1

Just now (the early morning of May 5th, Beijing time), the Federal Reserve announced that it would raise the federal funds rate by 0.5% (that is, by 50 basis points) to 0.75%~ 1.0% to reduce the high inflation rate in the United States.

The early morning rate hike is the first time that the Federal Reserve has raised interest rates twice in a row since 2006, and this rate hike is also the first time in 22 years.

At the same time, the Federal Reserve also announced that it will start a plan to reduce its balance sheet by $47.5 billion per month from the $9 trillion balance sheet in June and $95 billion per month three months later.

After the Federal Reserve announced a rate hike, a strange scene appeared in the capital market:

The stock index, which had fallen originally, fell only for a while after the news was released, and then began to rise sharply.

At the close, the three major US stock indexes closed up, with Nasdaq up 3. 19%, Standard & Poor's 500 up 2.99% and Dow up 932.27 points (up 2.8 1%).

The US dollar index rebounded strongly in the expectation of a sharp interest rate hike, but this rebound actually plummeted after the Federal Reserve officially announced the interest rate hike, and fell by 0.93% to 102.53 as of press time.

The dollar raised interest rates, and commodities rose instead of falling. Luntong, which fell nearly 4% on Tuesday, bid farewell to a four-month low after announcing a rate hike. International crude oil futures accelerated, and US WTI crude oil rose more than 5% for the first time in three weeks. The new york gold plate, which had previously closed down, then turned up, once approaching 1.900 USD, which was more than 1% higher than the closing price.

However, there is another driving force for the rise in oil prices. The European Union announced a plan to gradually embargo Russian oil.

According to Bao Ge's normal understanding, raising interest rates is the most taboo thing in the secondary market. The Federal Reserve raised interest rates sharply, US stocks should plummet, the US dollar index rose sharply and gold began to fall. Now the investment products in the capital market have gone out of the completely opposite trend of raising interest rates with the US dollar.

Of course, this is not "witnessing history". This strange trend comes from this man's words:

Powell made it clear that raising interest rates by 75 basis points at a meeting is not an option that the Committee "actively considers".

Powell's statement basically denied the possibility of a subsequent single rate hike of 75 basis points.

At present, the pricing of the Federal Reserve's interest rate hike at the FOMC meeting in June 15 has plummeted. It is estimated that the Fed has a 76.4% probability of raising interest rates by 25 basis points at next month's meeting, and a 23.6% probability of "staying put"-the probability of raising interest rates by 75 basis points has dropped from over 90% before the interest rate decision to 0%.

It's like, the Fed took a big stick and slapped the market hard, but gently said to the market: Don't be afraid, I will never be cruel next time, and I will never hit harder than now!

Then, the market touched the body that had just been beaten and said that it was very happy!

I have to admire the expected management of the Federal Reserve, which has firmly grasped the capital market in just a few words. Not to mention the A-share interest rate hike, even if the RRR cut is less than expected, the market will be scared to death.

This may be the performance of a "mature person".

2

The United States began to taste the "bad consequences" it planted.

In the past few months, the inflation rate in the United States has been rising, reaching 8.5% in March. The PPI of industrial products rose by 1 1.2% year-on-year, and the PCE (personal consumption expenditure deflator) rose by 6.6% year-on-year, constantly refreshing the peak since 1982.

A one-time rate hike of 50 basis points indicates that the Fed has realized that inflation has been seriously underestimated for a long time.

Another evil consequence of inflation is that the consumption power of the United States has begun to decline.

Because of inflation, Americans of different income levels are changing their consumption plans. A survey of about 3,500 American consumers shows that more than 70% of them have turned to cheaper substitutes in food and household necessities; Nearly 40% people said that they would postpone buying goods such as travel, furniture and electronic products.

All the bad consequences come from the seeds planted two years ago-the amount of water released in the sky.

Stimulated by the relay between Trump and Biden, Americans have accumulated 2.7 trillion US dollars in extra savings, averaging $014,000 per American. In two years, the United States has consumed more than $65,438 billion in goods. Obviously, releasing water has not only exhausted the government's funds, but also overdrawn the future wealth. The Federal Reserve has accumulated 9 trillion dollars in liabilities.

This is the main reason why American inflation is "ahead" of the world.

Even the managing director of the International Monetary Fund (IMF) said that the United States printed too much money without considering the unexpected consequences.

In fact, for the United States, raising interest rates is not enough. This round of inflation in the United States is the result of the double influence of internal and external attack:

Internal: Increased demand brought by issuing money and releasing water; External: Supply chain crisis leads to supply reduction.

If the supply chain problem is not solved, it is impossible to reduce inflation by raising interest rates.

The solution to the supply chain crisis in the United States depends partly on the epidemic control in China and partly on itself.

