Point of View: The Federal Reserve Has Over-Eased, with a 65% Chance of Stagflation in the United States

According to Farside Investors' monitoring, U.S. spot Bitcoin ETFs saw a net outflow of $424.7 million yesterday. IBIT recorded a net outflow of $185.5 million, while FBTC posted a net outflow of $245.6 million. U.S. spot Ethereum ETFs had a net outflow of $15.4 million, all from FETH.

According to foreign media reports, after DeepSeek closed its latest financing round, founder Liang Wenfeng’s personal wealth has more than doubled, making him the richest founder of a global large AI model enterprise. Per the Bloomberg Billionaires Index, Liang’s current net worth stands at $36 billion, up from roughly $16.7 billion, surpassing Anthropic co-founder Dario Amodei and OpenAI co-founder Greg Brockman. This comparison only covers companies whose core business and majority revenue come directly from large AI models, excluding diversified tech giants such as Alibaba and Tencent, as well as AI industrial chain-related firms like data center operators and semiconductor companies. The vast majority of Liang’s wealth stems from his controlling stake in DeepSeek. In June this year, DeepSeek reportedly completed a 50 billion yuan financing round with a valuation exceeding 330 billion yuan, and Liang personally contributed 20 billion yuan. Per calculations by the Bloomberg Billionaires Index, his shareholding has been diluted to approximately 78%. (Jinshi)

More than a dozen single-stock leveraged ETFs listed in South Korea at the end of May have seen sharp declines, with several products tracking Samsung Electronics and SK Hynix nearly halving in price. Among them, the "SAMSUNG KODEX SK Hynix Single-Stock Leveraged ETF" — which has an asset size of $3.4 billion — has fallen roughly 45% since its launch, with a drawdown of over 60% from its June peak. The total asset size of related products stands at around $3 billion. On Monday, SK Hynix recorded a historic 15% drop; on Tuesday, it fell more than 8% intraday, and the KOSPI index once tumbled 5% to below 6,500 points. Jung In Yun, CEO of Fibonacci Asset Management, noted that many retail investors view leveraged ETFs as long-term investment vehicles, and the steep declines have left them with significant losses, potentially weakening their willingness and ability to continue purchasing semiconductor stocks. South Korea’s top financial regulator expressed regret last month over approving the listing of such products, yet retail trading enthusiasm has not cooled notably. Over the past month, South Korean leveraged and inverse exchange-traded products have attracted a combined $3.8 billion in inflows, primarily directed toward single-stock products tracking SK Hynix and Samsung Electronics. Jung In Yun predicts regulators will likely tighten suitability requirements, risk disclosures and investor education, rather than imposing a full ban on the products. On the same day, the South Korean government raised its 2024 economic growth forecast from 2% to 3%, stating that AI chip demand will continue to offset some of the headwinds from Middle East conflicts, and projects this year’s current account surplus will hit a record $290 billion.

Goldman Sachs Korea Trading Desk has stated that the key support level for South Korea’s KOSPI index stands at 6500 points. If this level fails to contain selling pressure, the index could drop further to the 6100–6000 point zone. Per Bitget data, South Korea’s KOSPI index fell by more than 5% intraday today, hitting a low of 6448.86 points and breaking the 6500 threshold. It has since rebounded to 6676 points, narrowing its decline to 1.97%.

Since the start of this year, foreign investors have withdrawn a total of nearly $110 billion from South Korea’s stock market, hitting a record high, mainly to avoid portfolio allocation imbalances caused by the market’s rapid rally. This has left domestic retail investors in South Korea shouldering most of the buying demand. After net purchasing 42.4 trillion won worth of stocks in June, South Korean retail investors have added a net 13.2 trillion won in KOSPI stocks so far this month. As of July 14, the margin balance retail investors held for KOSPI investments stood at 28 trillion won, following a record high of 29.8 trillion won on June 24. Alexander Redman, chief equity strategist at CLSA, said: "South Korea remains the most overweight market in our portfolio, but I have started reducing positions. My concern is that the market is currently dominated by retail investors, as they are making heavy use of margin trading." (Source: Jin10)

Bitcoin has fallen more than 2% in the past 24 hours, trading at around $62,380. Market expectations of a Federal Reserve (Fed) interest rate hike as early as July have risen sharply: funding markets now put the probability of a rate hike this month at roughly 50%, up from only about 10% just a few days ago. The shift in expectations stems from Fed Governor Christopher Waller’s remarks that officials may need to raise rates to curb price pressures. U.S. two-year Treasury yields have since climbed to 4.29%, hitting their highest level since the start of last year. Escalating U.S.-Iran tensions and a sharp rally in oil prices have also amplified inflation concerns: WTI crude oil futures have risen from $67 per barrel at the start of the month to nearly $80 per barrel. The U.S. Labor Department will release June’s Consumer Price Index (CPI) on Tuesday. Economists surveyed by Bloomberg expect the year-over-year rise in headline CPI to fall below 4%, with both headline and core inflation likely seeing their first monthly decline since January; May’s figures were 4.2% and 2.9% respectively. However, the recent oil price surge may lead markets to view this CPI data as a lagging indicator. If inflation proves more persistent, it could further intensify rate hike fears. Markets will next focus on Federal Reserve Chair Jerome Powell’s testimony before Congress. ING analysts note Powell can emphasize that inflation expectations remain relatively moderate, and there is sufficient basis to keep interest rates unchanged; even if a rate hike is ultimately delivered, it could be reversed shortly after, with future rate cuts likely to exceed hikes in magnitude.