CSC: During this rate cut by the Federal Reserve, early signs of economic recession have emerged, which may not bode well for mid-term US stocks. It is recommended to reduce holdings at high levels

CSC stated that the US economy continued to slow down in August, with the manufacturing sector hovering at a low level, non-farm payrolls weaker than expected, unemployment rate falling, wage growth picking up, CPI lower than expected but core CPI rising more than expected on a month-on-month basis. The negative impact of the previous rapid rate hikes on the economy will continue. In the short term, the US fiscal deficit in August reached a high of $380 billion, 70% higher than the previous highest deficit of $220 billion in US history in August, which will significantly offset the downward trend of the US GDP in the third quarter and boost the US stock market in the short term. Looking ahead, the historical impact of rate cuts on the US stock market mainly depends on whether it is "preventive" or "recessionary". After the "preventive" rate cut in 2019, the US stock market rose, but at that time the unemployment rate did not rise significantly, and the US economy was just slowing down from an overheated state. In contrast, at present, the US unemployment rate has risen from 3.4% to 4.3%, and triggered the Sam Law in July, which means that the economy has already shown early signs of a recession at the time of this rate cut, which is not favorable for the US stock market in the medium term. It is recommended to reduce holdings at high levels