Although many have predicted that the Federal Reserve's rate hike will be reduced, Federal Reserve Chairman Powell has claimed that the ultimate interest rate in the future will be higher than expected. Many investment banks have already predicted that there will be an additional 200 basis points of rate hikes in the future, which will further raise US Treasury yields and may lead to a default on US Treasury bonds. Last night, US stocks fell sharply, and before the release of the US CPI, the US financial market will experience greater turmoil.

01, Layoffs, Surge

Now it seems that the more optimistic the future outlook of US listed companies, the more their stock prices fall, while the more pessimistic ones have the potential for stock price increases. Yesterday, the CEO of META announced the latest layoff plan. The total number of layoffs this time reached 11,000, which means that 13% of the company's employees will be forced to leave in the near future. This is the latest step in a series of layoffs by many US tech giants in recent times and is also the company with the largest number of layoffs. This is bad news for employees, but good news for shareholders. In the current poor economic environment, controlling costs has become an important choice. Therefore, META's stock price rose rapidly yesterday, with the highest increase reaching 8%. It fell back later, but the final increase still exceeded 5%. Combined with the 2% decline in the three major US stock indices last night, this is already a very good performance.

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02, Disney's Sharp DeclineHowever, the stock trend of another company, Disney, is completely different.

Previously, Disney was quite optimistic about its future prospects, and market analysts believed that the company would achieve a net profit of over $600 million in the fourth fiscal quarter. However, this overly optimistic sentiment has actually laid the groundwork for the current stock price decline.

Yesterday, Disney announced a net profit of only $160 million for the fourth quarter, which is a huge gap compared to the previous analyst forecasts. The company's stock price had already fallen by 7% before the market opened. After the market opened last night, there was a sell-off, and Disney closed down by 13.6%.

03, The First Two Crises

However, the biggest concern for all companies at present is still the continuous interest rate hikes by the Federal Reserve.

Although the market is predicting that the Federal Reserve will slow down the pace of interest rate hikes, according to Powell's statement, the road to future interest rate hikes is still very long, and the final interest rate target is much higher than previous predictions.

Some investment banks have already believed that the final interest rate may reach 6%, which requires at least an additional 200 basis points of interest rate hikes on the current basis, bringing the interest rate to exceed 2006 and approach 2000.

However, looking back at the situation at that time, they were all very bad memories.

In 2000, the federal interest rate once reached a maximum of 6.5%, but then the U.S. stock market entered a continuous decline after the burst of the internet bubble. That bear market lasted for three years and also forced the Federal Reserve to significantly lower interest rates, bringing them close to 1%.

In 2006, the federal interest rate was once again raised above 5%.However, this round of interest rate hikes triggered the 2008 subprime mortgage crisis, with the U.S. stock market being halved and a global financial storm occurring. Subsequently, for many years, the economies of the United States and the world entered a period of turmoil.

The first two times the interest rate exceeded 5.5%, they both triggered significant economic crises.

This time, if the interest rate is raised again, it does not even need to reach 6%; even if it just goes above 5.5%, it will mean that in the next one or two years, not only will the United States enter a severe recession, but it may also cause a global economic crisis.

04, U.S. Treasury bonds may default

At the same time, we also need to pay attention to the fact that the current scale of U.S. Treasury bonds has reached 310 trillion, and data from the U.S. Treasury Department shows that the interest on U.S. Treasury bonds will increase to more than 50 billion U.S. dollars this year.

As interest rates continue to rise, next year the U.S. government may need to pay 80 billion U.S. dollars in interest for U.S. Treasury bonds.

In the past 20 years, in the vast majority of years, the U.S. government has been in a fiscal deficit, making it increasingly difficult to hope to repay the interest and principal of U.S. Treasury bonds with taxes.

In the future, the United States has only two choices: either Congress agrees to break through the highest limit of U.S. Treasury bonds, robbing Peter to pay Paul, or U.S. Treasury bonds will face a substantial default.