In the past two months, many people have said that they can't understand a series of actions by the U.S. federal government and the Federal Reserve. The bigger question is, do Americans still want dollars?
On May 15, the U.S. Department of Labor released inflation data for April, and as soon as this data came out, the most likely answer was imminent, and Americans may have already made their choice.
The Fed has always said that whether the dollar cuts interest rates depends on two important data, one is inflation data, and the other is employment data.
Let's see, how did the Americans release these two key figures?
First of all, we should look at these data based on two important premises: first, the current US federal government and the Federal Reserve are wearing the same pants, and they are both the same master behind them.
As for why, you can look at our previous content, and I won't repeat it here.
Second, the U.S. federal government, in conjunction with the Federal Reserve, could theoretically manipulate all the data relevant to the dollar's interest rate decisions.
You may have to ask why, but let's look at the data and you get the idea.
On May 15, local time, the U.S. Department of Labor released inflation data for April, with the headline inflation rate falling from 3.5% in March to 3.4% in April, and core inflation falling from 3.8% in March to 3.6% in April.
As soon as this data came out, the market was shocked, inflation has slowed down, is the Fed finally going to cut interest rates?
If you look at the U.S. Labor Department's non-farm payrolls data for April released on May 3, the signal is even more obvious. U.S. nonfarm payrolls rose by 175,000 in April, well below market expectations of 240,000.
Many people have turned up the data they released some time ago, and perhaps the answer will be clearer.
The U.S. Department of Labor announced on April 10 that the March CPI rose 3.5% year-on-year, higher than the market expectation of 3.4%, and the core CPI rose 3.8% year-on-year, higher than the market expectation of 3.7%.
At the same time, non-farm payrolls rose by 303,000 in March, far exceeding market expectations, and the unemployment rate fell to 3.8% in March, remaining below 4% for 26 consecutive months.
Inflation in March was slightly higher than expected and accelerated slightly, which was a murky figure, but the employment data was very clear, and some people said that the June rate cut was completely yellow.
This shows that they were still a little entangled at that time, whether to cut interest rates or raise interest rates? Let's take a look at the market reaction first.
You see, compared with March, the data for April is obviously a bit outrageous.
In particular, the non-farm payrolls data fell by 42% in April compared with March, a full decrease of 128,000 people, and in just one month, the U.S. job market turned upside down? It's a magical statistic.
As we said earlier, the U.S. federal government and the Federal Reserve wear the same pants, and they can manipulate the data together. The U.S. Secretary of Labor was appointed by Biden, and the signal couldn't be more obvious when such data is released.
What signal? The answer is that they want to cut interest rates, but they don't dare to cut them immediately, because the risk is too great.
Therefore, they first came out with two data to test the market's reaction, and the most important thing is our reaction, depending on whether we accept the offer.
You may ask, what does it have to do with the data made by the Americans, whether the dollar cuts interest rates or not?
The reason is simple, as we have said a few times before, because the dollar is relatively weak at the moment, there is a high risk of a rate cut.
Because the US dollar has to bear the risk of falling by about 10% when the US dollar cuts interest rates, the current US dollar index is only about 105, and the proportion of international payments is only about 47%.
If it falls by 10%, the dollar index will fall to about 95, and the proportion of international payments will fall to about 37%, which will be about the same as before the dollar raised interest rates at the beginning of 2022.
What's more, if the dollar index falls below 90 and triggers a panic sell-off in the market, the dollar may collapse all of a sudden, the U.S. stock market may crash, the U.S. commercial real estate crash, and the small and medium-sized banks go bankrupt on a large scale.
Therefore, if the US dollar cuts interest rates, it will need the cooperation of major currencies such as the euro, the British pound, the yuan and the yen, at least not to act too hard, and even help stabilize the dollar and avoid catastrophic consequences.
Although the US high-level came twice in a month in April, it is impossible for us to make a clear commitment to this kind of thing, and we will only talk about it depending on the market situation.
To put it bluntly, if you can't kill the dollar depending on the situation, then forget it; If there is an opportunity to kill or significantly weaken the dollar, including the euro, the pound and even the yen, it will not be soft, this is the reason why the wall is falling and everyone is pushing it.
It is estimated that the British will never forget how in the 1990s, American capitalists joined forces to short the pound sterling and completely drove Britain out of the world capital competition stage.
The Japanese will also remember how recently the dollar hit the yen.
You say, they will take the opportunity to do it, will we still be soft?
So, no one will give the Americans an unequivocal promise that there will never be anything like the Plaza Accord again.
However, the dollar is dangerous, and Biden's election is even more dangerous, and this is a clear thing, so we will not expand on it.
Typically, incumbent presidents in election years will conduct substantial quantitative easing and even direct payments to voters to curry favor with voters, as Trump did in 2020.
However, the dollar is currently in a cycle of interest rate hikes, and it is dangerous to cut interest rates.
Keeping the dollar or the election? This is all the meat of the hands of the Jewish consortium, and it will hurt for years if you lose any of them.
Therefore, before preparing to cut interest rates, the smart Jewish consortium will send a signal with two data pieces to test the market's reaction.
If we take the call, for example, and also give a signal, the dollar rate cut will come soon.
So do you think we'll cooperate? Welcome to leave a message in the comment area to discuss.