The U.S. October PPI data released last night showed that controlling inflation was hindered. The U.S. stock market did not react sharply, but Bitcoin fell below the $89,000 mark.
U.S. Federal Reserve Chairman Jerome Powell made hawkish remarks at an event in Dallas early this morning (15th) Taiwan time. He said that the U.S. economy has performed well recently, giving the central bank room to cut interest rates cautiously. When approaching the so-called neutral interest rate level, it would be wise to cut interest rates slowly if economic data allows.
The economy is not sending any signals that a rate cut is urgently needed, and better economic conditions allow us to act prudently in making decisions.
The emergence of hawkish signals, coupled with the fading of the post-election market, caused both Bitcoin and the four major U.S. stock indexes to fall earlier.
Bitcoin once fell below $87,000
Bitcoin first experienced a rapid decline after the opening of the U.S. stock market last night, and then fell again after Powell's speech at around 4 a.m., reaching a low of $86,666 at around 7:30 a.m., a drop of 2.76% in the past 24 hours.
The market expects the probability of the Federal Reserve cutting interest rates by 1 basis point in December to drop to 58%.
On the other hand, the Bureau of Labor Statistics also released data last night (14) showing that the U.S. PPI rose 0.2% month-on-month in October, and the previous value was revised up from 0% to 1%. Although this was in line with expectations, the October PPI index was still higher than September; the October PPI rose 2.4% year-on-year, higher than the previous market estimate of 2.3%, and exceeded the 1.8% increase in September.
At the same time, the core PPI, excluding food and energy, rose 0.3% from September, higher than the 0.2% increase in September and higher than market expectations; the annual increase was 3.1%, higher than the forecast of 3.0% and 2.8% in September.
The US PPI data for October showed that US inflation is still sticky, so the market believes that the Federal Reserve (Fed) will take a more cautious attitude in subsequent interest rate decisions.
At the time of writing, according to the CME Fed Watch tool, the market expects the Fed to cut interest rates by 1 basis point in December, which has dropped sharply from 82.5% the previous day to 58.9%, while the probability of maintaining the current interest rate has risen to 41.1%.
All four major U.S. stock indexes fell
The four major U.S. stock indexes all fell at the close of last night:
The Dow Jones Industrial Average fell 207.33 points, or 0.47%, to close at 43,750.86.
The S&P 500 index fell 36.21 points, or 0.61%, to close at 5,949.17.
The Nasdaq index fell 123.07 points, or 0.64%, to close at 19,107.65.
The Philadelphia Semiconductor Index fell slightly by 1.70 points, or 0.03%, to close at 5004.59 points.
Wall Street analysts: Fear index shows that US stocks will remain at a healthy level before the end of the year
After Trump's victory, U.S. stocks continued to rise. However, as the market value of U.S. stocks continued to rise, many investors began to worry whether the bubble was on the verge of bursting.
In this regard, Nicholas Colas, founder of DataTrek Research, a Wall Street research firm, recently said that he expects the VIX index, which measures market bubbles, to remain at a healthy level by the end of the year:
The fear index can provide traders with guidance on the health of the market. Although U.S. stock indexes closed at record highs on Monday, the fear index is still in a healthy state and may remain at a healthy level before the end of this year.
However, Karen Karniol-Tambour, chief investment officer of Bridgewater, the largest hedge fund in the United States, recently reminded investors that although U.S. stocks still have room to rise, the current exposure level is no longer suitable for continued buying:
You can't ignore that people's exposure to the stock market today is very different than usual, and the risks right now are very high.
Trump's victory will indeed be beneficial to growth to some extent, but it should also be noted that Trump may also bring about a rebound in inflation. Although the stock market outlook remains optimistic, you have to learn to diversify your investments.
