BitUnix analyst: The Federal Reserve is facing a new dilemma of 'not raising interest rates is not enough, raising interest rates is painful' According to BlockBeats, on June 4th, the core variable affecting global asset prices is no longer whether the US and Iran will go to war, but a new round of inflationary pressure driven by war, tariffs, and a wave of AI investment. From the latest release of the Federal Reserve's brown book and conversations with officials, it appears that the US economy is experiencing a typical "dual economy" phenomenon. On the one hand, the United States added 122000 private jobs in May, and the construction of AI data centers continued to drive capital expenditures. Alphabet increased its financing scale to $84.75 billion, and SpaceX's valuation approached $1.8 trillion, indicating that corporate investment and technology capital expenditures remain strong; On the other hand, consumer confidence has fallen to historic lows, real wages have begun to decline, and consumption by low - and middle-income households has significantly weakened. Companies have also begun to postpone some investment plans, and what truly deserves market attention is the change in inflation structure. At present, the core inflation in the United States has risen to 3.8%, higher than the Federal Reserve's target of 2%, and the source of this round of inflation is different from 2022. In the past, it mainly came from supply chain bottlenecks and fiscal stimulus, but now it is driven by three forces simultaneously: the first is energy inflation. Iran has approved the establishment of the Strait of Hormuz Working Group. Although the US Iran negotiations continue to advance, the discussions between the two sides are no longer limited to nuclear issues, but have extended to deeper issues such as lifting the blockade, restoring oil exports, unfreezing overseas assets, and managing the Strait of Hormuz. Even if an agreement is ultimately reached, Middle Eastern countries have begun to construct alternative transportation systems that bypass the Strait of Hormuz on a large scale, indicating that the market has begun to price the 'long-term geopolitical risk premium'. The second is tariff inflation. The latest proposal from the United States proposes to impose an additional 10% to 12.5% tariff on 60 economies, covering major supply chain countries such as China, Japan, India, South Korea, and the European Union. Although the White House has attempted to package it as a trade protection measure, historical experience shows that tariffs are essentially an implicit tax burden imposed on importers and consumers. From manufacturing, retail to logistics systems, costs may eventually be transmitted to terminal prices. The third is inflation in AI capital expenditures. In the past, the market believed that AI would only improve productivity, but currently the capital market is entering another stage. Companies including Google, Microsoft, Amazon, Meta, NVIDIA, etc. are still investing heavily in data centers and computing infrastructure, driving up costs of electricity, chips, servers, land, and construction. The Federal Reserve's brown book also points out that AI related investments have become one of the few areas still expanding. This is also the reason why Dalio, the founder of Bridgewater Fund, issued a warning. He does not deny AI, but believes that the market has begun to show typical foam characteristics. Throughout history, whether it's railways, the internet, electric vehicles, or the AI revolution, technology has often been real, but valuations may not necessarily be reasonable. When the market begins to shift from 'investing in the future' to 'verifying profitability', funds will begin to distinguish who is the true winner who can create cash flow and who only relies on stories to obtain high valuations. However, at present, we cannot simply define that AI has entered the end of the foam. The birth of VOO, the world's first ETF with a scale exceeding $1 trillion, indicates that funds have not left the stock market, but continue to flow towards large weighted enterprises. In other words, the market is now more like a high concentration of funds in a few leading enterprises than on the eve of the bursting of a comprehensive foam. Therefore, for investors, the real concern is not whether AI will disappear, but whether the valuation has far surpassed profitability. From the perspective of the Federal Reserve, there has been a shift in attitude at present. New York Fed President Williams believes that there is currently no immediate need to raise interest rates, but there is also no reason to see a rate cut; Dallas Fed President Logan directly stated that further interest rate hikes may be needed later this year. For asset allocation, the most important issue in 2026 is no longer chasing a single hot topic, but establishing anti inflation capabilities and liquidity safety margins. When the market is simultaneously facing geopolitics, tariff restructuring, energy supply chain restructuring, and AI capital cycle expansion, the risk of excessive concentration on a single industry or asset is increasing. The assets that can truly cross cycles in the future will be those that combine cash flow, pricing power, and liquidity, rather than story assets that rely solely on market sentiment to boost valuations.