We have to take a review of the time of last year this period. Why? On 18th December 2024, after the FOMC meeting, Jeromy Powell acted according to the expectation of the market. He had a rate cut of 25 base points, but what people were waiting was not the cut, it was his speech after the cut. Basically, rate cut should be good news to the market, but it was already digested. The focus was on his speech, whether it was dovish or hawkish. When he disclosed there would not be any cut in the next 6 to 9 months, a big black candlestick occurred. It was bad news and shown a big black candlestick.
Then market went horizontally, the bloom caused by general election stopped and went down in February. So, what should we expect this time. A cut of 25 base points also digested, this is not good news. We also should expect there would not be any rate cut before the end of his term in May, but what we should mind is his wordings, whether it is strong, weak or neutral. The new chair will take office in the June FOMC meeting, but the speech of Powell will be more important than the Dot Plot Chart.
The press meeting will determine the trend of the rest of December, even though it is the last month of the year, but it has a Santa Claus Rally which will extend to next year. So, if there is a big white candlestick appearing after the press meeting, we can say the whole of December will be in uptrend including the Santa Claus Rally. It will confer new hopes to next year and incessant record high will come one by one. If a big black candlestick occurring, of course there would not be any record high this year, but also would not drop too deep, because the new Fed chair will take office in June, rate cut will start in June which is earlier than the September cut in 2025.
Therefore, in such a case, no need to pay too much attention to economic growth, unemployment or inflation, for QT policy has already stopped in December. Initially, what we called QE is to print more money, and QT is to collect back or recycle the printed money, now stopped means goes back to the beginning of zero point.
How about the Russian/Ukraine Conflict? Today is the 1386th day of fighting. No one will have any hope of finishing the war in 24 hours or 100 days. It can hardly catch any attention now. How about Gaza? And other conflicts? Already replaced by Sino-Japanese tension. China used 100 warships for exercise outside Okinawa (public water between Japan and Taiwan). Japan complained that China uses fire control radar to lock up the F-15 of Japan, which is on the edge of shooting. China at first said it was not true, but later said it was Japanese fighters entered into the zone of their aircraft carrier strike group. It is no use to blame Sanae Takaichi, everyone knows that she is backed up by Donald Trump. Without Donald Trump she could not do anything. So, the spearhead should aim at Trump and if only at Takaichi, absolutely no use at all. Anyway, the most urgent point is using conversation to stop the locking of fire control radar for it will easily causes misfiring.
Trump turns on green light of the sales of NVDA chips to China, but the market effect is so slight. For H200 is no use at all for America, and only can made Chinese local manufacturing stocks dropped. GOOG is chasing up NVDA as last year NVDA surpassed AAPL and MSFT. But the battle not yet over, no matter GOOG can chase up the capitalization of NVDA or not, it is not the end of the seesaw game. NVDA is having counter attack and how about AMZN, META, ORCL, TSLA, INTC? They will also from new ally to fight the battle of AI. Please wide open your eyes and watch this game.