This round of volatility may be even more severe than the trade war.
1. The world is anxiously watching the escalation of the situation regarding the 'firing of Federal Reserve Chairman Powell.' The credibility of the Federal Reserve, as the world's strongest central bank, largely relies on its historical independence from political influence. Removing Powell would severely damage an already fragile market, with consequences potentially far exceeding the smoke of trade wars.
French Finance Minister Le Maire warned that if Powell is ousted, the credibility of the dollar will be threatened, the cost of U.S. debt repayment will rise, and the U.S. economy will fall into severe chaos. The consequences will eventually force the U.S. to negotiate to end the tensions.
The market may receive warnings in advance but cannot take preventive measures—because the impact is too significant to estimate.
· First, the movement of the dollar will be closely monitored. If it continues to decline, it likely indicates that this news is starting to impact the market. The U.S. stock market began to decline toward the end of Thursday because Trump claimed he would fire Powell. The situation escalated further on Friday, but most global markets were closed that day, so the actual impact has yet to be fully realized.
· Second, the threat to the independence of the Federal Reserve has suddenly increased, which will both intensify market pressure and lead to a loss of trust in the Federal Reserve among investors, shifting the situation toward stagflation. Political interference in monetary policy can bring about a detrimental 'boom-bust' cycle, ultimately resulting in economic instability and rising inflation.
· Third, even if investors are fully aware of this risk, they cannot truly reflect it in pricing. This risk is too great and too widespread; it was the same during the trade war—yet the impact of this issue will be larger and more shocking than the effects of the trade war. Looking back at the trade war, even if investors knew a month ago that 'liberation day' would arrive, they could not have predicted the subsequent crash.
2. The Chinese market may respond to Trump's statement of 'reaching an agreement with China within a month.' If the reaction is calm, it indicates that Trump's influence on the market has dissipated. An increase is not necessarily a good thing; it suggests that Trump's influence on the global market still persists, and while short-term prosperity may be considerable, it lays the groundwork for a greater risk of correction. Conversely, a decrease is not necessarily a bad thing; it indicates that the market is beginning to perceive Trump as 'noise,' which could greatly benefit future stability. #特朗普施压鲍威尔 $BTC
