Phased dump: The truth behind the Fed's interest rate cuts

Recently, everyone has been talking about the Fed's interest rate cuts, and the market sentiment has been ignited. Many people think that interest rate cuts are a positive sign, and risk assets will continue to surge. But in my opinion, this feels more like a phase of dumping.

Why do I say that? Interest rate cuts often do not happen when the economy has completely bottomed out, but rather when liquidity is relatively ample and market sentiment is somewhat heated. On the surface, it seems to be "supporting the bottom," but in reality, it creates a safe exit channel for large funds. By releasing positive expectations, it boosts market sentiment and excites investors to take over, allowing funds to gradually exit at high levels.

Interest rate cuts are not a one-time event; they are a process. In the first half, the market may still be quite lively, with the dollar weakening and funds flowing into risk assets, even leading to another surge in the market. However, risks are often buried in the latter half of the cycle, and real downward pressure usually appears as the rate cuts approach their end. In other words, the prosperity brought about by rate cuts is more like a "lifeline" rather than a new bull market.

Looking at external signals again. If the yen continues to strengthen, it often indicates that the dollar has reached a peak; the volatility of the won is more like a "canary," often releasing risks in advance. These signs are integrated with the operations of the Fed, and fundamentally, they all point to capital seeking an exit.

History has repeatedly proven: at the beginning of a rate cut, it seems beneficial, but in essence, it is a turnover window. For investors, the key is not to focus on the interest rate points, but to recognize the logic.