stance remains uncertain, and Wall Street traders have all become 'linguists'
With the September interest rate meeting approaching, Powell once again takes the stage, and the investment circle immediately transforms into the 'mind-reading association.' Some focus on every pause he makes, others analyze the angles of his gaze, and some even wonder—does his coughing suggest the economy is cooling down?
If we talk about the Federal Reserve Chairman's 'verbiage,' it truly deserves to be called magic in the financial world. A word leaning towards 'easing' makes the stock market dance, while a sentence with a hint of 'hawkishness' turns the bond market into a deep freeze. But the problem is—this time, Powell's position is like a medium-rare steak, somewhat bloody yet a bit cooked, leaving one unable to take a bite.
The market has split into two factions: the doves say, 'Inflation is already coming down; if the Federal Reserve tightens further, it will crush the economy;' the hawks retort, 'CPI is still sticky; easing too early would be prolonging inflation.' Meanwhile, traders are simply calculating: no matter if he is a hawk or a dove, as long as I can guess correctly in advance, I can make money while others are still struggling.
To put it bluntly, this pre-September speech feels more like Powell's 'code game.' He needs to soothe market sentiments while not letting people feel that the Federal Reserve is uncertain; he must show a tough stance while not scaring the stock market into submission. The result? Investors are left playing Tai Chi, verbally shouting 'steady,' while secretly opening positions.
I personally think we should stop fixating on whether he is a hawk or a dove, because Powell is more like a 'chameleon.' The real key lies not in what he says, but in making you believe you understand.
Let’s stop analyzing his few seconds of pauses and blinks; next time Powell speaks, I suggest preparing a 'simultaneous interpretation version of soul food' for Wall Street. Otherwise, the ultimate winner of the hawk-dove battle will merely be the joke-teller.
