Macroeconomic Interpretation: Powell's "Driving in a Fog" and the Financial "Hunger Games"

Core Viewpoint

2025-11-09 12:50:18

Collection

The new policy system presents three characteristics: limited visibility, weak confidence, and liquidity-driven distortions.

Original Title: "Driving in Fog" and the Financial Hunger Games

Original Author: @arndxt_xo

Original Compilation: Ding Dong, Odaily Planet Daily

A significant pullback coincides with the quantitative easing (QE) cycle—when the Federal Reserve intentionally extends the maturity of its held assets to lower long-term yields (this operation is known as "Operation Twist" as well as QE2/QE3).

Powell's metaphor of "driving in fog" is no longer limited to the Federal Reserve itself but has become a reflection of today's global economy. Whether policymakers, businesses, or investors, all are groping forward in an environment lacking clear visibility, relying solely on liquidity reflexes and short-term incentive mechanisms.

The new policy regime presents three characteristics: limited visibility, fragile confidence, and liquidity-driven distortions.

The Fed's "Hawkish Rate Cut"

This 25 basis point "risk management" rate cut lowers the interest rate range to 3.75%--4.00%. Rather than being seen as easing, it is more about "keeping options open."

Due to two completely opposing opinions, Powell sent a clear signal to the market: "Slow down—visibility has disappeared."

Due to a data blackout caused by the government shutdown, the Federal Reserve is almost "blindly opening." Powell's hints to traders are very clear: It is still uncertain whether rates can be announced in December. Rate cut expectations have quickly receded, the short-end yield curve is flattening, and the market is digesting the cautious shift from "data-driven" to "data missing."

2025: The Liquidity "Hunger Games"

Repeated interventions by central banks have institutionalized speculative behavior. Now, what determines asset performance is not productivity, but liquidity itself—this structure leads to continuously inflated valuations while credit in the real economy weakens.

The discussion further expands to a sober examination of the current financial system: passive concentration, algorithmic reflexivity, and retail option mania—

Passive funds and quantitative strategies dominate liquidity, volatility is determined by positions rather than fundamentals.
Retail bullish option buying and Gamma squeezes create synthetic price momentum in the "Meme sector," while institutional funds flock to an increasingly narrow market leader.
The host refers to this phenomenon as the "financial version of the Hunger Games"—a system shaped by structural inequality and policy reflexivity, forcing small investors into speculative survivalism.

2026 Outlook: The Boom and Concerns of Capital Expenditure

The AI investment wave is pushing "big tech" into a post-cycle industrialization phase—currently driven by liquidity, but facing leverage sensitivity risks in the future.

Corporate profits remain bright, but the underlying logic is changing: the once "light asset cash machines" are transforming into heavy capital infrastructure players.

The expansion of AI and data centers initially relied on cash flow, but now shifts towards record debt financing—for example, Meta's oversubscribed $25 billion bond.
This shift means profit margins are under pressure, depreciation is rising, and refinancing risks are increasing—laying the groundwork for the next credit cycle's turn.

Structural Commentary: Trust, Distribution, and Policy Cycles

From Powell's cautious tone to the final reflection, a clear main thread runs through: centralization of power and loss of trust.

Every rescue by policy almost reinforces the largest market participants, further concentrating wealth and continuously weakening market integrity. The coordinated operations of the Federal Reserve and the Treasury—from quantitative tightening (QT) to short-term Treasury (Bill) purchases—intensify this trend: liquidity is abundant at the top of the pyramid, while ordinary households are suffocated by stagnant wages and rising debt.

The most critical macro risk today is no longer inflation, but institutional fatigue. The market still appears prosperous on the surface, but trust in "fairness and transparency" is eroding—this is the true systemic vulnerability of the 2020s.

Macro Weekly Report | Updated November 2, 2025

This issue covers the following content:

This week's macro events
Bitcoin heat index
Market overview
Key economic indicators

This Week's Macro Events

Last Week

Next Week

Bitcoin Heat Index

Market Events and Institutional Dynamics

Mt. Gox extends repayment deadline to 2026, with approximately $4 billion in Bitcoin still frozen.
Bitwise Solana ETF reaches a management scale of $338.9 million in its first week, setting a record, even as the SEC remains in a review deadlock.
ConsenSys plans to IPO in 2026, with underwriters including JPMorgan and Goldman Sachs, targeting a valuation of $7 billion.
Trump Media Group launches Truth Predict—the first prediction market in collaboration with a social media platform and Crypto.com.

Financial and Payment Infrastructure Upgrades

Mastercard acquires crypto infrastructure startup Zerohash for up to $2 billion.
Western Union plans to launch stablecoin USDPT on Solana in 2026 and registers the WUUSD trademark.
Citibank teams up with Coinbase to launch an institutional-grade 24/7 stablecoin payment network.
Circle launches Arc public testnet, attracting participation from over 100 institutions, including BlackRock and Visa.

Ecosystem and Platform Expansion

MetaMask launches multi-chain accounts, supporting EVM, Solana, and soon Bitcoin support.

