1. Nixon&Trump2. Volcker Shock The person who helped the Federal Reserve rebuild its credibility was his successor Volcker, a typical monetary hawk who raised interest rates to 20% (now only around 4%) in one go to control inflation and stabilize market expectations - but this behavior is also considered the main cause of the 1981 recession. But in the long run, Volcker's hawkish stance makes monetary policy regulation over the next 40 years more sustainable. Lesson from 3.1970s ① Maintaining the independence of the Federal Reserve cannot help the government stimulate the economy due to political leanings ② We must unwaveringly adhere to the 2% inflation target ③ Demand side monetary expansion is the "spark" of inflation, while supply side oil crisis is the "fuel" of inflation In 2020, QE was a demand side monetary expansion, and in this context, caution should be exercised in dealing with supply side driven inflation. The current tariff inflation is a supply side driven inflation ④ Once the Federal Reserve loses its credibility, market expectation management will become ineffective ⑤ Rebuilding the credibility of the Federal Reserve requires a significant interest rate hike, which may lead to a recession Previously, there was Covid QE, and now the "universal tax" has forcibly increased the difficulty, leading to a rise in supply side prices. Given the history of the 1970s, the Federal Reserve's interest rate cut this time is bound to be a complete failure~ Considering the current pricing of interest rate futures for recession, the market does not doubt whether interest rates will be cut in the next two quarters, but rather when they will be cut - that is, when the economic "hard data" will weaken. Therefore, the most stable trading strategy for the risk asset market is to wait for this moment to come. Although he does not have the courage of "Volcker Impact", Master Bao, who has been pigeoned for so long, is actually a very reasonable choice to maintain neutrality in the face of Trump tariff.