For Trump, the most important thing is to force the Federal Reserve to cut interest rates, and currently, there is only one thing that can achieve this wish, which is for the U.S. stock market to decline. Since he took office, what has been his most important goal? The Federal Reserve needs to cut interest rates!
He needs a low-interest-rate environment to drive more people to finance and invest, and he also needs to issue U.S. bonds. If the Federal Reserve continues to maintain relatively high interest rates, it means that the dollar index will continue to strengthen, which is very unfavorable for the return of manufacturing.
So why doesn't the Federal Reserve cut interest rates? The Federal Reserve believes that the U.S. economy is too good to lower rates; it could overheat, and the CPI has not been fully controlled yet.
So Trump wants to cut interest rates, but the Federal Reserve is unwilling to do so. What can Trump do? He can only artificially find ways to induce an economic recession, and what is somewhat awkward in the U.S. economic structure? Consumption accounts for 80% of their entire economic structure, and 64% of American households' assets are in the stock market! Do you understand?
What kind of recession will directly affect consumption? That's right, it's the U.S. stock market! Just like when Chinese real estate retracts, domestic consumption will decline.
Because the public's confidence in the future will be lost. The same goes for the U.S.; as long as the stock market drops a little more, you'll find that U.S. consumer power will be significantly affected, the CPI will come down, and the Federal Reserve will have room to cut interest rates.
Therefore, for Trump, the only result he hopes to achieve can really only be accomplished if the U.S. stock market declines. So, when you see him being interviewed, didn’t he say? He said that our perspective in China is of a hundred-year plan. His statement actually makes it very clear that to make America stronger, some short-term costs indeed need to be paid.
So, can the next decline in the U.S. stock market drive the Federal Reserve to really achieve interest rate cuts and monetary easing? We will wait and see.
