In a piece that is attributed to Bloomberg, we sourced it here in Tokyo from the Japan News by Yomiuri Shimbun, it suggests that the Fed could be leaning toward another interest rate cut next month. Powell called the recent rate cut, the first in over a decade a “mid-cycle adjustment to policy” and not the first of along series of cuts. However, with the US and China trade war starting to gain momentum and the US now taking it to higher levels, with China not backing down in the slightest, the Federal Reserve will be forced to cut rates and protect the weakening US economy.
Note that Q1 GDP – economic expansion in the US – was at 3.1% but in Q1 it fell to 2.1% partially due to the US-China trade war. Stocks suffered their biggest loss in 2019 when China struck back on trade, allowing its currency to weaken to a 10 year low. We feel that the US and China have no intention to give and and this trade war will only expand and turn into a mini-Cold War that could last several years. The US and China are now in a new global conflict.