Wall Street veteran: U.S. economic challenges may be underestimated, and the Federal Reserve may start a "panic rate-cutting cycle."

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Ed Dowd, a veteran Wall Street analyst and founding partner of the global macro alternative investment firm Phinance Technologies, recently stated that after being elected president, Trump "inherited a mess," and the US economy is now facing grave challenges that are underestimated by outsiders. He warned that the upcoming Fed rate cuts may evolve into a "panic rate-cut cycle" similar to the 2007 financial crisis, but such easing may not be able to prevent asset values from shrinking.

Dowd believes that the annual employment revision data released last week by the US Bureau of Labor Statistics (BLS) exposed serious problems with the economic data during the Biden administration, and he described what Trump must now deal with as "a disaster."

Dowd also believes that the US real estate market has already begun to weaken, inflation expectations are dropping, and the Fed's rate-cutting measures may not be able to reverse this trend. Dowd predicts the world will fall into a "very deep recession," and suggests investors consider safe-haven assets such as gold and land.

Employment Data Revision Exposes Economic "Statistical Fraud"

Last Tuesday, the BLS announced that for the 12 months ending March this year, US non-farm payrolls were revised downward by a much larger than expected 911,000, equivalent to nearly 76,000 fewer jobs added per month on average. This is the largest downward revision since 2000. Dowd severely criticized such a large revision, calling the deviation fraudulent in nature. He said

"This may be statistical fraud, bureaucratic incompetence, or both. This deviation is as high as an outrageous 7 standard deviations. A 3.4 standard deviation event is equivalent to the probability of being struck by lightning at least once in a lifetime—a very small chance. A 7 standard deviation deviation strongly implies fraud."

Dowd pointed out that the large-scale illegal immigration during the Biden administration (which he estimates at around 20 million people) artificially propped up US economic data, and now with the new Trump administration strengthening border controls and deporting illegal immigrants, these factors will reverse, further dragging down economic performance.

US Faces "Real Estate Recession" Risk, Inflation Expected Below 2%

The real estate market is becoming a major concern for the US economy. Dowd predicts that the real estate market will continue to decline, which will have a profound effect on the overall economy, as real estate accounts for 36% of the economy. Dowd explained:

"The real estate market is collapsing, because people simply can't afford housing costs. What previously supported the real estate market was rent paid by illegal immigrants. With Trump closing the border and deporting illegal immigrants, this trend is reversing. Our real estate report released a month ago shows all indicators are declining, and we will be facing a real estate recession."

Due to the weakening real estate market, Dowd predicts inflation will drop significantly: "We expect to see inflation figures below 2%," which is consistent with the Fed's inflation target, but this will be a sign of economic weakness, not healthy cooling.

Fed May Fall Into a "Panic Rate-Cut Cycle," Asset Value Depreciation Hard to Avoid

Regarding the widespread market expectation of Fed rate cuts, Dowd drew a worrying historical analogy. He stated that the current situation is similar to the early days of the 2007 financial crisis, when the Fed began to cut rates, but the stock market did not bottom out until 2009. Dowd warned:

"This is what I consider the start of a 'panic rate-cut cycle.' We are going to see the Fed cut rates all the way through this asset deflation process. Cutting rates in a slowing growth environment does not result in asset (value) reflation. They are already behind, and as we fall into deflation, they will keep cutting."

Dowd believes that Fed rate cuts will not be able to prevent imminent asset price declines and recession. He stated the current economic plight is not limited to the US—Europe and other regions are also facing major problems, and the global economy will soon fall into a "very deep recession."

Investment Advice: Gold and Land Over Cryptocurrency

Facing the coming economic challenges, Dowd suggests that investors focus on traditional safe-haven assets. He remains bullish on gold and revealed that his clients are increasing their holdings of gold and land, rather than cryptocurrency.

This advice is based on his expectations of asset deflation and recession. In an environment of falling interest rates and declining asset prices, traditional safe-haven assets may provide more reliable value preservation functions.

During his Wall Street career, Dowd has successfully predicted several major market turns, including the collapses of Enron and Lucent Technologies, as well as the recent peak and decline in interest rates and the downturn in the real estate market. His latest warnings have aroused further concerns among market participants about the outlook for the US economy.

Risk Warning and DisclaimerMarkets have risks, investments require caution. This article does not constitute personal investment advice, nor does it take into account an individual user’s specific investment objectives, financial situation, or needs. Users should consider whether any opinions, views or conclusions in this article fit their specific situation. Investments made accordingly are at their own risk. ```