The impact of the China outbreak in March on the US supply chain is obvious. But America cannot control it. We can only expect that China will fully resume its work and production after the epidemic is completely controlled in May.

Then why does the United States have to solve the supply chain crisis on its own?

Because this wave of high inflation in the United States also came from the Sino-US trade war four years ago.

When former US President Trump was in office, he set a precedent of excessive tariffs, imposing 7.5%~25% punitive tariffs on China products worth $370 billion in an attempt to use tariffs as a weapon to suppress China's economy. But what Trump didn't expect was that the United States was shooting itself in the foot. The goods imported by the United States from China are the necessities of American life, which stand out from the fierce market competition and have incomparable price and quality advantages compared with products from other countries. Even if tariffs are imposed on goods exported from China to the United States, it will be difficult to shake the status of "Made in China".

At present, the commodity tax rate of American exports to China is basically above 20%, which used to be around 3%, and seven times the loss is basically spread in the hands of American consumers.

Therefore, reducing tariffs on China has become an important means for the United States to reduce inflation and reduce people's living costs.

On April 22, US Treasury Secretary janet yellen said on TV that reducing tariffs on goods from China is "worth considering";

On May 3rd, US Trade Representative Qi Dai said earlier that in order to solve the rising inflation rate, including reducing tariffs on goods imported from China.

Of course, even under such urgent inflationary pressure, all the tools are on the table, and the US government is still unwilling.

While reducing tariffs, Qi Dai also said, "But we need to look at this issue from a strategic perspective. The key is how to deal with this problem. "

Although the United States is pushed to the cliff by inflation, this "both want and want" mentality shows the image of the United States as the world hegemon.

If the United States continues to adopt this arrogant and confrontational attitude towards China, it is definitely not enough to raise interest rates only by the Federal Reserve, which will not only fail to solve inflation, but also bring about a serious economic recession.

In the face of this invisible opponent, the overcompensation behavior of the United States will embark on another stagflation after the 1970s, which will not only stifle the American economy, but also bring a financial crisis to the world.

three

The 50 basis point rate hike is not the end, but the beginning of a strong rate hike by the Federal Reserve.

Powell said: the consensus of the Committee is that raising interest rates by 50 basis points should also be an option to be discussed at future meetings.

Raising interest rates so intensively and substantially is undoubtedly a kind of "suicide" for the US economy.

According to the data released by the U.S. Department of Commerce on April 28th, the initial value of real gross domestic product (GDP) decreased by 1.4% at an annual rate in the first quarter of 2022, far below the growth of 1% predicted by economists. This is also the first time since the early outbreak of the epidemic, that is, since the second quarter of 2020, the US GDP has fallen into a "negative growth".

Here, Bao Ge first explains that this "negative growth" is because the market misunderstood him.

The nominal GDP growth rate of the United States in the first quarter was 1 1.49%. Excluding the inflation rate, the real GDP growth rate is 4.3%. Because the real GDP growth rate of the United States in 202 1 year is 5.7%, if converted into real annualized GDP, the GDP growth rate of the United States in the first quarter will decrease by 1.4%, that is, the growth rate will slow down by 1.4%, which is not negative growth, but still increasing!

Despite this, it is an indisputable fact that the economic growth in the United States is slowing down.

According to the latest IMF forecast, the US economy will grow at a rate of 3.7% in 2022, which is 0.3 percentage points lower than the previous forecast.

Under the influence of raising interest rates and shrinking the table, the risk of a "hard landing" in the US economy is increasing.

Of course, the violent suicide rate hike in the United States is also a huge impact on the global economy.

Against the background of the Fed's interest rate hike cycle, the US dollar index has continued to strengthen, hitting a new high in more than five years and advancing to the high point in the past 20 years. Correspondingly, other currencies have also begun to depreciate sharply.

Recently, the Japanese yen depreciated to the highest level in 20 years, the Korean won depreciated by 7%, Indian Rupee depreciated by nearly 3%, the Thai baht depreciated by 4%, the Turkish lira depreciated by 1 1.8%, and the euro once fell below the 1.05 mark, hitting a five-year low of 1.0483.

Historically, bloody cases of economic recession in emerging markets abound: 1992 Latin American sovereign debt crisis, 1998-2000 Russia, Argentina and Ecuador economic crisis, 200 1 2002 Turkey and Brazil economic crisis, 20 14 to 20/.

The most far-reaching one is 1980. The American economy has experienced historic inflation, and interest rates have been greatly raised to curb inflation. Subsequently, the financial environment tightened, the dollar strengthened, and many developing countries found it difficult to repay their debts and fell into a great recession.

Now the scene of history seems to be repeating itself.

For the global economic performance in 2022, the International Monetary Fund (IMF) gave four words: serious deterioration.

In brother Bao's view, few words make great achievements!