Core Viewpoint - The ongoing financial turmoil, ignited by a fierce battle between the White House and the Federal Reserve over interest rate cuts, signals a potential decline in the dominance of the US dollar [3][5][8]. Group 1: Financial Market Reactions - Following President Trump's call for an immediate 300 basis point rate cut, market reactions were swift, with the probability of Powell's dismissal rising from 16% to 26% within hours, gold prices increasing by $20 per ounce, and the dollar index dropping by 25 points [3]. - The Federal Reserve's decision to maintain interest rates at 4.25%-4.5% was marked by a historic 9-2 vote, indicating significant internal divisions, the first dual dissent since 1993 [6]. - The Nasdaq index reached a historical high, contrasting with a nearly 1% decline in the Dow Jones, driven by strong performances from tech giants like Nvidia, which saw its market cap exceed $4.3 trillion [6]. Group 2: Central Bank Actions and Global Trends - In April, global central banks sold $36 billion in US Treasuries, while purchasing 280 tons of gold in the first half of the year, the highest in two decades, reflecting a significant loss of confidence in the dollar [8]. - The share of US dollar reserves held by global central banks fell from 72% to 58%, while the ASEAN's renminbi settlement rate surged to 38%, indicating a shift towards de-dollarization [8]. - The European Union and ASEAN are reportedly constructing a "de-dollar trade network," further shaking market confidence in the dollar's supremacy [8].

Group 1: Market Dynamics - The Dow Jones Industrial Average fell nearly 1%, while the Nasdaq Composite Index reached a historic high, indicating a stark contrast between tech giants' performance and traditional markets [2] - Nvidia's stock surged by 1.87%, pushing its market capitalization above $4.3 trillion, attributed to its deployment of 600,000 to 800,000 revolutionary SOCAMM memory modules for next-generation AI chips [2] - The Chicago Mercantile Exchange's interest rate futures market shows a 62.6% bet on a rate cut in September, despite a 97.4% probability of no change in July [2] Group 2: Global Economic Tensions - The U.S. government's imposition of a 19% tariff on Indonesian products and escalating trade tensions with Mexico contribute to global economic uncertainty [3] - A new agreement between the U.S. and EU sets the tariff on EU goods at 15%, significantly lower than the previously threatened 60%, with the EU committing to purchase $750 billion in U.S. energy products [3] - Central banks sold $36 billion in U.S. Treasury bonds in April and hoarded 280 tons of gold in the first half of the year, marking the highest level in two decades [3] Group 3: Inflation and Economic Signals - The core Consumer Price Index (CPI) rose by 2.9% year-on-year in June, exceeding the Federal Reserve's 2% target, with nearly 90% of businesses indicating they would pass tariff costs onto consumers [5] - The 30-year U.S. Treasury yield surpassed 5%, while domestic demand growth hit a two-and-a-half-year low, indicating a slowdown in hiring [5] - The U.S. national debt stands at $37 trillion, with interest payments projected to exceed $1 trillion by 2025, consuming a quarter of federal tax revenue [5] Group 4: Federal Reserve's Internal Struggles - The Federal Reserve is experiencing significant internal division, with a 9-2 vote to maintain interest rates, marking the first public dissent among board members in over 30 years [6] - Calls for an immediate 25 basis point rate cut were made by board member Waller, while Bowman and others opposed any easing of monetary policy until inflation is controlled [6] - Powell emphasized that controlling inflation remains the primary goal, despite external pressures from the Trump administration [6] Group 5: Political Pressures on Monetary Policy - President Trump has publicly demanded a 300 basis point rate cut and hinted at the potential dismissal of Fed Chair Powell, causing market volatility [7] - Following Trump's threats, the probability of Powell's dismissal surged to 26%, leading to a spike in gold prices and a drop in the dollar index [7] - Trump's subsequent reversal on the threat of firing Powell and his attempts to negotiate for rate cuts reflect the ongoing tension between the White House and the Federal Reserve [7]

Global Landscape - The international situation is exacerbating the financial storm, with the Trump administration announcing a 19% punitive tariff on Indonesian products and escalating trade tensions with Mexico, indicating a rise in global trade protectionism [2] - A new trade agreement between the EU and the US has been reached, with the EU agreeing to purchase $750 billion worth of US energy products and an additional $600 billion in investments, while sensitive tariff issues remain unresolved [2] - Central banks worldwide are accelerating the process of "de-dollarization," with $36 billion in US Treasury sales in April and a record accumulation of 280 tons of gold in the first half of the year [2] Federal Reserve Division - The Federal Reserve is experiencing its most significant internal division in 30 years, with a 9:2 vote to maintain interest rates, marking the first time since 1993 that two members publicly opposed the chair's decision [4][6] - The meeting revealed conflicting views on whether to cut rates, with one faction advocating for an immediate 25 basis point cut due to economic conditions, while another faction insisted on maintaining rates until inflation is under control [6] Economic Challenges - The US economy is showing contradictory signals, with the core CPI rising to 2.9% in June, significantly above the Fed's 2% target, driven by tariffs that have increased consumer prices [7] - Despite rising inflation, there are signs of economic slowdown, including a drop in consumer confidence and a slowdown in hiring, leading to increased market uncertainty [7] Political Turmoil - President Trump called for an immediate 300 basis point rate cut just hours before the FOMC meeting, creating panic in the markets and raising concerns about political interference in monetary policy [8][10] - The probability of Powell being dismissed surged to 26% on prediction markets, causing significant market volatility, including a $20 increase in gold prices and a 25-point drop in the dollar index [8] Market Divergence - Financial markets are displaying a split, with the Dow Jones index falling nearly 1% while the Nasdaq reached a historic high, driven by tech giants like Nvidia, which saw its market cap exceed $4.3 trillion [12] - The futures market is experiencing volatility, with a 97.4% probability of maintaining rates in July but a 62.6% probability of a rate cut in September, indicating investor expectations for future monetary easing [14]