European Natural Resources Fund: The Federal Reserve is expected to cut interest rates twice next year, and a significant decline in the global financial markets may occur between March and May next year

Zhitong
2024.12.25 06:28
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Li Gangfeng, an analyst at the European Natural Resources Fund, stated that the Federal Reserve is expected to cut interest rates twice next year, which may lead to a significant decline in global financial markets between March and May 2025. He suggested gradually reducing risk assets during this period. Li Gangfeng also mentioned that Trump's election could impact market trends, expecting U.S. stocks and digital currencies to remain strong until the end of April next year, while gold prices may perform poorly

According to the Zhitong Finance APP, Li Gangfeng, a special analyst for the European Natural Resources Fund Commodity Discovery, stated that last week the Federal Reserve lowered interest rates by 25 basis points as the market expected, but indicated that it might only cut rates twice in 2025 (compared to the prediction of four cuts next year in September) and will closely monitor the inflation trends in the United States. On the other hand, Powell stated that the assets the Federal Reserve can invest in are limited by law, and digital currencies are not included; Trump suggested that the U.S. should reduce its gold holdings to buy digital currencies, which Powell's actions are indeed favorable for gold. The global financial market may experience significant fluctuations (declines) from March to May 2025, and it is recommended to gradually reduce risk assets during these months to maintain stability.

Li Gangfeng mentioned that since the market has been concerned about the U.S. balance sheet and the dollar, no president can change the historical tide. During the previous Trump presidency, national debt increased by $7.8 trillion, coupled with tax cuts and no restrictions on other expenditures, leading him to set a historical record as the president with the third-largest increase in fiscal deficit during his term. However, from an investment perspective, fundamentals are not important; what matters is what the market believes at this moment. The market believes that if Trump is elected, the U.S. dollar will rise, bond prices will fall, commodities will decline, and U.S. stocks and digital currencies will rise.

Li Gangfeng previously predicted that if Trump is elected, the market may give him a six-month honeymoon period, so the strength of U.S. stocks and digital currencies may be maintained until around the end of April next year; in terms of metals, unless geopolitical tensions rise again, it may have already passed the peak moment in the short to medium term. According to historical statistics, the average return of gold prices in the first year of each U.S. president's term is only slightly over 1%, making the first year of a four-year term often the worst performing