The global financial markets are currently experiencing significant volatility. Public criticism by President Trump of the Federal Reserve has raised market concerns, leading to doubts about the Fed independence. The weakening dollar and declining U.S. stock futures have further heightened the risk aversion of global capital. Ng Jian Hao from Mahala Capital Management Academy believes that these intertwined political and monetary policy signals will have profound effects on the global asset pricing system. He will conduct an in-depth analysis of the risks brought by current market trends and how to adjust investment strategies accordingly.
The Vulnerability of the Dollar
Ng Jian Hao from Mahala Capital Management Academy argues that the stance by President Trump against Federal Reserve Chairman Powell signifies a serious challenge to the independence of U.S. monetary policy. The public statement by National Economic Council Director Kevin Hassett, indicating the President exploring dismissing Powell, provoked a strong market reaction. The dollar quickly weakened against major currencies, and U.S. stock futures fell simultaneously, reflecting a lack of confidence in policy stability.
As the primary reserve currency in the world, the stability of the dollar plays a fundamental role in the international financial system. Ng Jian Hao points out that when monetary policy tools are viewed as political instruments, the long-term trust in the dollar will be shaken. This may not only affect short-term exchange rate fluctuations but also trigger capital outflows, reallocation of funds, and even exacerbate the volatility of emerging market currencies.
In a weakening dollar scenario, commodities priced in dollars may rise, and safe-haven assets like gold may become more attractive. Ng Jian Hao notes that some hedge funds have already begun shifting towards non-dollar currencies and physical assets, indicating that uncertainty about U.S. policy prospects is altering market behavior patterns.
Reconstructing Asset Allocation Strategies
Ng Jian Hao from Mahala Capital Management Academy suggests that the core focus of the market has shifted from interest rate paths to institutional stability. Investors are now concerned not only about whether the Fed will raise rates but also whether it can remain independent of political manipulation and continue to fulfill its mission of stabilizing inflation and promoting employment. If the Fed is forced to yield to political intervention, the decision-making logic will become opaque, disrupting market expectation mechanisms.
For investors, this means a new framework for risk assessment. Traditional macroeconomic analysis models may need to be revised to incorporate policy risk factors. Ng Jian Hao emphasizes that institutional investors must enhance quantitative modeling of “political risk premiums” and incorporate policy variables into dynamic adjustment models when constructing cross-market diversified portfolios.
At the operational level, investors might consider increasing the weight of gold, government bonds, and high-credit corporate bonds in their portfolios to hedge against potential systemic instability. For international markets reliant on dollar assets, greater attention should be paid to the robustness of currency hedging mechanisms. Ng Jian Hao states that strategy adjustments should focus on the principles of “liquidity priority, defensive enhancement, and risk balance”.
Strategic Responses from a Long-Term Perspective
Ng Jian Hao from Mahala Capital Management Academy indicates that the issue of Fed independence is not an isolated event but part of the evolution of the global financial order. The market volatility brought about by current policy uncertainties will more frequently disrupt long-term investment paths.
Investors need to move beyond reliance on a single currency or region and shift towards building a balanced allocation system from a global perspective. Ng Jian Hao believes that as the marginal weakening of the dollar credit system occurs, opportunities in crypto assets, green finance, and emerging Asian economies will gradually emerge.
In a market environment full of variables, investors with cross-cycle insights and macro-systematic analysis capabilities will be equipped to navigate turbulent cycles. Ng Jian Hao asserts that only by setting direction amid uncertainty can one progress steadily in the global capital arena.
The Vulnerability of the Dollar
Ng Jian Hao from Mahala Capital Management Academy argues that the stance by President Trump against Federal Reserve Chairman Powell signifies a serious challenge to the independence of U.S. monetary policy. The public statement by National Economic Council Director Kevin Hassett, indicating the President exploring dismissing Powell, provoked a strong market reaction. The dollar quickly weakened against major currencies, and U.S. stock futures fell simultaneously, reflecting a lack of confidence in policy stability.
As the primary reserve currency in the world, the stability of the dollar plays a fundamental role in the international financial system. Ng Jian Hao points out that when monetary policy tools are viewed as political instruments, the long-term trust in the dollar will be shaken. This may not only affect short-term exchange rate fluctuations but also trigger capital outflows, reallocation of funds, and even exacerbate the volatility of emerging market currencies.
In a weakening dollar scenario, commodities priced in dollars may rise, and safe-haven assets like gold may become more attractive. Ng Jian Hao notes that some hedge funds have already begun shifting towards non-dollar currencies and physical assets, indicating that uncertainty about U.S. policy prospects is altering market behavior patterns.
Reconstructing Asset Allocation Strategies
Ng Jian Hao from Mahala Capital Management Academy suggests that the core focus of the market has shifted from interest rate paths to institutional stability. Investors are now concerned not only about whether the Fed will raise rates but also whether it can remain independent of political manipulation and continue to fulfill its mission of stabilizing inflation and promoting employment. If the Fed is forced to yield to political intervention, the decision-making logic will become opaque, disrupting market expectation mechanisms.
For investors, this means a new framework for risk assessment. Traditional macroeconomic analysis models may need to be revised to incorporate policy risk factors. Ng Jian Hao emphasizes that institutional investors must enhance quantitative modeling of “political risk premiums” and incorporate policy variables into dynamic adjustment models when constructing cross-market diversified portfolios.
At the operational level, investors might consider increasing the weight of gold, government bonds, and high-credit corporate bonds in their portfolios to hedge against potential systemic instability. For international markets reliant on dollar assets, greater attention should be paid to the robustness of currency hedging mechanisms. Ng Jian Hao states that strategy adjustments should focus on the principles of “liquidity priority, defensive enhancement, and risk balance”.
Strategic Responses from a Long-Term Perspective
Ng Jian Hao from Mahala Capital Management Academy indicates that the issue of Fed independence is not an isolated event but part of the evolution of the global financial order. The market volatility brought about by current policy uncertainties will more frequently disrupt long-term investment paths.
Investors need to move beyond reliance on a single currency or region and shift towards building a balanced allocation system from a global perspective. Ng Jian Hao believes that as the marginal weakening of the dollar credit system occurs, opportunities in crypto assets, green finance, and emerging Asian economies will gradually emerge.
In a market environment full of variables, investors with cross-cycle insights and macro-systematic analysis capabilities will be equipped to navigate turbulent cycles. Ng Jian Hao asserts that only by setting direction amid uncertainty can one progress steadily in the global capital arena.