After this week's interest rate cut, Federal Reserve officials made their first appearance. Minneapolis Fed President Kashkari stated in an interview with Fox News that a strengthening economy may mean fewer rate cuts. This viewpoint is unprecedented from the Federal Reserve. Previously, there was a fear of a potential rebound in inflation, so the magnitude of rate cuts would not be as expected. Earlier this week, Fed Chair Powell indicated 'core inflation remains at a high level' after a press conference, which also hinted that 'the rate cut magnitude may not be as expected'. This statement undoubtedly delivered a 'heavy blow' to the financial markets. This week, with the US elections in full swing, the market overlooked a 'hawkish rate cut', and now the Federal Reserve has pulled investors' thoughts back; be cautious on Monday.
1. Federal Reserve officials usually make public speeches in the second week after announcing interest rate decisions, but this time it was only one day later. Kashkari was the first official to speak out and should be taken seriously.
2. Kashkari mentioned 'not as expected'; what are the expectations? The expectation is that there will be a 25 basis point cut at each meeting until June next year, followed by possible sporadic cuts in the third and fourth quarters, and then a halt to rate cuts. Kashkari's point is that the entire rate cut cycle won't be like this.
3. Other viewpoints: - It is still too early to say whether Trump will drive up inflation and ultimately reduce the number of interest rate cuts; the Federal Reserve will need to observe which policies will truly be implemented before incorporating them into their analysis. - What truly matters is not the short-term plans of Congress and the new government, but productivity and economic growth. If this can be sustained, and our economy is structurally more productive in the future, it suggests that we may not ultimately cut rates as much. - There is no worry about potential conflicts between the Federal Reserve and Trump, as both parties want to see inflation drop and a strong labor market.
4. Kashkari has no intention of being vague; he should have communicated with Powell in advance. Powell will speak next week, and Kashkari may be warming up the audience for him. Kashkari's speech is complex, but if connected to Trump, it becomes simpler: it's a preventive measure for Trump, indicating that stopping rate cuts in the future is not due to him, but because the economy is strong enough to not need cuts. The Federal Reserve seems to avoid discussing politics, but actually, every statement is related to Trump. This is a helpless move; only by publicly stating everything they want to do in the future and maintaining policy transparency can they remain independent.
How Trump understands it will be another matter. Biden and Trump will meet in the Oval Office on Wednesday at 11:00 AM Eastern Time, and the financial markets will hear Trump's voice. If you want to see our deeper interpretation of the global market, feel free to subscribe to (Global Market Strategy: Trump Returns, Global Alert). Trump is back for revenge, and every corner of the world will feel the chill. Has the rise of gold ended? Will the yuan depreciate significantly? What is the fate of A-shares? Here are deeper answers.
Report highlights:
1. Today we released the (Fear and Greed Index Report: High Winds and Rough Waves). Our exclusive data shows that after this week's close, significant signals appeared in the US Dollar Index, Nvidia, A-shares, US stocks, gold, silver, crude oil, Bitcoin, and Ethereum. Some markets that you think have reached their limits have actually just begun.
2. The meeting in China has concluded, how does Wall Street view it? What will happen on Monday? Please see our exclusive interpretation.
3. What will happen on Trump's first day in office? When will the 'second trade war' begin? China has formulated an emergency plan, with '12 characters' to respond. Will the dollar soar? We have simulated two scenarios after comprehensive tariffs: one where only China retaliates, and another where all countries retaliate; the trends of the dollar will differ. 4. Wall Street has named 8 Chinese stocks to watch this week, one of which has nearly a 90% potential upside.
