Was Powell a dove or playing the hawk to scare the market before September?
As the September meeting approaches, the Federal Reserve's 'main character' Powell has begun his routine speeches again. Every time it reaches this point, he acts like a theater actor: once he appears, the audience goes quiet, and everyone starts guessing—will he perform as the 'gentle old dove' or the 'iron-fisted old hawk' this time?
When it comes to market sentiment, it truly is a mix of anticipation and fear. The anticipation is that: the Federal Reserve might ease up and hint that interest rate cuts are around the corner, allowing the stock market to celebrate; the fear is: what if Powell gets tough and declares 'we will fight inflation to the end', instantly flipping the market, and investors' wallets disappear like a balloon popping.
However, this Federal Reserve is no pushover. They are well aware of the market's 'over-interpretation syndrome', so when they speak, they act like 'masters of leaving blanks'. If they say too much, the market will latch onto key phrases; if they say too little, everyone feels uncertain. Thus, Powell often chooses a golden middle path: speaking halfway, leaving you to fill in the gaps.
The key point lies in inflation. Although the data isn’t as explosive as last year, stubborn service prices are still holding the fort, and oil prices are also restless.
In this situation, even if the Federal Reserve is inclined to cut rates, they must present a hawkish posture—otherwise, the market becomes overly optimistic, risk assets get too excited, and in the end, it's the economic stability that suffers.
So this time, I predict Powell will have a 'hawkish beak but dovish heart'. His words will be full of intimidation, but at the core, he is actually leaving room for future policy adjustments. He won’t tell you 'September rate cut', but he won’t close the door either. After all, the Federal Reserve has never been a babysitter soothing children, but rather a psychologist for the financial market, occasionally needing to provide you with a 'tranquilizer'.
Don’t ask whether Powell is a hawk or a dove this time; just ask—he is the bird that 'pretends to scare you, but is actually secretly feeding you milk'. In the investment circle, understanding the performance is more important than understanding the words. $ETH
