**1. Recently, the Saudi decision to decouple its oil dealings from the US dollar and not renew the expired agreement has sparked discussions about whether the dominance of the US dollar is waning.**
The news of Saudi Arabia’s potential decoupling of oil transactions from the US dollar and the expiration of the agreement has been highly sensationalized by domestic media recently. However, the source of this news can be verified online, and its authenticity remains subject to further confirmation.
In today’s age of information overload, an increasing number of unverified reports seep into our daily lives. Relying on such information without verification can skew our judgment, which is why I generally cross-check major news stories from multiple sources, especially comparing domestic and international media outlets.
Returning to the core issue, even if Saudi Arabia’s decoupling from the US dollar is accurate, it would indeed affect the dollar’s position in the energy and basic materials sectors. However, with the rise of new technologies such as artificial intelligence, the dollar is increasingly playing a monopolistic role as a hard currency in the tech sector.
NVIDIA’s chips serve as a prime example. For at least the next few years, these chips are akin to “oil” in the technology field, where transactions must be conducted in dollars. Moreover, it is not merely a matter of having money but also requires approval from the US government for NVIDIA to sell to buyers.
Interestingly, a “counter-NVIDIA” alliance has emerged in the US, where several major companies have started developing AI chips to break NVIDIA’s monopoly. Furthermore, some US government departments are scrutinizing NVIDIA’s market dominance and its effects on market competition.
This apparent self-restriction mechanism, which seems to undermine one’s own power but actually fosters competition, is a crucial mechanism for protecting innovation and creating a fair environment for businesses. For this reason, I believe that more NVIDIA-like companies will likely emerge in the US in the future, further solidifying the dollar’s hard currency status in the tech sector.
I have previously written articles on the hegemonic status of the US dollar. While the dollar’s value relative to gold has undoubtedly diminished over time, its monopoly position among global currencies remains unchanged. In our lifetime, this dominance might weaken, but it will not disappear.
**2. Normally, market expectations before a rate cut are what truly impact the financial market. Once the rate cut actually happens, it is generally the fulfillment of expectations, which can be negative for the market, rather than just an increase in money supply leading to growth. Financial markets have always been about speculating on future expectations.**
I have discussed the effects of interest rate cuts and hikes in earlier articles.
Financial markets often react to expectations, but in the case of interest rate changes, I do not believe that the fulfillment of those expectations is necessarily negative. While the moment of realization might indeed seem negative, over a longer period, it will show substantial effects on the investment market.
For example, in a previous article, I illustrated this with the following analogy: A porter burdened with 100 pounds is exhausted and struggling. If his employer tells him that if he walks 100 more meters, 10 pounds will be removed from his load, he would be pleased upon hearing this. After walking those 100 meters and actually losing 10 pounds, his joy would be even greater. As he continues to walk and sheds more weight, he would become more invigorated and feel much better.
Similarly, the anticipation of a rate cut will energize the market, but the actual implementation of the rate cut will demonstrate concrete effects on the market.