The most important thing for the market to pay attention to in this Walsh congressional hearing is not whether he said or not to raise interest rates. But he sent a very clear signal: The Federal Reserve currently has a low tolerance for inflation. Many people believe that as long as the CPI drops slightly, the Federal Reserve will immediately turn to easing. But the answer given in this hearing is very clear: Not so fast. Walsh emphasized that zero tolerance for sustained high inflation and restoring price stability remain the core tasks. Translated into market language is: The interest rate cut transaction will not go smoothly until inflation is confirmed to have returned to the target. 2/This conflicts with previous market expectations. The market prefers to trade the future in advance. As soon as the data cools down, people start fantasizing about interest rate cuts; As soon as technology stocks rebound, they begin to price and liquidity returns; When bond yields fall, it feels like a loose cycle is coming soon. But the Federal Reserve doesn't want the market to be too comfortable now. Because once the market relaxes financial conditions too early, stock market gains, loose credit, and continued strong consumption may actually lead to a resurgence of inflation. So the Federal Reserve must suppress expectations. There is another detail to this hearing: Walsh did not provide a clear next step. There is no clear indication of an immediate interest rate hike, There is no indication of a rate cut soon. This ambiguity is actually a policy tool. Because what the Federal Reserve needs most now is the power of choice. If inflation continues to decline, we can remain inactive; If inflation rises again, there is still room for further tightening; If the economy suddenly weakens, it can be adjusted again. So the market will be very uncomfortable. Because the market likes certainty, but the Federal Reserve is deliberately not providing certainty now. What does this mean for the US stock market? Interest rate sensitive assets will continue to be under pressure. Especially high valuation technology stocks, growth stocks, AI hardware, semiconductors, and other sectors are essentially dependent on discounted future cash flows. The higher the interest rate, the easier it is for the valuation to be suppressed. It's not that these companies are bad, but how much valuation the market is willing to give will be influenced by the interest rate environment. That's why even good companies can have significant valuation differences in different interest rate cycles. 5/But there is no need to view this matter as purely negative. The hawkish stance is suppressing valuation, not necessarily the long-term main line. If corporate profits continue to be strong, AI capital expenditures continue to be realized, and technology companies' cash flow continues to grow, the market will still slowly digest high interest rates. What is truly dangerous is: The high interest rates haven't come down yet, Profits are starting to weaken again, Valuation and performance are both suppressed. That is the combination that the market fears the most. So next, I will focus more on three things: Firstly, is inflation continuing to cool down instead of looking good in a single month. Secondly, has there been a significant decline in employment. Thirdly, can technology stock financial reports prove that AI investment is truly turning into revenue and profit. If inflation does not come down, it will be difficult for the Federal Reserve to relax. If profits cannot be sustained, high valuations are difficult to stabilize. If both sides get stuck, market volatility will increase. This hearing is not telling the market to 'raise interest rates immediately'. But tell the market: Don't fantasize about cutting interest rates too early. Until inflation truly returns to its target, the Federal Reserve is more likely to maintain a hawkish stance. For investors, in the short term, don't take easing as a definite script. In the long term, we still need to return to fundamentals: Interest rates determine the upper limit of valuation, Profit determines market confidence.