Don't fight the Fed! This is the lesson that investors have learned from countless losses in the past, but it is always after the next loss that everyone will realize this conclusion again. Now the market has come to this time again, and the Fed should teach greedy investors a lesson. 01. Greedy emotions Now the sentiment of greed is flooding the entire market, which means that the market is accumulating strength to prepare for the next decline. Buffett is right. When everyone is greedy, sober investors should feel fear. This year, the Nasdaq index has rebounded first and has the highest increase. This is because investors predict that the Fed will stop raising interest rates. The previous rate hikes undoubtedly hurt growth-oriented technology stocks the most, but after the rate hikes stopped, these technology stocks immediately ushered in a sharp rebound. The rapid rebound caught short-selling funds off guard. Data shows that the scale of short-selling covering has reached the highest level since the end of 2015. Two years ago, the US stock market triggered a wave of retail investors beating shorts, but the hedge fund's covering at that time was not as large as the current scale. However, some hedge fund managers have reminded everyone that after all, the Federal Reserve has continued to over-issue currency for more than 10 years, and it is unlikely that the bubble can be resolved by just one year of tightening policies. Currently, many valuation indicators are higher than when the Internet bubble burst in 2000. This is something everyone needs to pay attention to. 02. The Federal Reserve may make an unexpected decisionNow it appears that various economic data and the Federal Reserve's stance are in stark contrast to investors' optimism and greed.

The labor market in the United States is extremely tight, a situation that shows no signs of easing, and future wages may continue to rise, with inflation potentially experiencing prolonged fluctuations.

Under these circumstances, it is evident that investors' predictions of the Federal Reserve halting interest rate hikes in March or May clash fundamentally with the Fed's thinking.

The President of the Atlanta Federal Reserve has indicated that at least two more interest rate hikes are needed this year. Given that the non-farm employment data has exceeded expectations, the Fed may reconsider increasing the rate hike to 50 basis points.

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In fact, when interest rate hikes first began last year, the Fed increased the rate hike from 25 basis points to 50 in the second hike.

At the same time, it cannot be ruled out that the Federal Reserve will continue to raise the terminal interest rate.

Previous forecasts had the terminal rate at 5.1, but several officials believe it needs to reach 5.5, with the most hawkish views even suggesting that the terminal rate needs to reach 6% in order to bring inflation back to a reasonable range.

It seems increasingly likely that the Federal Reserve will make unexpected decisions.

03, U.S. stock market decline

Some investors have already begun to exit, and a worrying sell-off may be imminent.Following the synchronized decline of the three major U.S. stock indices last Friday, the three major U.S. stock indices fell again on Monday this week, with the Nasdaq index dropping more than 1% for two consecutive trading days.

Intel's share price fell by 4%, and AMD's also declined by 2%. The entire semiconductor industry's performance was subpar, with various listed companies lowering their expectations and beginning layoffs.

Tech giants such as Apple, Amazon, and Google also saw their share prices drop by more than 1%.

Only Tesla's stock price rose by 2.5% due to the announcement of a price reduction promotion.

Chinese concept stocks fell again, with the China Golden Dragon Index closing with a drop of 1.8% in the early morning hours today.