In the ever-changing financial markets, many signs indicate that we may currently be in the tail end of a bull market, and the glory of the bull market seems to be coming to an end.
From a macro policy perspective, according to normal logic, September does not possess conditions for an interest rate cut. The Federal Reserve has always set its inflation target at 2%, with stable employment and reducing inflation as its core goals. Looking back at September of last year, to help the Democratic Party win the election, the Federal Reserve unexpectedly cut interest rates by 50 basis points, when the inflation data was 2.4 and core CPI was 3.3. Now, the latest inflation data is 2.7 and core CPI is 3.1. Although various forecasting agencies generally believe that a rate cut should occur this time, and the upward trends in U.S. stocks and Bitcoin also seem to indicate early signals of favorable news, there are hidden complexities behind this. If there is no rate cut, it will undoubtedly be a significant negative, and a market decline is almost a certainty.
Looking at corporate dynamics again, the news that Nvidia will pay 15% of its revenue in China to obtain relevant product export licenses has caused a stir. It is not hard to find in Nvidia's financial report that while its earnings are still growing, the growth rate has indeed slowed. The year-on-year growth was 77.94% in the fourth quarter of 2024, but this figure dropped to 69.18% in the first quarter of 2025. After paying 15% of its revenue in China, it is foreseeable that its growth rate in the second or third quarter will most likely slow down further. Tesla and the other eight giants in the industry have mixed revenue data, but the policy implemented by the United States will undoubtedly compress corporate profits.
The long-term bull market of U.S. stocks is largely attributed to the (Securities Act of 1933) and (Securities Exchange Act of 1934). Even if listed companies do not distribute dividends, they will buy back shareholders' stocks at prices higher than the stock price at that time, effectively achieving dividends, and the repurchased stocks will no longer be listed for trading. As long as the U.S. economy improves and company profits continue to grow, stocks can soar. However, now, the three major U.S. indices are continuously hitting new highs, and beneath this seemingly prosperous surface, the profits of the eight giants are under potential threat from U.S. policies. In the short term, there may still be favorable support, but in the long term, it is undoubtedly a huge negative.
History is always remarkably similar. The UK began imposing tariffs in 1919, and in 1932 (the Import Duties Act) comprehensively increased tariffs by 10-33%. Now the U.S. is retracing the old path of the UK. Back then, the UK increased excess profit taxes and high corporate taxes to boost fiscal revenue, which is akin to the U.S. letting Nvidia pay 15% of its revenue in China. Subsequently, the UK declined, and the U.S. rose. Where will the U.S. go this time? A decline in corporate profits will inevitably impact buybacks and dividends, with Buffett's Berkshire Hathaway being the best example. The cash flow has decreased, and the old man has not invested in stocks for half a year and has not repurchased dividends for 12 months. Even if the U.S. cuts interest rates and reduces its balance sheet, relying solely on corporate profits for buybacks will be difficult to support a continued rise in U.S. stocks, especially since profits are still declining.
UBS report analysis points out that the S&P may pull back to 5900 in September, rebound to 6100 by the end of the year, and is expected to take off to 6600 in 2026. This prediction fully considers the current economic situation in the U.S. and coincides with the judgment of the tail end of a bull market. However, even so, the depth of the bear market will not be too exaggerated, and Bitcoin will rise accordingly. If Ethereum breaks historical highs, it will open a new stage.
In summary, even if interest rates are cut in September, U.S. stocks and Bitcoin may rise briefly, but are likely to continue to decline afterward, having basically reached the top. U.S. fiscal revenue is increasing, interest rates are falling, the risk of a U.S. debt crisis is decreasing, the role of stablecoins in the cryptocurrency circle is gradually weakening, and the stablecoin track in the crypto space may trend downward. However, the market may still see an increase in 2026, breaking the traditional four-year bull-bear cycle, and investors still need to focus on positioning Bitcoin, Ethereum, and the cryptocurrencies approved by ETFs.
It is worth noting that there are suspicions of data fabrication in the United States. Asking local friends in the U.S. will reveal that the prices of essential goods have obviously risen. The number of poor people in the U.S. has increased from 30 million to 40 million, and prices in New York and Los Angeles are also rising. However, PPI and CPI appear stable, which may be an attempt to force the Federal Reserve to cut interest rates, induce the depreciation of the dollar, and create capital inflow. Whether Powell will maintain a tough stance or heed Wall Street's calls to choose to cut interest rates remains to be seen, but based on his past style of action, the possibility of a rate cut is not small.
In addition, looking at historical financial crises, the oil crisis of 1973-1974, the Asian financial crisis of 1998, the subprime mortgage crisis of 2008, and the birth of Bitcoin seem to follow some inexplicable pattern. Now it is 2025, which inevitably raises speculation about whether a financial crisis will erupt in 2028 or if certain signs will appear in advance? MicroStrategy's Bitcoin position will expire in 2027, and it generally takes about 20 years for any industry to transition from madness to calm, reminding us to remain rational and cautious towards market changes when investing.
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