The U.S. stock market and the U.S. dollar index are both weakening, while the Chinese yuan and the Japanese yen are both strengthening.

Various domestic data in the United States have entered a new phase.

Surprisingly, the Bank of Japan has suddenly raised interest rates, and the market has once again completely reversed the expectations of the Federal Reserve's rate cuts.

Major events are happening frequently in the Middle East, to the extent that the United States has to publicly acknowledge the need to increase military strength in the Middle East.

These events are happening one after another, leaving people with no time to catch their breath.

What is behind all this?

How should we view these events?

How are these events connected?

Let's talk about this today.

On August 2nd, both onshore and offshore yuan suddenly rose sharply, with an exaggerated increase of up to 1,000 basis points within a single day, bringing the yuan to the U.S. dollar to a position of 7.16.

When did this trend of the yuan strengthening begin?

It was on July 23rd.

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And when was this time?

Here we need to pay attention to that on July 22nd, the yen started to fall from the position of 157 all the way down, arriving at 146.54 on August 2nd.

That is to say, both the yuan and the yen began to strengthen during that period.

The yen had started to fall from the historical high of 161.67 on July 10th.

What period is this?

This is the period when the U.S. dollar index fell from 104.998 to the current 103.12.

So we see a very clear correlation.

When the dollar began to weaken, both the yen and the yuan strengthened.

Of course, we can simply understand this phenomenon as in the currency market, the dollar and these two currencies are relative, so when the dollar is weak, other currencies naturally become strong.

There is no problem with such an explanation, but I'm afraid we need to see deeper to judge the connection between them, and then we can understand what it means that the world is universally connected.

Let's talk about this from August 2nd.

On August 2nd, the U.S. Department of Labor announced the non-agricultural employment number for July, which is 114,000 people.

This value was previously expected to be 175,000 people, and the previous month, that is, in June, it was 206,000 people.

This means that the number of new jobs in the United States has been cut in half in a month.

Naturally, this leads to a surge in the unemployment rate, from the previous value of 4.1% to 4.3%.

And this unemployment rate has actually triggered an economic law that may not be familiar to some comrades, called "Sam's Rule".

The general meaning is that when the average value of the unemployment rate in the last three months is compared with the lowest point of the average value of the past 12 months, the average of three months is 0.5% higher than that of 12 months, it means that the economy is already in a recession.

This rule has been confirmed in 11 economic recessions in the United States from 1950 to the present.

Now the unemployment rate in the United States has finally triggered this 0.5 percentage point difference in the previous month, and it depends on the performance of the next two months.

If the United States is not timely in dealing with the data, then not only is the real recession, but even the paper recession has been unable to cover up.

Such a high unemployment rate naturally leads to an increase in the number of unemployed people.

Last month, the United States had an additional 352,000 unemployed people, and now there are 7.2 million unemployed people, far higher than the same period last year.

Among them, the number of temporary unemployed people increased by 249,000, reaching 1.1 million people, and the number of permanent unemployed people is 1.7 million people.

What does such economic data mean, I think ordinary people can see, let alone those elites, especially the elites on Wall Street.

So the federal fund futures show that the probability of the Federal Reserve cutting interest rates by 50 basis points in September has directly soared to the position of 80%, and the annual interest rate reduction space has reached more than 110 basis points.

On the day of the information release, the yield of the U.S. two-year government bond fell by 29 basis points in a short time, almost reaching a new low in the past year, and the yield of the 10-year government bond fell to 3.81%, and the U.S. dollar index went to the position of 103.12 mentioned before.

The futures of the three major U.S. stock market indexes fell rapidly, with the Dow Jones falling by 1.57%, the S&P 500 falling by 2%, and the Nasdaq falling by more than 3%.

The British FTSE 100 index, the French CAC 40 index fell by nearly 1%, the German DAX index fell by 1.74%, the Italian FTSE MIB index, the Eurozone STOXX 50 index fell by more than 2%, among which the European Stoxx Technology Index once fell by as much as 6.6%, which is the largest drop since 2020.

