The big one is coming!!! 🚀🚀🚀
In September, the Federal Reserve is expected to cut interest rates, and it is basically a done deal, with a probability as high as 90%. What the market is currently buzzing about is whether the rate cut will be 25 basis points or a more aggressive 50 basis points. Goldman Sachs has already taken the lead in 'sounding the alarm,' throwing out the possibility of a 50 basis point cut.
Looking back at the Federal Reserve's actions this year, there are some similarities to last year. In July last year, it was supposed to be the moment to start cutting rates, but the Federal Reserve chose to hold firm and take no action. As a result, subsequent employment data came in 'cold,' far below expectations, and by September, they had no choice but to 'hit the brakes' and cut rates by a substantial 50 basis points to salvage the situation.
This year's plot seems to be replaying. In July, when the market was all anticipating a rate cut from the Federal Reserve, Powell chose to stick to his guns and keep rates unchanged. However, the subsequent employment data hit hard; the cooling of the U.S. labor market was much faster than imagined. The non-farm payroll data for July was not only far below expectations but also drastically revised down by nearly 260,000 jobs for the previous two months. This 'tragedy' of data undoubtedly made the Federal Reserve's previous reluctance to cut rates quite awkward, raising many questions from the outside.
Now looking back, the reason Powell insisted on maintaining rates in July may have deeper reasons behind it. It is highly likely that it was to cover Wall Street and Jewish capital, allowing them to exit the U.S. stock market safely. After all, if they had cut rates in July, market liquidity would increase, and stock market volatility would intensify, which might not allow these capitals to finish their withdrawal arrangements in time. After a period of operation, they have likely completed their exit, so by September, the Federal Reserve can open the rate cut channel without any concerns, and given the poor performance of the current economic data, it is not ruled out that they might directly unleash a big move of a 50 basis point cut.
Cheng Ge will be laying low with some strong coins during this event, anticipating and entering at good positions ahead of time!
