As things stand, the market is starting to price in recession risk.
The CPI will be released in the middle of this month, and it is estimated that the CPI will drop a lot, but don’t think that the market will get better if the CPI drops a lot, which may not be the case.
The main reason is that the CPI has already been priced in advance, so even if it drops a lot, it is reasonable, and the market is now very concerned about the economic situation. If the economic situation cannot be stabilized, the market will continue to fall.
The Fed’s interest rate cut in September is a foregone conclusion. If the unemployment rate rises again beyond expectations after waiting for the August non-agricultural data, the interest rate cut from the original 25 basis points will increase to a 50 basis point cut, but if the interest rate cut exceeds expectations, the market may fall further.
The main reason is that the Fed’s interest rate cut exceeds expectations is because it is afraid of economic problems, so it will cut more interest rates, and the market may be more panicked, because the economic problems may be bigger than imagined, so it will rush ahead in advance.
If we want the market to be able to get out of the big trend of interest rate cuts and rising prices, we need the economy to turn from recession to stability, and then slowly recover, so that we can lead the market out of a big bull market.
Then our main focus in the future will be on the economy. After all, if interest rates are cut later, a large amount of money will be released.
The money was released from the end of 2019 to 2020, and it only started to rise in the second half of 2020. So even if the money is released, it will take some time to transmit. Wait patiently.
