The understanding king's high-profile threat to make Old Powell leave early, let me first share my view: even if he has the heart, he does not have the courage.
The power struggle between the understanding king and Old Powell is something I predicted long ago (see: the top strategies of top players). This is a fight of the executioners, with no room for compromise.
From a technical operations perspective, even if the understanding king breaks the 1935 Supreme Court ruling and removes Old Powell, the Federal Reserve can immediately re-elect Old Powell as the chair of the FOMC (Federal Open Market Committee), continuing to hold the power to cut interest rates. Moreover, Old Powell has already served two terms as Federal Reserve chairman with outstanding achievements, and his status is well established; he is deeply rooted, and many people in the Republican Party hold him in high respect.
I believe the understanding king will use all means to force Old Powell to retreat, including threats, but I absolutely do not believe he dares to genuinely take action against Old Powell, as that would be the last straw that breaks the camel's back, leading to his further alienation.
However, it is true that the understanding king has lost patience with Old Powell. In the first quarter, the U.S. Treasury accumulated net financing of 800 billion dollars, progressing slower than in the past three years, which has also caused the U.S. Treasury's TGA account to currently drop to the level of 300 billion dollars. Without the cooperation of the Federal Reserve, the understanding king indeed has fewer cards left to prop up the market.
For the market, the struggle between the President and the Federal Reserve has shifted from the shadows to the spotlight, which has already become a bearish factor. Although Old Powell mentioned support for cryptocurrencies in his speech, it cannot offset the current macro bearishness. Bitcoin and U.S. stocks are still facing headwinds, and neither has emerged from their bottoming patterns. Without a recovery in the macro environment, there will be no leverage to support a bull market in risk assets. For long-term investors, the Bitcoin range around 70k and the previous low of the Nasdaq certainly can be a starting point for positioning. However, positioning is not about going all in; it is important to emphasize that the process of positioning is slow and requires continuous market forecasting. At the current stage, we are still far from a bull market, and each dead cat bounce is merely an arbitrage opportunity for short-term technical experts. Ordinary people should not misjudge and chase highs, risking their capital before a reversal that has not yet arrived.
