This week's market revolves around one thing: everyone is waiting for the Federal Reserve at 3 AM on the 11th. Firstly, a rate cut is essentially a done deal; there's no suspense about that. The key question is whether they dare to sound a bit more dovish about next year's rate cut expectations.
If they continue to act hawkish, be prepared for a collective sell-off. If they dare to soften their tone in line with what Trump suggests, there might be some breathing room. Because I don't believe at all in the forward guidance that these people talk about.
Looking back at the scene from the end of last year, we know that market sentiment was already good around Christmas. Trump won the election, and the rate cut was implemented. However, Powell's speech pushed down this year's rate cut expectations to two times.
The market was directly pressed down, and what happened? This year, there were actually four rate cuts, what does that indicate? It shows that the plans these old hawks talk about are just a way to fool retail investors. When real trouble hits, they are more cowardly than anyone else.
It's the same now; whatever dot plot, just treat it as nonsense. If they claim to prioritize inflation, it means they are preparing to crush the American economy, likely leading to a recession. If they focus on the economy, they can only cut rates faster and more aggressively; inflation is just a shield.
No matter how tough they claim to be, their actions tell a different story. Once the new Fed chairman takes office, it will only align more closely with Trump's rhythm. The real rate cut pathway will come eventually; it's just that this December meeting is destined to be a torment.
