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

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

Why do you say that? Interest rate cuts often do not occur when the economy has completely bottomed out, but rather when liquidity is still relatively loose and market sentiment is somewhat heated. On the surface, it seems to be a "bottom support," but in reality, it creates a safe exit channel for large funds. By releasing positive expectations, market sentiment is pushed higher, making investors excited 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, and the market might even rally again. However, risks are often buried in the second half of the cycle, and true downward pressure tends to emerge as the interest rate cuts approach their end. In other words, the prosperity brought about by interest rate cuts is more like a "life extension" rather than the beginning of a new bull market.

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

History has repeatedly proven: at the beginning of interest rate cuts, it seems favorable, but in reality, it is a turnover window. For investors, the key is not to focus on the interest rate points but to recognize the logic. Interest rate cuts are not a red envelope; they are a phased dump.