Many friends asked whether Powell’s speech was good news or bad news. If it was good news, why did both cryptocurrencies and stocks fall? If it was bad news, would the bull market be over?

First of all, I still think that Powell’s speech today does not have much significance. Judging from the dot plot in September, the interest rate at the end of the year is 4.4%, and it is currently 5%, which means that the interest rate cut will be between 50 and 75 basis points, that is, between 4.5% and 4.25%.

If there is no problem with the U.S. economy, a 75% decline for the whole year, that is 50, 25, 25, is already good. A more radical decline of 50, 50, 25 is not impossible, but the premise is that the unemployment rate continues to rise. However, a rise in the unemployment rate also means that there may be problems with the economy.

So if the Fed believes that there is no problem with the economy, then 25 will be more convincing. After all, two consecutive 50s will make people think more. This time, Powell's speech revealed the expectation of the next 25, 25, provided that the economic situation has not changed much.

This is actually a good signal, that is, there is no problem with the US economy, and there is no need for the Fed to continue to accelerate interest rate cuts. As stated in the September meeting, the Fed is not worried about going long, but about going short. The return to normal levels in November means that the long positions in September were actually a bit "overly worried."

Therefore, I personally think that this is a good thing. Although it has lowered expectations for rate cuts and increased the risk of a U.S. recession, it also shows that the Fed has not seen any signs of recession at present, so the Fed has the confidence to maintain a small rate cut. Even if there is no rate cut in the next two times, or if there is only one rate cut, I don’t think it is necessarily a bad thing. Of course, this will also increase risks.

It all depends on how the market reacts.

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