Global and Regional Dynamics

Kyrgyzstan launches a stablecoin backed by BNB; at the same time, Trump pardons CZ, paving the way for Binance's return to the U.S. market.
U.S. SOL spot ETF (excluding seed funding) sees inflows of $199.2 million.
Japan launches a fully compliant yen stablecoin JPYC, aiming for an issuance scale of $65-70 billion by 2028.
Ant Group registers the "ANTCOIN" trademark, quietly returning to the Hong Kong stablecoin race.
AWS and Microsoft cloud services disruptions cause market chaos, with conflicting statements from both sides.
JPMorgan's Kinexys blockchain completes its first private equity fund tokenization transaction, further promoting institutional adoption.
Tether becomes one of the major holders of U.S. Treasury bonds, with holdings reaching $135 billion, generating over $10 billion in annualized returns.
Metaplanet initiates a stock buyback plan to address declining net assets.
The trading heat of privacy assets rises, with ZEC prices breaking through 2021 highs, but this week's gains still lag behind DASH.
Sharplink deploys $200 million ETH on Linea to earn DeFi yields.
With sports betting becoming a hot sector, Polymarket plans to officially launch products in the U.S. at the end of November.
Securitize announces plans to go public through a $1.25 billion SPAC merger.
Visa adds payment support for four stablecoins and four chains.
21Shares submits Hyperliquid ETF application, with more crypto funds entering the market.
KRWQ becomes the first Korean won stablecoin issued on the Base chain.

Market Overview

The global economy is transitioning from inflation risk to confidence risk—future stability will depend on the clarity of policies rather than liquidity.

Global monetary policy is entering a phase of limited visibility. In the U.S., the FOMC lowered rates by 25 basis points to 3.75%--4.00%, exposing widening internal divisions. Powell hinted that further easing in the future is "not a done deal." The ongoing government shutdown prevents decision-makers from obtaining key data, increasing the risk of policy misjudgment. Weak consumer confidence and a slowdown in real estate mean that market sentiment, rather than stimulus measures, is influencing the direction of the economy's "soft landing."

Among G10 countries: the Bank of Canada completed its last rate cut, the European Central Bank maintained the 2.00% rate, and the Bank of Japan cautiously paused. The common challenge faced by all parties is how to curb economic growth amid persistent service sector inflation. Meanwhile, China's PMI has once again fallen back into contraction territory, indicating weak recovery, sluggish domestic demand, and signs of policy fatigue.

Adding to the political risks, the U.S. government shutdown threatens the normal operation of welfare programs and may delay the release of key data, undermining confidence in fiscal governance. The bond market has begun to digest expectations of declining yields and slowing economic growth, but the real risk lies in the collapse of institutional feedback mechanisms—data delays, policy indecision, and declining public trust intertwine, ultimately leading to a crisis.

Key Economic Indicators

U.S. Inflation: Mild Recovery, Clearer Path

The recovery in inflation is primarily supply-driven rather than demand-driven. Core pressures remain controlled, and weakening employment momentum gives the Federal Reserve room to continue cutting rates without triggering an inflation rebound.

September inflation year-on-year at 3.0%, month-on-month at 0.3%, the fastest since January this year, but still below expectations, reinforcing the "soft landing" narrative.
Core CPI excluding food and energy year-on-year at 3.0%, month-on-month at 0.2%, indicating stable price fundamentals.
Food prices rose by 2.7%, with meat prices up 8.5%, affected by labor shortages in agriculture due to immigration restrictions.
Utility costs rose significantly: electricity +5.1%, gas +11.7%, primarily driven by AI data center energy consumption—new drivers of inflation.
Service sector inflation fell to 3.6%, the lowest since 2021, indicating that cooling labor markets are alleviating wage pressures.
Market response is positive: stock markets rise, interest rate futures strengthen rate cut expectations, and bond yields remain stable overall.

U.S. Demographics: Critical Turning Point

Net immigration turns negative, posing challenges to economic growth, labor supply, and innovation capacity.

The U.S. may face its first population decline in a century. Although births still exceed deaths, negative net immigration offsets a projected population increase of 3 million in 2024. The U.S. is experiencing a demographic reversal, not due to declining birth rates but due to a sharp reduction in immigration caused by policy. Short-term impacts include labor shortages and rising wages; long-term risks focus on fiscal pressure and slowing innovation. Unless this trend is reversed, the U.S. may repeat Japan's aging scenario—slowing economic growth, rising costs, and facing structural productivity challenges.

According to AEI forecasts, net migration in 2025 is projected at -525,000, marking the first negative value in modern history.

Pew Research Center data shows that in the first half of 2025, the foreign-born population decreased by 1.5 million, mainly due to deportations and voluntary departures.
Labor growth stagnates, with agriculture, construction, and healthcare sectors facing significant shortages and wage pressures.
28% of American youth are immigrants or children of immigrants; if immigration ceases, the population under 18 may decline by 14% by 2035, exacerbating pension and healthcare burdens.
27% of doctors and 22% of nursing assistants are immigrants; if supply declines, automation and robotization in healthcare may accelerate.
Innovation risk: immigrants have contributed to 38% of Nobel Prizes and about 50% of billion-dollar startups; if the trend reverses, the U.S. innovation engine will be damaged.

Japan's Export Recovery: A Rebound in the Shadow of Tariffs

Despite being dragged down by U.S. tariffs, Japan's exports have rebounded. In September, exports grew by 4.2% year-on-year, marking the first positive growth since April, mainly driven by recovering demand from Asia and Europe.

After months of contraction, Japan's exports have resumed growth, with September seeing a year-on-year increase of 4.2%, the largest increase since March. This rebound highlights that despite new trade frictions with the U.S., regional demand remains strong, and supply chains have adjusted accordingly.

Japan's trade performance indicates that despite U.S. tariffs on automobiles (its core export category), external demand from Asia and Europe has begun to stabilize. The rebound in imports suggests a mild recovery in domestic demand, driven by a weaker yen and a replenishment cycle.

Outlook:

Exports are expected to gradually recover, driven by normalizing internal supply chains in Asia and energy prices.
Ongoing U.S. protectionism remains the main obstacle to maintaining export momentum in 2026.