On December 18, the Federal Reserve cut interest rates by 25 basis points. This was normal and in line with market expectations.

But as soon as Powell's speech came out, the global market went into a tizzy. The U.S. stock market plummeted

The S&P 500 fell 3% in one day, and the Dow Jones Industrial Average fell for ten consecutive days, setting the longest losing streak in 50 years.

Highly valued technology stocks were hit hardest, with Tesla plunging 8.3%.

Bitcoin was not spared either, falling 5% from its high.

In Asia, the Korean won fell flat and the RMB also failed to live up to expectations, with the exchange rate breaking 7.3.

The style of the entire market can be described in two words: tragic

Why did the market react so strongly this time?

To put it bluntly, expectations were completely shattered.

What did people expect from the Federal Reserve in the past?

Lower interest rates, release money, and stabilize the market. During the epidemic, the Federal Reserve also implemented unprecedented easing, and the market was almost flooded.

With this rate cut, everyone was wondering whether the Federal Reserve was going to enter a easing cycle. However, Powell made it clear: Don’t think too much, we still have to look at inflation.

To be honest, inflation has indeed dropped a bit this year, but it is still far from the target of 2%.

Powell even said that it might take until 2027 to get this done.

Moreover, the Federal Reserve has cut interest rates next year from 100 basis points to 50 basis points, with a maximum of two cuts throughout the year.

The market was shocked when it heard this. They had originally expected the interest rate cut to bring in cheap money, but now they find that liquidity will not only not be loose, but may even be tighter.

As a result, risky assets simply couldn't hold up.

Highly valued technology stocks were hit hardest, while small-cap stocks and unprofitable technology companies were wiped out.

The S&P had its "worst Fed Day" in more than 20 years, and Tesla fell like a free fall.

Investors are not stupid either. They quickly switched to safe-haven assets. U.S. Treasury bonds and U.S. dollars were snapped up.

The yield on short-term U.S. Treasury bonds soared to the sky, and the U.S. dollar reached a new high in more than two years

Asian markets are even more nervous

The Korean won fell to its lowest point in 15 years, and the KOSPI index of the Korean stock market fell 2% in response.

It's not just a problem with the Federal Reserve. South Korea's domestic politics is also not peaceful. The martial law imposed by Yoon Seok-yeol has shattered market confidence.

On our side, the RMB has fallen without any temper, and the offshore exchange rate has directly broken 7.3. This time, Asian currencies are really being rubbed by the US dollar, and the Thai baht and peso have all fallen.

Bitcoin isn’t much better.

The strengthening of the US dollar has directly suppressed the attractiveness of dollar-denominated assets. High interest rates also make the cost of cryptocurrency speculation higher. Who is willing to take risks in such an environment?

Powell said the Fed has no interest in a Bitcoin reserve plan.

This statement directly leaves the previous Bitcoin bill hanging in the air. How it will go in the future depends on the intention of Congress.

Right now, the global market is in a mess.

The high valuations of U.S. stocks are frightening, and Asian currencies are being suffocated by the U.S. dollar.

Although our policy support is strong, the road to recovery is not easy.

However, from an investment perspective, the only market in the world with low valuations and great growth potential is China.

Taking advantage of the low valuations, it may be a good choice to focus on areas that are supported by policies, such as consumption, new energy, semiconductors, etc.

Of course, the most frightening thing at this time is being affected by market noise and losing your mindset.

Gold, US dollar and Bitcoin: When the US dollar is strong, gold is weak. A strong US dollar is bearish for Bitcoin in the short term. If there is a panic trading of Bitcoin, it is a good time to buy Bitcoin. Bitcoin has high risks and volatility, but holding it for a long time is the key.

After all, when we are in a panic, there is noise all around. I hope that when A-shares look back at today one year from now, we will feel the same regret for not getting on board as we do today when we look back at US stocks one year ago.#加密市场回调