01. Interest Rate Hike by 25 Basis Points

As the market anticipated, the Federal Reserve has once again raised interest rates, marking the eighth consecutive rate hike in eight meetings. However, this time the increase has been reduced to 25 basis points.

The cumulative interest rate hike now stands at a substantial 450 basis points, bringing the current rate level to where it was at the end of 2007, just a step away from the highest rate seen in 2008.

The Federal Reserve's rationale for the rate hike is twofold.

The first aspect is that the economy continues to perform well, with various data indicating that it is still in a state of moderate growth, and employment figures also show that the unemployment rate remains at a relatively low level in recent years. This gives the Federal Reserve the confidence to proceed with the rate hike.

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The second aspect is inflation. Although the CPI, PPI, and PCE indices all suggest that inflation has peaked and is on the decline, compared to historical levels, it is still at an absolute high. To avoid the high inflation that lasted for more than a decade in the 1970s, the Federal Reserve cannot afford to be complacent and must continue to maintain the pace of rate hikes for the time being.

Despite another rate hike, the magnitude is entirely within the market's forecast. Moreover, the Federal Reserve's stance is relatively moderate, not showing a strong bias towards a hawkish position.

As a result, the market's optimistic sentiment has further spread.

02. Significant Rise at the Close

At the close in the early morning, the S&P 500 index rose by 1.05%, and the year-to-date cumulative increase has reached 7.29%.In the numerous sectors covered by the Standard 500 Index, the information technology sector saw the highest increase, reaching 2.3%, followed by the consumer discretionary sector, which also rose by 1.9%. However, the energy sector fell by 1.9%, becoming the only sector to decline.

The NASDAQ Index recorded the highest increase, closing up 2% in the early morning, with a year-to-date gain of 12.9%. Last year, among the three major indices that fell in sync with the US stock market, the NASDAQ had the largest drop, but now it is leading the rebound with the highest increase.

Tesla rose by 4.7% last night, Meta by 2.8%, and Microsoft, Amazon, and Google all saw gains close to 2%.

Yesterday evening, Meta released its Q4 financial report, with several figures exceeding market expectations. The operating income was higher than anticipated, and the number of active users also surpassed expectations. However, the first-quarter forecast released simultaneously indicated a slight dip in operating income.

What truly propelled the stock price positively was the company's announcement of a share buyback, with an expected buyback amount of $40 billion this year, a significant increase from the actual $27.9 billion repurchased last year. Consequently, the company's stock price surged by 17% after closing.

In comparison, the increase in Chinese concept stocks was even higher, with the China Golden Dragon Index rising by 4.34% last night, demonstrating greater resilience.

03, Dark Clouds Gathering

However, contrary to the optimism of ordinary investors, an increasing number of economists and renowned fund managers are feeling a sense of panic about the market.

Before the subprime crisis hit, Taleb, who warned the market through his best-selling book "The Black Swan," issued a warning yesterday that the US stock market might be facing a time bomb more devastating than the 1929 stock market crash.

The most important reason for him and his company to hold this view is that the Federal Reserve has been using ultra-low interest rates for more than a decade, leading to an overflow of market liquidity. Excessive borrowing is bound to become a bubble that can burst at any time as interest rates continue to rise.He believes that this is nothing new; most economic bubbles are created and burst in this way. Although the 2008 subprime crisis has only been over for about a decade, many people have apparently already forgotten. Now, many aspects seem very similar to that time.

Dr. Doom, Nouriel Roubini, who successfully predicted the 2008 subprime crisis, also warned that the continuous rise in interest rates will lead to a severe debt crisis, which could be destructive to the economy.