The Federal Reserve's big reshuffle!
The Federal Reserve Board unanimously approved letting the current 11 regional Federal Reserve presidents serve another 5 years. This decision seems calm on the surface, but as I ponder it, the waters run deep.
To put it bluntly, this is the current Federal Reserve team preemptively "setting up defenses." There were previous rumors swirling that Trump wanted to "insert his people" into the Federal Reserve next year, in order to pave the way for interest rate cuts.
Now, they have secured these voting president positions until 2031, directly telling you: don't even think about FOMC personnel changes; if you want to stir things up next year, there’s no chance.
In my personal opinion, in the short term, this is a small positive, but it has delayed the real "big moves."
Why is it a short-term positive? Because uncertainty has temporarily been eliminated.
The financial market fears chaotic expectations the most. Now that the personnel framework is stable, at least in the first half of next year, we don’t have to worry about policy becoming neurotic due to personnel struggles; the fluctuations in the market can also stabilize a bit.
So, what is the "big move"? It’s the much-anticipated massive liquidity injection! Now that the president positions are stable, it means that Powell and his team of technocrats’ cautious approach can still prevail for the time being.
Even someone like Kevin Hassett, who loudly advocates for the Fed to aggressively continue lowering interest rates, will find it harder to push his agenda even if he becomes president next year; rapid liquidity injections will face obstacles. So, the expectation of an immediate flood of liquidity next year may have to wait.
Don’t be led by short-term news. The real players are quietly building positions now, taking advantage of the expectation gap before the final benefits of the "massive liquidity injection" are realized.
Are you the one watching the excitement from below the car, or the one waiting for the wind to come from above? Want to know how I see the upcoming key nodes and specific layout ideas?
If you are unclear about the specific timing, you can follow the leader, who provides real-time reminders in the village for friends who have followed me.
