It is estimated that starting from tonight, the global market will begin to trade in the "Sichuan University Wisdom Victory" market, especially for the Federal Reserve's interest rate cut. It seems that people are already optimistic and excited now.

I have some slightly different thoughts and questions~~

The first step is that it is likely that the U.S. federal funds rate will drop to around 3.5% in the next 6 to 12 months.

The second step is that after Trump took office, several basic policy directions, including the trade tariff stacking game (the United States plus China, China plus the United States; the United States plus the European Union, the European Union plus the United States; constantly increasing the cost of trade frictions between each other), the re-industrialization of the United States, and the contraction of the supply chain to the Americas under the Monroe Doctrine, will quickly push up the wage levels of goods, services and employed people.

At the same time as the second step, the war between Russia and Ukraine may end quickly, and trade frictions between the EU and the United States may also intensify. The Middle East is full of variables. Trump may either lead the peace talks strongly or support Israel more strongly, and there is a certain probability that he will be caught in the Middle East battlefield. The Western Pacific region has the greatest variables, and there are many unknown variables. However, Trump's tendency towards isolationism and Monroeism has reduced the risk of war in Eurasia, and the risk of trade frictions in various places is increasing.

Third, trade frictions and the redivision of globalization will throw the boomerang of inflation back to the United States. The inflation level in the United States, especially the core inflation level, will probably remain at a fairly high level.

The duplicate construction of global supply chains will not only fail to bring about a "soft landing" for a certain period of time, but will also repeatedly bring the risk of "overcapacity" after the so-called "soft landing" due to the destruction of total demand by trade frictions.

The prevalence of nationalist ideas under the anti-globalization trend may also throw out some boomerangs and unpredictable risks.

Taking all these changes into account, in the most optimistic scenario, it may be difficult to foresee the Fed's continued interest rate cuts to below 3% to 2.5% during the next Trump term, and US inflation may also find it difficult to reach a reasonable level.

The specter of "stagflation" is unlikely to go away.