The Federal Reserve has fallen out, Powell has extinguished hopes for interest rate cuts, and Wall Street is in an uproar
Traders were waiting for interest rate cuts, but Powell said that current rates are sufficient to handle tariffs and inflation, which has halved the possibility of a rate cut in September. After three months of waiting, this result is simply unbearable. The dollar surged, gold was sold off and prices plummeted, and the S&P 500 also fell
Powell said it is too early for policy evaluation, and his speech does not resemble that of a central bank governor, it’s just pouring cold water on the market. There have long been divisions within the Federal Reserve, and a 9-2 vote seems unified, but Waller and Bowman firmly demanded an immediate 25 basis point cut, which is the first time since 1993 that two governors have opposed so strongly. Powell's so-called 'consensus' is deceptive, and the internal split is about to surface
Even more unreasonable is that while they say economic growth is weak, they also claim consumption is stable. The common people's wallets are thinning, yet Powell casually remarks that it is expected.
The reasons the Federal Reserve insists on not cutting rates do not hold water. They say they want to see the effects of tariffs, but tariffs have been in place for six months, inflation data has not changed much for five consecutive months, and the unemployment rate has slightly decreased, largely due to increasing the labor force by reducing immigration. They say inflation is still high, yet they are contradicted by the data, clearly a double standard
Wall Street veterans have seen through this. A BlackRock manager said Powell's words are not credible, Goldman Sachs also stated that unless there are significant employment issues or tariffs prove ineffective, don't expect a rate cut. Bloomberg's people are even more direct, saying that those trading stocks in the future need to be prepared to deal with risks, as even slight changes in data can cause market turbulence
Powell's firmness this time is a gamble on the Fed's remaining credibility. High rates are being maintained, and the common people's consumption is about to buckle. The White House's warnings are ignored, and such a hardline policy is being used to address the current economic situation, which will surely lead to bigger problems later
Hopes for rate cuts are gone, but it may trigger greater risks. Political disputes, economic issues, and internal divisions combined create a huge mess
I believe the next to be affected by these circumstances will likely be the money in your accounts. Currently, everyone is a deity, but the retail investors suffer. Follow Brother Li, and I will guide you to avoid pitfalls
