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Urgent rate hikes?

Urgent rate hikes?

Urgent rate hikes?

This week, it should be loaded into textbooks.

1. On Tuesday, I was taken aback by the speech of Fed Governor Waller, who is the first official of the week and one of the unusually hawkish officials within the Fed. I thought that his speech was to counter the market's expectations of a rate cut, but I didn't expect it to be self-defeating, and the market mistakenly thought that he had turned into a dovish. In fact, this matter bothered me for a day, and even raised doubts about the Fed's policy pivot, because important disagreements usually arise within the Fed at the end of a cycle. It wasn't until later that I saw the original text of his speech that I realized that it was the news that popped up in the trading terminal out of context. Sure enough, it is "three people become tigers", there will never be a truth in the news, but there must be a spirit of restoring the truth. If there is a major news event in the future, you must go to the most primitive place to see it.

2. On Thursday, after reading San Francisco Fed President Daley's speech, I breathed a sigh of relief. She used a lot of words "fundamental" and "too high", giving people the intuitive impression that she was here to "refute rumors". She deliberately chose to release her remarks half an hour after the release of the core PCE price index in the United States in October, in order to wait for the market to calm down and use the content of her speech to "sufficiently" influence the market. In fact, one detail worth noting is that she was interviewed by the German newspaper "Börsen-Zeitung", which published the full text on its website. But at about the same time, the trading terminal popped up with the distilled headline, the first sentence of which was "Fed's Daly: No interest rate cut is currently being considered". This sentence is not the title of "Börsen-Zeitung", but a distillation of the middle part of its publication. But no matter how fast the trading terminal is, it is impossible to see this phrase in a large article in the first second and send it out. The only possibility is that the trading terminal has already seen the content and entered it all in, just waiting for the specified time to click the "Publish" button. Who leaked it to the trading terminal, and for what purpose?

3. On Friday, I guessed what Fed Chairman Jerome Powell said, just as predicted in "Global Market Strategy (Issue 55): Irrational Madness" - his speech will be picked among Daly's speeches, and in the end it will be "slightly hawkish". Because of his status, he can't speak his mind like other Fed officials. But what I didn't expect was that the market only listened to what it liked. It has really become the famous sentence in the entertainment industry - I don't want you to think, I want me to think. What the market wants the Fed to be, the Fed is what it is. The Fed wins and loses, and the Fed doesn't necessarily win every game.

Now we are looking at a market that has fallen into an irrational madness – the stock market is at a high level, recovering a 15-week decline in just six weeks. Gold is just 6 cents away from its all-time high, and unlike in the past, the highs in the past were all crisis-fueled, with the global pandemic in 2021, the Russia-Ukraine war in 2022, and the banking crisis in May 2023.

It's all out of the script, what else will happen next?

Almost everyone knows that the market's rate cut expectations are too far ahead of the curve and that the Fed is bound to fight back. But what the Fed says seems to be ineffective, and will there be an emergency rate hike? At least for now, there is a 1 in 1,000 probability.

At a time when the market is in a state of frenzy, we have released a special edition of Global Market Strategy (Issue 55): Irrational Madness:

First, how to trade? Chase high, once it falls, there is no time to escape. Shorting is clearly bucking the trend. We offer two trading tips (a one-size-fits-all approach). Covering the latest strategies of A-shares, U.S. stocks, gold, crude oil, and U.S. Treasury bonds next week, as well as year-end point forecasts for the U.S. dollar and RMB. When to go long, when to go short? Here's a deeper answer.

Second, the U.S. stock market will not keep rising, and once it falls, where will its target level be (the bottom is appropriate), we have found an important law of the Fed's control of the U.S. stock market, this Fed understands the market too well.

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