Dear investors, we have entered August, and the market generally expects an upcoming interest rate cut. However, the interest rate cut does not come without reason; it is usually a response strategy when signs of economic recession appear, much like injecting a shot of adrenaline into the economy.

Recent non-farm payroll data has been quite dramatic. The initially released figures showed employment growth of over a hundred thousand, but after several revisions, the number plummeted to around ten thousand. This situation has sparked considerable controversy, but it is important to understand that the Federal Reserve's decisions are not influenced by external factors.

Looking at the economic cycle, we can identify some patterns. When the expectation of interest rate cuts first emerges, the market often experiences a brief boom. However, once the expectation of rate cuts matures, if the economy indeed falls into recession, the market may subsequently decline. There is a time lag here; interest rate cuts and market reactions are not synchronous.

As market participants, we must recognize that most trading actions are based on expectations rather than actual conditions. Therefore, we should not overly focus on surface phenomena, but rather conduct an in-depth analysis of market expectations and potential trends. In the current economic environment, it is especially important to remain clear-headed and rational.