Contemporary ghost stories are probably where US economic data has a place. On Tuesday local time, the US Department of Labor released annual non-farm data after a sharp downward revision. What shocked the market was that nearly one million jobs in the United States "disappeared" overnight. This data conveyed a clear signal that before Trump imposed large-scale tariffs on imported products, U.S. employment growth has stagnated. Is this because Trump further put pressure on the Federal Reserve and blamed Biden, or is it that "deliberate fraud" guiding funds to continue to stay in the United States during the Biden period? Faced with this situation, the founders of the "Dollar Smile Theory" directly predicted that the RMB may rise sharply to 6.
False prosperity in the United States?
Falsification of US economic data is actually not new. The Vietnam War caused a surge in US government spending. The Johnson government directly revised the rules of fiscal deficits and incorporated social security and other trust funds into the "unified budget", which statistically offset the deficits in general projects of the US government that year. In other words, this move by the Johnson authorities directly wrote off part of the rising Vietnam War. During the Nixon period, it directly put pressure on the statistical department to remove meat and eggs and scallions from the CPI to reduce inflation.
It can be said that the United States is the originator of "falsification" of economic data, and their purpose is also very simple, which is to deal with political pressure.
At present, with Trump's tariffs and various policies, the American people gradually became dissatisfied with the Trump administration. Especially after Trump fired the U.S. Bureau of Labor Statistics, the non-farm employment data in August was still lower than expected, and even lowered the employment data in June again, indicating that the United States actually reduced 13,000 jobs that month, and the unemployment rate was also rising.
This immediately found an opportunity for those who dislike Trump, saying that Trump is killing the US economic vitality, and even White House economic advisers admitted that the non-farm data in August was "a bit disappointing."
It can be said that if this trend continues, the Trump administration will inevitably face huge pressure next year's midterm elections, and at this time an annual overhaul of non-agricultural data appeared.
Recently, the U.S. Department of Labor released an employment report revised within 12 months to March this year. According to data, there are 911,000 fewer jobs in the U.S. economy than the previous estimate, which means that before Trump came to power and before tariffs were imposed, employment in the U.S. has stagnated.
This is very interesting.
Non-agricultural data, as a barometer for investors to observe the US economy, will greatly affect the problem of funds staying and leaving funds in the United States. During the Biden period, the Federal Reserve continued to raise interest rates, leaving funds significantly in the United States. The prosperous employment data made investors even more neglected. The average returns brought by the overall economic growth of the United States cannot actually cover such high capital costs in the United States.
When Trump came to power, he was facing a US debt scale that was rising and the US interest rates were high. This greatly increased the US Treasury’s debt repayment cost and was not conducive to realizing its own plan to return to the United States by manufacturing.
This may have exposed the difference between Biden and Trump. Biden wants to keep funds in the United States through finance and contribute to the development of the United States, but Trump wants to make the United States stronger again through manufacturing.
So Trump doesn't like high interest rates and doesn't want to pay so much money for interest in vain.
The RMB returns to the 6th era?
As soon as the non-farm data for the annual overhaul was released, Trump once again pointed his finger at the Federal Reserve, saying that high interest rates are killing the overall economic growth of the United States is completely correct.
I have to say that this move not only makes the Fed's interest rate cut a further inevitable choice, but also turns the blame on the Fed and the Biden administration, shaping itself into a chosen person who can make the United States stronger again.
The three major U.S. stock indexes hit record highs on the same day, while the market bets that the Federal Reserve cut interest rates by 25 basis points sharply to 93% in September, and the probability of a 50 basis point cut reached 7%.
Looking at this point, Trump did win, but the market's doubts about the independence of the Federal Reserve further deepened, which will directly shake the international credit of the US dollar and the entire financial asset system based on the independence of the Federal Reserve.
The founder of the "Dollar Smile Theory" said that the current market sentiment is heating up, and hedge funds are increasing their bets on RMB call options against the US dollar, and the bull market in China's stock market also supports the RMB exchange rate to a certain extent. However, China is currently facing pressure to make the local currency appreciate, and China's financial assets are still in the undervalued stage and the holdings are insufficient. Therefore, he said that the RMB may rise sharply against the US dollar to a level of 6.
But no matter what, as the cornerstone of the Federal Reserve's independence gradually gets hit by the political hammer again and again, the credit of the US dollar is suffering substantial damage, but when the US dollar can no longer gain a foothold in the international community, international affairs are no longer the United States' dominance. #MCN double-quantity advanced plan#
Information source: "The founder of the "Dollar Smile Theory": The RMB may rise to 6 characters" Phoenix Finance
