Dollar Rate Hike Talk Reignites Amid Fears of US Top Bank Collapse

Nuclear bomb-level news is spreading wildly among the public: Is the largest investment bank in the United States about to collapse?

JPMorgan Chase is not only the largest bank in the United States but also one of the largest investment banks in the world. However, this super banking giant may be on the verge of collapse.

Recently, there has been a growing clamor for interest rate hikes in the United States. If JPMorgan Chase really explodes, forget about the interest rate hike, even President Biden would have to consider whether to perform an impromptu resignation first.

The call for a dollar interest rate hike is rising again, so why is JPMorgan Chase about to explode? Is a super black swan event about to unfold? Faced with a dilemma, what choice will the Federal Reserve make?

The first investment bank in the United States is in danger!

What does it mean to be the largest bank in the United States?

JPMorgan Chase has more than 60 million accounts in the United States, accounting for one-fifth of the total population of the country, and manages an asset scale of as high as 2.46 trillion US dollars, including stocks, bonds, loans, and some other financial instruments.

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JPMorgan Chase has always been known for its "fortress-like balance sheet" and has hardly ever received any pessimistic ratings.

However, this first investment bank in the United States has recently encountered a series of bearish news, indicating danger.Firstly, there was a decline in performance, with a single-day stock price plummeting by 6.5%, marking the worst single-day performance in nearly four years.

Looking at the specifics, JPMorgan Chase reported a net profit of $13.419 billion for the first quarter, a year-over-year increase of 6%, which seems to be a decent earnings outcome.

However, another key indicator—net interest income—experienced its first quarter-over-quarter decline in four years, amounting to only $23.2 billion, significantly lower than analysts' expectations.

Logically, with the United States continuously raising interest rates and the dollar interest rates remaining high, these banks should be raking in substantial profits, so why has the interest income decreased?

A possible speculation has emerged in the market:

The root cause may lie in the reduction of the total deposits held by JPMorgan Chase. Many Americans are no longer waiting for the distant prospect of interest rate cuts and are already eager to transfer their funds out, leading to capital outflow.

It's important to note that the current Federal Funds Rate in the United States is at a high of 5.5%. Once the dollar begins to cut interest rates, it's hard to imagine what the scene would be like.

Secondly, there are rampant market rumors that JPMorgan Chase's short position on gold has been liquidated, which is the direct cause of the explosion.

What does it mean to short gold?

In simple terms, it involves selling first and then buying. When the price of gold rises to a high level, and you predict that it might drop, you borrow someone else's gold and sell it. When the price of gold actually falls, you buy back the gold to return the borrowed gold, thereby earning the difference.But the key point now is that the price of gold has been soaring, which means that JPMorgan Chase has to pay an extremely high price to buy back the gold it borrowed initially, ultimately resulting in huge losses.

Some people may not understand, with JPMorgan Chase's capital so strong, could its risk resistance be so poor?

In fact, it's similar to stock trading; large funds have their own way of playing, and small funds have their own way of playing. The two are not the same concept.

As a major shareholder of the Federal Reserve, JPMorgan Chase has been suspected of cooperating with the Federal Reserve to raise interest rates and short gold for profit in the past, so it's not impossible for them to take a big gamble this time and play a big one.

It's worth mentioning that Jamie Dimon, the CEO of JPMorgan Chase, recently announced the sale of 1 million shares of JPMorgan Chase for the first time in 18 years, with a value as high as $140 million.

Is the "head of the family" of JPMorgan Chase smelling some danger signal? We don't know.

Gold is the hard currency, and the dollar is just waste paper.

The root of JPMorgan Chase's "bomb crisis" this time is undoubtedly the soaring price of gold.

Recently, not only has the domestic gold price continued to rise, but the international gold price has also reached $2362.8 per ounce, repeatedly setting a new historical high.

As we all know, gold has multiple attributes such as commodity, finance, and risk aversion, and it is the most important global strategic asset as well as the cornerstone of the financial reserve system of various countries.Starting from 2022, the United States, leveraging the hegemony of the US dollar, has acted with impunity. Afghanistan and Russia have been severely impacted by the financial stick of the United States, with various defaults and plundering, revealing its true face to the world.

Due to the United States being "unpopular," the US dollar has faced a credit crisis, and countries have accelerated the process of de-dollarization, significantly increasing their gold reserves.

According to statistics from the World Gold Council, global gold demand has reached 4899 tons since last year, setting a historical record, with central banks around the world maintaining high demand for gold.

As of the end of March, the valuation of China's gold reserves has reached 161.069 billion US dollars, an increase of 12.425 billion US dollars month-on-month. The strength of China's central bank in purchasing gold is unparalleled globally.

Facts have proven that gold that can be held in hand is the only unique hard currency, and the US dollar, which is always ready to default, is no different from waste paper.

From this perspective, the current predicament of JPMorgan Chase is actually self-inflicted:

The Americans themselves have gradually pushed the US dollar into the abyss, leading to the surge in gold prices, and ultimately causing JPMorgan Chase to face a "meltdown crisis."

How will the Federal Reserve make a choice?

When the major shareholders of their own are about to explode, and at the same time, it is the largest bank in the United States, the Federal Reserve will naturally step in to help.

But the key issue now is, under the dilemma, how will the Federal Reserve actually choose?If interest rates continue to rise, American banks were already lining up for a meltdown last year; this time it's JPMorgan Chase's turn. Imagine the 60 million American depositors waking up one day to find that their money in the bank has vanished—what would be the outcome?

Don't even mention JPMorgan Chase; Biden, thinking of this consequence, would have goosebumps and wish to step down on the spot, handing over the position directly to Trump.

Choosing to lower interest rates, the stagflation crisis of the 1970s is right before our eyes, a nightmare for the Federal Reserve that has lasted for decades. Controlling inflation has always been considered a top priority.

Especially just last month, the US CPI rose by 3.5% year-on-year, far exceeding expectations, and inflation has shown a trend of making a comeback.

Once the Federal Reserve starts to lower interest rates, it's like stopping chemotherapy before it's over; when the indicators rebound, it would be truly beyond remedy, and we could just wait for the feast to begin.

That's why we can see that the Federal Reserve has been delaying rate cuts, even with Federal Reserve Chairman Powell's public stance being inconsistent, sometimes dovish and sometimes hawkish.

The fundamental reason is that this is a dilemma with no easy way out; any choice is wrong, and no one dares to predict the final outcome.

In conclusion:

Some may think that JPMorgan Chase has reached the point of being too big to fail, so the Federal Reserve will definitely intervene in the end.

But don't forget, Lehman Brothers, which fell in 2008, was also the fourth-largest investment bank in the United States, and now it's gone without a trace.What choices will the Federal Reserve ultimately make? This question is truly difficult to predict.