The price of crude oil has plunged, and the U.S. oil and Brent oil both rose and fell on the same day, with Brent oil falling by 2% and U.S. oil falling by 3%.

At the same time, there is the previously mentioned strong yuan and yen.

So here, we find that this matter is not just a problem of the currency market, otherwise, why is the performance of these global capital markets?

Or we have to ask, why is the release of an unsatisfactory non-agricultural employment data, all of a sudden, seems to have brought down the U.S. capital market, which accounts for more than 65% of the global share?

At this time, we have to look forward.

In May, the Financial Association reported that the U.S. household debt reached the highest level on record, and more and more borrowers are repaying very difficult.

Coupled with the quarterly report on household debt and credit released by the Federal Reserve Bank of New York, the total household debt in the United States in the first quarter reached 17.7 trillion U.S. dollars, an increase of 184 billion U.S. dollars from the fourth quarter of last year, an increase of 1.1%.

In the previous video, we also talked about the current U.S. credit card default rate of 8.9%, which shows that the difficulties at the people's level are very prominent.

Sometimes we say how much the U.S. GDP has increased, as if these GDPs are related to the American people.

In fact, these increases are basically in the hands of the American ruling class, and the American people can't even share these increases, and even the part of these increases driven by inflation is actually the debt of the American people.

So to really look at the U.S. economy, the situation of household debt is the most basic thing, and it must be seen.

Then in May, a financial analysis consultant's report showed that due to the heavy burden of commercial real estate loans and the current high interest rates, small banks and regional banks are facing tremendous pressure.

Among more than 4,000 financial institutions in the United States, 282 are under pressure.

This data seems to be nothing, and it is only about 7%, which seems to be worth mentioning.

But I believe everyone understands the risk transmission effect between these financial institutions.

Before starting from Silicon Valley Bank, it has only been 6 banks that have gone bankrupt so far, and the United States has started to use various means for saturation rescue.

So what if there is a widespread bankruptcy of these banks?

Coupled with the current scale of U.S. debt and its credit situation, I'm afraid the real internal explosion is nothing more than this.

And now the Federal Reserve has always maintained high interest rates, making enterprises and individuals reluctant to borrow, and even because the people can't live on, more and more people are not repaying the money they borrowed before, these small and medium-sized banks will lose a lot of income.

At the same time, due to the series of bank bankruptcies before, many depositors have transferred their money to large banks, which has led to a large loss of deposits in small and medium-sized banks, and this kind of squeeze plus deposit loss is even more difficult for small and medium-sized banks.

So this is likely to detonate the internal thunder of the United States, and the smoke that is now emitting is becoming more and more obvious.

Finally, it is the U.S. Treasury bonds.

Now the U.S. debt has broken through the scale of 35 trillion, and just in 24 years, the interest to be paid by U.S. debt is as high as 1 trillion U.S. dollars, even surpassing the military expenditure of the U.S. military.

Now the United States still maintains high interest rates, and although the possibility of interest rate cuts this year is full, the possibility of returning to low interest rates is not very high, which means that the United States still needs to pay a lot of interest, so can U.S. debt be guaranteed?

I'm afraid everyone is saying on one hand that there is no problem, and on the other hand, the body is very honest.

Of course, do you think the United States is only in danger of national debt?

In fact, it is not the case.

State governments and local governments are also very dangerous now.

According to an analysis by a non-profit organization called "Accounting Truth", 53 major cities in the United States do not have enough income to pay the bills, including cities like Chicago, Philadelphia, Houston, Portland, Miami, and so on.

According to a report by the U.S. Consumer News and Business Channel, many major cities in the United States are in a serious financial predicament, which makes local governments try their best to control expenditures.

So it is obvious that the United States is now in a tight spot from top to bottom.

