01, Will the Federal Reserve Cut Interest Rates?

Currently, there is a consensus in the market that the Federal Reserve will slow down the pace of rate hikes, with future increases likely to be in increments of 25 basis points. For most of last year, the United States persistently raised rates by a substantial 75 basis points each time, but now it is clear that the Federal Reserve cannot continue to do so.

However, it is difficult to form a consensus on when the Federal Reserve will start cutting interest rates, and this divergence of opinions will inevitably increase market volatility. Federal Reserve officials remain steadfast in their belief that interest rate cuts are not possible until inflation falls back to 2%. Yet, investors argue that, as the economic performance worsens, the Federal Reserve may have no choice but to shift towards cutting interest rates in the second half of this year.

Not only do ordinary investors have differing views, but even official institutions hold inconsistent opinions. Former U.S. Treasury Secretary Summers, who is attending the Davos Economic Forum these days, has warned that in the 1970s, the United States adopted a relatively lenient attitude towards inflation, which led to a decade of stagflation and recession in the economy. The Federal Reserve must not repeat the same mistake now.

However, economists from the International Monetary Fund believe that the Federal Reserve could完全可以 raise its inflation target to 3%. The current tightening measures taken to curb inflation are not only affecting the U.S. economy but also dragging down the global economy.

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02, U.S. Stocks RiseAfter three consecutive days of decline, the U.S. stock market finally saw a rebound, with the Nasdaq Composite Index surging by 2.66%. Throughout the week, the three major indices showed a pattern of rising first and then falling, but by Friday, they rose again.

Many technology stocks also experienced significant increases. Netflix's stock price soared by 8%, largely due to the company's earnings report showing a higher-than-expected growth in subscribers.

Tesla, which had been continuously falling, also rose by 5%, and Google's stock price increased by the same percentage.

Microsoft and Amazon also saw a rise of 3%.

In the new energy vehicle sector, Tesla has started to lower prices to consolidate its market share. Last night, Tesla's stock price increased by 4.9%. Companies from China, including NIO, XPeng, and Li Auto, all rose, with gains ranging from 2.8% to 5.0%.

Clearly, for the foreseeable future, the focus of the U.S. stock market has shifted from the magnitude of the Federal Reserve's interest rate hikes to the performance of U.S. economic data. The upcoming release of fourth-quarter earnings reports may lead more people to realize that the U.S. economy's march into recession seems unstoppable.

However, compared to the United States, China's situation is very clearly positive.

The Chinese yuan has appreciated significantly since early November of last year, rebounding by 7% so far and regaining several key levels.

At the same time, the stock market has also seen a substantial rebound.Due to the more convenient flow of funds in and out of Hong Kong, the Hong Kong stock market is more significantly influenced by foreign capital. Against the backdrop of foreign capital's continuous purchase of Chinese assets, the Hong Kong stock market has risen by more than 50% since last November, leading the global stock markets.

A-shares have also recorded a good rebound, with the Shanghai Composite Index up by 5.68% this year to date, and the ChiNext Index has risen by more than 10%.

Even more impressive is the continuous influx of foreign capital.

In less than a month of trading, the net purchase of northbound funds has already reached 112.5 billion yuan, surpassing the total for last year. The net purchase in the latest week reached 48.5 billion yuan, which is also the second-highest record in history.

In the coming period, the US dollar index will continue to fall, and it is estimated that funds will increasingly withdraw from the US market in larger amounts, with a significant portion flowing into Asia, including China and India.

In comparison, China's economy is more stable, and its prospects are more optimistic, so it will continue to attract foreign capital purchases.