Recently, there has been a rather subtle signal in the market - the Fed may have to continue cutting interest rates in December.

Be careful, the keyword this time is not "interest rate cuts" itself, but "forced." In the past two years, central banks around the world have crazily injected liquidity 316 times, pushing cryptocurrencies, the credit market, and private equity—these risky assets—to a peak state of liquidity. Now suddenly hitting the brakes? It's hard to say whether these assets can withstand it.

Look at the current situation: Bitcoin is falling, and bank stocks are also declining. These sectors that are most sensitive to money are acting to tell everyone — there is too much tightness in the market. Sound familiar? It was the same script in December 2018. Back then, the liquidity-sensitive sectors couldn't withstand the pressure, ultimately forcing the central bank to turn around and inject liquidity. Will history repeat itself?

What’s more troublesome is that this time it’s not just an issue within the United States. Japan has recently exploded as well—30-year government bonds plummeted 5% in two weeks, with a cumulative annual drop of 12%, the worst record since the 1970s. The yen is about to break 160 against the dollar, a new 40-year low.

What's the problem? The new Prime Minister, Sanna Marin, implemented a massive fiscal stimulus equivalent to 3% of GDP, which directly drove Japanese bond yields through the roof. As a result, the cost of arbitrage trading between the US and Japan skyrocketed, impacting the liquidity of US stocks as well. So it's natural to see cryptocurrencies like Bitcoin drop—every link in the financial chain is interconnected, and any issue in one segment can lead to a cascading effect.

The current situation is somewhat like a domino effect; whether the Fed can stabilize it, we'll just wait and see on our little stools.