The Fed's rate cut should be good for the market, so why did it become a catalyst for decline? The logic behind it is much more complicated than you think!
Whenever the US dollar raises interest rates, funds flock to the United States like a tide, seeking security and maximizing returns. With leverage, the market seems to be prosperous, but in fact, there are undercurrents.
However, when the interest rate cut bell rings, the arbitrage feast ends, capital is eager to withdraw and repay debts, and asset prices fall accordingly. If the economy adds to the recession haze, panic selling will trigger a chain reaction, and the risk of financial crisis will increase sharply.
Historical mirror, the Internet bubble in 2000 and the subprime mortgage crisis in 2008 are both painful memories in the interest rate cut cycle. Today, quantitative easing has become the norm for saving the market, the debt snowball is getting bigger and bigger, and the credit of legal currency is in jeopardy.
On the eve of the yen rate hike and the US dollar rate cut, the market is nervous and the economic recession is shrouded. Whether the Fed will start printing money again has become the focus of the world.
There may be a mild adjustment in the early stage of the interest rate cut, and the storm will hit when the recession is confirmed, and the carnival will come after the flood. Everything is because the value of paper money fluctuates.
