Regarding Dollar Hegemony, Interest Rate Cuts, etc. | Q&A

1. Recently, Saudi Arabia has decoupled its oil from the US dollar and will not renew the expiring agreement. Does this mean the dollar's hegemony is failing?

The news about Saudi Arabia decoupling its oil from the dollar and not renewing the agreement has been heavily promoted in domestic media recently. However, the source of this news can be checked online, and its authenticity is yet to be confirmed.

In today's information overload, an increasing number of unverified messages are infiltrating our daily lives. Relying on such information without verification can affect our judgment, so I generally confirm significant news from multiple sources, especially comparing domestic and foreign media.

Returning to the event itself, even if the decoupling of Saudi oil from the dollar is true, I believe it will certainly impact the dollar's status in the energy and basic materials sectors. On the other hand, with the rise of emerging technologies like artificial intelligence, the dollar is increasingly playing a monopolistic role as hard currency in the tech sector.

NVIDIA's chips are a very typical example.

At least for the next few years, they are the oil of the tech sector, and they must be exchanged for dollars. Moreover, it's not just about having money; it also depends on whether the US government approves NVIDIA's sales to buyers.

Yet, a "anti-NVIDIA" alliance has emerged in the US market—several giants have started collaborating to develop AI chips in hopes of breaking NVIDIA's monopoly. Furthermore, certain departments of the US government have already set their sights on NVIDIA, questioning whether its monopolistic position is affecting market competition.

This seemingly "self-destructive" mechanism that actually stimulates competition is a very important mechanism for protecting innovation and creating a fair environment for businesses. For this reason, I believe that more companies like NVIDIA will likely emerge in the US in the future. The dollar's status as hard currency in the tech sector will further strengthen.

Regarding the dollar's hegemonic status, I have previously written dedicated articles. Compared to gold, the dollar has undoubtedly been weakening in value, but its monopolistic position among all currencies in the world has not changed. In our generation's lifetime, its monopolistic status may weaken, but it will not disappear.

2. Normally, the expectations before interest rate cuts are what truly belong to the financial market. When the actual cut occurs, it should be a case of good news being priced in as bad news, rather than the money increasing after the cut leading to a rise. The financial market has always been overdrawn on expectations.

I have also written about the effects of interest rate cuts/increases in previous articles.

The financial market often looks at expectations, but regarding interest rate cuts/increases, I do not believe that the realization of news is necessarily bad news. Perhaps at the moment of realization, that day, or that week, it may be bad news, but in the longer term, it will definitely show significant effects on the investment market.

Taking interest rate cuts as an example, I previously provided the following analogy:

A porter carrying a 100-pound load is already panting and exhausted. At this moment, his employer tells him that if he walks another 100 meters, he will take away 10 pounds of his load, leaving him with only 90 pounds. The moment he hears this information, he will surely be happy. After walking 100 meters and actually having 10 pounds taken away, I believe he will be even happier. After walking another 100 meters and having another 10 pounds removed, he will be increasingly delighted, not only feeling refreshed but also standing up straighter.

This effect will genuinely reflect on the porter.

Similarly, the expectation of interest rate cuts will invigorate the market, but the actual action of cutting rates will show tangible effects to the market.

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