The undercurrent of the market under the Fed's "soft landing" vision: interest rate cut expectation, technology stock rebound and risk warning

In the volatile capital market today, every official statement from the Federal Reserve is like a wind vane, affecting the nerves of global investors. In recent days, the collective voice of a number of Federal Reserve officials has painted an optimistic picture of a "soft landing" of the US economy for the market, and suggested that the path of future interest rate cuts will be smooth and gradual. The news quickly sent ripples through the market, brightening investor sentiment as if overnight, and technology and consumer discretionary stocks took advantage of the wind to achieve a long-overdue rebound. However, under this seemingly positive wave, there are many undercurrents that deserve in-depth analysis and criticism.

The so-called "soft landing" vision of Fed officials has certainly given markets a shot in the arm, but there is a rift between the logic behind it and reality that cannot be ignored. First, the term "soft landing" is inherently fraught with uncertainty, both as an idealized pursuit by policymakers and as a forced compromise of economic complexity. History tells us that the turn of the economic cycle is often accompanied by violent fluctuations and adjustments, and a "soft landing" is more like a utopian dream that is difficult to realize. At a time when the global economy is facing multiple challenges, such as trade disputes, geopolitical tensions, and supply chain disruptions, it remains a big question mark whether the US economy can manage a smooth transition on its own.

The "small, gradual rate cuts" mentioned by Fed officials are equally questionable. As an important tool of monetary policy, the effect of interest rate cut often has lag and uncertainty. Under the current inflationary pressure still exists, the labor market seems strong but the underlying current background, too early or too fast interest rate cut may not only fail to effectively stimulate economic growth, but may aggravate the risk of inflation, and even trigger asset price bubbles. In addition, the market's excessive interpretation of the rate cut news often leads to the irrational flow of funds in the short term, which aggravates the volatility and instability of the market. This kind of binge based on short-term good news may not be conducive to the healthy development of the market in the long run.

The collective rebound of technology stocks and consumer discretionary stocks seems to be a direct reflection of improving market sentiment, but there are hidden worries. As an important engine of economic growth in recent years, the technology industry has long been well known for its high valuation and high-risk characteristics. The rally has been based more on short-term swings in sentiment than any substantive improvement in corporate fundamentals. Especially in the context of increasing global economic uncertainty, the profitability, market share and innovation ability of technology enterprises are facing severe tests. Once the market sentiment reverses, the correction in technology stocks may be far greater than the market expects, causing significant losses for investors.

Fed officials' comments have been effective in boosting market risk appetite, largely due to the market's over-reliance on policy intervention. However, this dependency psychology not only weakens the market's ability to self-regulate, but also masks potential risk factors. The blind boost of market risk appetite is easy to lead investors to ignore fundamental analysis and blindly chase hot spots, which will aggravate the speculative atmosphere in the market. In the long term, this will pose a serious threat to the stability and sustainability of the market.

More deeply, the rhetoric of Fed officials and the policy direction behind it is really a game between policymakers and market forces. In this game, policymakers try to guide market expectations through rhetoric, and thus influence market behavior. However, the complexity and variability of the market often make it difficult to achieve the desired policy effect. In addition, the information asymmetry between policy and the market may also lead policymakers to misjudge the situation and make wrong decisions. Therefore, for the remarks of Federal Reserve officials, we should keep a clear head, rationally analyze the logic and intention behind it, and avoid being swayed by market sentiment.

To sum up, Federal Reserve officials on the US economy "soft landing" and the future path of interest rate cuts, although the short-term market sentiment has a positive impact, but the rift between the logic and reality behind it, the excessive interpretation of interest rate cut expectations, the illusion of the rebound of technology stocks, the blind boost of market risk appetite and the game between policy and the market can not be ignored. As investors, we should maintain a rational and prudent attitude, in-depth analysis of market dynamics, attention to fundamental changes, and avoid blindly following the trend. In the complex and changing market environment, only by maintaining a clear mind and firm faith can we move forward steadily in the wind and rain.