Recently, The Wall Street Journal conducted a thought-provoking analysis of the U.S. employment data for August. The report pointed out that despite a significant drop in new jobs, the unemployment rate only increased by 0.1%. This seemingly contradictory phenomenon reflects a special balance in the current job market. It may indicate that companies are not halting recruitment due to an economic downturn, but rather are postponing hiring plans out of a wait-and-see attitude regarding trade conditions.
If the core inflation data released next week meets expectations, the Federal Reserve may choose to cut interest rates by 25 basis points. However, if inflation exceeds expectations, the Federal Reserve may also continue to adopt a wait-and-see attitude.
Even in the worst-case scenario where the U.S. economy falls into recession and impacts the global economy, the U.S. market still possesses investment value after risk release and valuation return. This is because the current interest rate level in the U.S. is relatively high among developed countries, which means the Federal Reserve still has ample monetary policy space to stimulate economic recovery.
The market is currently most focused on the CPI data for August, which will be released next week. If core inflation rises more than expected, it could have a negative impact on the market and trigger concerns about stagflation. Conversely, if inflation is lower than expected, it could bring short-term benefits and may even prompt the Federal Reserve to cut rates by 50 basis points. If the data meets expectations, it could support a 25 basis point rate cut by the Federal Reserve.
If a recession becomes a reality, companies may cut IT capital expenditures, which will impact the high growth expectations of the AI industry. At the same time, rising default rates for businesses and individuals, increasing vacancy rates, and credit contraction could severely hit the already fragile commercial real estate and overvalued residential real estate markets.
However, given that core inflation currently remains highly sticky, it is difficult for the Federal Reserve to make a substantial cut in interest rates all at once. If it were to directly cut rates by 200-300 basis points as some suggest, it could potentially recreate the stagflation nightmare of the 1970s.
Despite these potential risks, we remain cautiously optimistic about the economic outlook, believing that the likelihood of a full-blown recession is relatively low. Future economic trends will depend on the interaction of multiple factors, and it is necessary to continue closely monitoring changes in various economic indicators.
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LightningPacketLoss
· 22h ago
Goodness, they are going to flood the market again.
Recently, The Wall Street Journal conducted a thought-provoking analysis of the U.S. employment data for August. The report pointed out that despite a significant drop in new jobs, the unemployment rate only increased by 0.1%. This seemingly contradictory phenomenon reflects a special balance in the current job market. It may indicate that companies are not halting recruitment due to an economic downturn, but rather are postponing hiring plans out of a wait-and-see attitude regarding trade conditions.
If the core inflation data released next week meets expectations, the Federal Reserve may choose to cut interest rates by 25 basis points. However, if inflation exceeds expectations, the Federal Reserve may also continue to adopt a wait-and-see attitude.
Even in the worst-case scenario where the U.S. economy falls into recession and impacts the global economy, the U.S. market still possesses investment value after risk release and valuation return. This is because the current interest rate level in the U.S. is relatively high among developed countries, which means the Federal Reserve still has ample monetary policy space to stimulate economic recovery.
The market is currently most focused on the CPI data for August, which will be released next week. If core inflation rises more than expected, it could have a negative impact on the market and trigger concerns about stagflation. Conversely, if inflation is lower than expected, it could bring short-term benefits and may even prompt the Federal Reserve to cut rates by 50 basis points. If the data meets expectations, it could support a 25 basis point rate cut by the Federal Reserve.
If a recession becomes a reality, companies may cut IT capital expenditures, which will impact the high growth expectations of the AI industry. At the same time, rising default rates for businesses and individuals, increasing vacancy rates, and credit contraction could severely hit the already fragile commercial real estate and overvalued residential real estate markets.
However, given that core inflation currently remains highly sticky, it is difficult for the Federal Reserve to make a substantial cut in interest rates all at once. If it were to directly cut rates by 200-300 basis points as some suggest, it could potentially recreate the stagflation nightmare of the 1970s.
Despite these potential risks, we remain cautiously optimistic about the economic outlook, believing that the likelihood of a full-blown recession is relatively low. Future economic trends will depend on the interaction of multiple factors, and it is necessary to continue closely monitoring changes in various economic indicators.