The Weakening Of The Fed'S Tightening Influence Still Concealed Several Important Risks.

The Fed announced a 25 basis point increase in interest rates, and the target rate of the new fed interest rate ranges from 1% to 1.25%.

Meanwhile, Federal Reserve Chairman Yellen pointed out that the Fed will also reduce its balance sheet of 4 trillion and 500 billion US dollars.

However, the policies announced by the Fed seem to have relatively limited influence on the US market. What are the reasons for this? At the same time, under the current favorable background of the US market, there are still several important risks hidden. What are these risks?

Yellen, chairman of the Federal Reserve, said at the press conference that the shrinking process would be gradual and predictable.

In fact, if the Fed gradually shrinks, there will be little negative impact on the economy and the market in the short term.

But it also raises questions about whether the Federal Reserve is losing its effectiveness in the market.

That is, the influence of the Fed's policy on the market is gradually decreasing. Although the United States is in an environment of rising interest rates, the US stock market is still at the peak of history. The enthusiasm of the market has not changed since the Fed raised interest rates.

Many people are still puzzled that what the Fed is doing now seems to have disagreed with the market reaction, and the market is still strong in the context of rising interest rates.

Why does this happen?

The answer to the question is often ignored, that is, the support of other central banks in the world has made the US market strong.

As many economies in Asia and Europe are trying to stimulate the economy, more and more sovereign fund investors and central banks have shifted their capital to the US market.

Optimism and support for the US market.

At the same time, it shows that other central banks are optimistic about the prospects of the US economy and the impact of the Trump administration on stimulating the economy.

Like American investors, sovereign funds and investors in other countries are looking for higher returns and better deals.

As a result, the world's most powerful economies provide a golden opportunity for global investors, and global investors are flocking to the US market.

Three, there are three important risks in the US market at present.

In the context of global investors entering the US market, American investors still have to consider several important risks.

Risk is, if some foreign market investors or sovereign investment funds suddenly leave the US market, they sell the capital of the US market, which is likely to bring great risks to the US market.

The sale of international investors is likely to be the trigger for the risk of a sharp fall in the US market.

Risk two, the market should be aware that the rising interest rate background and the rising market have become apparent disjointed.

Once the problem is disconnected, it breaks out and even worsens.

This will also bring significant risks to the US market.

The risk is three. The global economic recovery has made global monetary policy deflation.

Although the US lending rate is stable or even at a low level, interest rates are rising gradually over time, which is likely to pose a major risk to the US market.

Four, how to deal with the three major risks in the US market?

After understanding the major risks, the urgent need for the US market is tax reform, which is what the market has been looking forward to.

Legislators must complete the tax reform by the end of this year, which will solve the worries of most markets and restore market confidence in the booming economy and work.

At the same time, the Fed's members should clearly give market instructions, that is, in the process of monetary tightening, they should not be too fast, especially when the current economic data show some weakness. The Fed's policy officials must be extremely cautious and should not make market confidence worse.

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