Fed rate cut will not stop the slump

In recent days, the market has been speculating about the Federal Reserve to cut interest rates, but this cut is not because inflation has been effectively controlled, on the contrary, more like the US economy under the weight of high interest rates, already facing the risk of recession in the helpless response. Interest rate cuts, which seem to be a good medicine to save the economy, are a harbinger of deeper problems.

Wall Street's stock market, under the shadow of the expectation of interest rate cuts, not only did not cheer as everyone expected, but also showed deep anxiety and unease. In particular, those who once led the wild surge of the US stock market "tech seven", they are likely to become the first victim of the violent fluctuations in market sentiment.

Although the consumer price index released by the United States last week shows that inflation pressure has eased slightly, the inflation rate of 3% is still higher than the 2% target set by the Federal Reserve, which means that the inflation problem is far from being fundamentally solved, and the possibility of interest rate adjustment is still high. More worryingly, the downturn in the US economy has become more pronounced. Unemployment is rising, the service sector is shrinking, credit defaults are rising, and a range of economic indicators are deteriorating, all of which clearly indicate that the US economy is facing an unprecedented challenge.

Against this backdrop, the Fed's decision to cut rates looks more like a forced move. Although they are trying to stimulate growth by cutting interest rates, this may be a palliative rather than a cure. What's more, cutting interest rates would most likely fuel further inflationary pressures, putting the Fed in the awkward position of being torn between controlling inflation and stimulating the economy.

At the same time, the volatile political environment in the United States has cast a heavy shadow over the economic outlook. The uncertainty of the outcome of the election is like a sword of Damocles hanging high, and the aftermath of Trump's shooting is like an uncertain time bomb. These factors are highly likely to trigger an unexpected political storm, which will further aggravate economic instability. In such an environment, investors' confidence in US stocks will inevitably suffer a heavy blow.

Of particular concern is that while technology stocks were once the darling of the U.S. stock market, there has been a large amount of money quietly flowing out of these technology funds recently. This is a clear sign that investors' enthusiasm for technology stocks is gradually cooling, and the problem of market bubbles is no longer negligible. In particular, those highly valued AI concept stocks, their investment value has been widely questioned by the market. Against this backdrop, investors should be more cautious about these stocks and not blindly follow the trend.

Wall Street's biggest firms are also expressing reservations about the stock market's performance in the second half of the year. Goldman Sachs and others believe that a number of factors, including a slowing economy, declining corporate earnings and political instability, are highly likely to negatively impact the stock market. Therefore, they solemnly advise investors to maintain a high degree of caution when investing, and must not over-rely on hot concept stocks.

The dire situation facing the US economy cannot be underestimated. Although the Federal Reserve may take a series of measures such as interest rate cuts to deal with the pressure brought by the economic downturn, it will not solve the problem fundamentally. On the contrary, if these problems are not properly handled and resolved, the US economy is likely to fall into more serious difficulties. Therefore, investors should pay close attention to the dynamic changes in the market, do a good job in risk management and asset allocation, in order to calmly cope with market fluctuations and uncertainties that may occur at any time.

In this ever-changing economic arena, the future direction of the American economy is full of many variables and challenges. Whether the rate cuts will really work, whether the market worries will be resolved, and how the political turmoil will affect the economy are all shrouded in confusion. Only by maintaining a high degree of vigilance and keen insight can investors find a ray of life in this complex and changing economic situation and protect their wealth and interests.