This is still the case when the United States has already accumulated a lot of debt and has returned the dollar tide through high interest rates.

The financial expenditure of the U.S. government from top to bottom, and the credit card of the common people, are almost bottomed out.

I believe that many people in the Chinese Internet are not clear or do not believe in such an economic situation, but Wall Street is clear and very vigilant.

They have actually been prepared to leave the market at any time and are in a state of nervous tension.

Well, at this time, the non-agricultural employment data is announced, and everyone sees that the data is so bad that it is a situation that even the magic of statistics cannot be played, so what is their choice?On August 2nd, the market reaction provided the answer: naturally, it was a run.

Well, capital has fled from the market.

At this point, what kind of coordination did Japan make?

The Bank of Japan raised interest rates from 0.1% to 0.25%.

Isn't that a coincidence?

On one side, Japan had previously intervened in the yen with US dollars, and it's estimated that Japan has quietly sold a considerable amount of US debt.

Otherwise, where would the ammunition come from to pull the yen from 161.67 to 157?

On another side, the fragility of the US economy has driven market nerves to be sensitive, and on the other side, there's Japan's unexpected interest rate hike.

These combined, an interesting phenomenon has emerged.

The international hot money that was originally inflating the stock market bubble in Japan saw a greater opportunity, that is, to arbitrage and settle in the Japanese stock market, and then return to the United States to short sell opportunities.

So they withdrew directly.

This withdrawal directly led to a plunge in the Japanese stock market.

Even the least affected TOPIX in the Nikkei index fell by 4.67%, and the other two fell by more than 4.8%.

We had just said that investors in Japan would face such a situation, and now it has come true.

On the other side, those "Watanabe nobles and Mrs. Watanabe" who had borrowed money domestically to arbitrage saw that their central bank had raised interest rates, and the US economic data was actually like this, so they followed those short-selling institutions to sell US stocks and other assets, and returned to Japan.

As a result, the US stock market also plummeted.

Both sides are falling, and the US economic data is really too poor, which has triggered a chain reaction, causing the major markets around the world to have the performance on August 2nd.

In the final analysis, the most important reason is that the US economy is really not doing well, everyone knows it, and no one pretends anymore, not accompanying the United States in the drama, which has led to such a fierce market change.

Whether it's the strong performance of the yuan and the yen, or the true reaction of various stock markets, in a word, the era when the United States commands the global economy through the dollar and US debt system is really gone, and even Japan dares to play the trick of a loyal dog biting its master again and again.

Previously, the Bank of Japan looked at adding 0.1% to express itself, looking like it was cleaning itself up and putting it on the plate, and now it's adding again, even showing a very hawkish attitude, and the yen is actually following the trend of the yuan, all of which seems to indicate what we said before, that Japan can only seek understanding to the west and possibly break free from the leash and other things, as if it is quietly happening.

And the United States' reaction to this is also very obvious.

After Israel, this conjugate father and son, made a crazy assassination action, it was seen that it was really impossible to cover up, and it was very likely that Japan would follow the East and run towards the possibility of independence, so it could only invest resources into more certain and key areas, in order to continue to maintain its trend of staying on the table.

Therefore, on August 2nd, US Secretary of Defense Austin ordered the adjustment of the US military's military posture, increased US support for Israel's national defense, and increased military deployment in the Middle East.

This means that when the real situation of the US economy can no longer be concealed, interest rate hikes can no longer be sustained, and the whole world has seen through this point, leading the United States to face a more thorough de-dollarization in terms of currency, it has begun the inevitable behavior of imperialism, that is, to participate in wars, and even may initiate a global war, to divert internal problems, and through this diversion, to exchange time for space, and hope to find a way to solve the problem by delay.

This is the bottom line behind those economic phenomena and geopolitical conflicts, in a word, the United States is really not going well, and the afterglow of the empire is finally beginning to slowly sink into the horizon.

So how these things will develop in the future, let us continue to wait and see.