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Sometimes, it may be just a straw that breaks the camel's back, and today's University of Michigan's one-year inflation expectations acted as such a straw. In fact, in Powell's speech the day before yesterday, the Fed's inflation expectations (core PCE) for the end of 2024 have been raised from 2.6% to 2.8%. The Fed is not stupid. On the contrary, they are all the top smart people in the United States. What we can perceive, they must also be able to see.

Inflation is like a poison for the United States, and its antidote is most likely an economic recession. Some partners say that you see how good the US stock market is rising, and the Nasdaq has set a new high. However, if you look closely, you will know that only those heavyweight stocks are driving the rise, and more than 90% of other stocks are mostly falling. This is similar to BTC. When the spot ETF is approved, funds are all concentrated on BTC, and occasionally a little will flow to other assets.

But when the market is not good, more funds will only be concentrated on BTC. There may be ETH in a few months, but there is only BTC at present, so BTC is more resistant to declines, after all, there is support based on USD. For US stocks, AI can be regarded as a stimulant for technology stocks.

Therefore, most US stocks that are not related to AI have also performed poorly. For example, Nike, one of the kings in the field of footwear, has fallen by 30% since the beginning of 2024.

In fact, many friends and the Federal Reserve know that it will be an extremely slow process to achieve interest rate cuts by reducing inflation. To put it bluntly, the possibility of defensive interest rate cuts is extremely low. This is also the reason why there are few defensive interest rate cuts in the nearly 60-year history of the United States. When you try to defend, inflation will rebound, so you can only continue to raise interest rates.

So why do Powell and the Federal Reserve pay so much attention to the unemployment rate? Because for the United States, the way to judge an economic recession is different from that of most countries in the world. Many countries regard a recession as a decline in GDP for two consecutive quarters, while the United States pays more attention to the unemployment rate. A recession is only considered to occur when GDP falls and unemployment rises sharply.

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