Market Misreads Powell's Speech! Smart Investors Quietly Accumulate, Buying Into This Sector on Fake Bad News!

Federal Reserve Chair Powell delivered his first speech at the Global Central Bank Annual Symposium, which the market interpreted as leaning hawkish, primarily because he clearly stated the Fed's policy is advancing toward the 2% inflation target.

After the Fed's late July interest rate meeting, Powell made dovish remarks, causing market concerns over uncontrolled inflation risks. As a result, U.S. long-term bond yields began rising, and the yield spread between short-term and long-term bonds surged sharply. However, after Powell's speech last Friday, while long-term yields rose slightly, the yield gap between short- and long-term maturities actually narrowed. Therefore, some investment institutions believe this speech was a correction of the late July comments, not a genuine hawkish shift by Powell.

Investors should note that the biggest difference between current Fed Chair Powell and his predecessor is the elimination of 'forward guidance,' allowing interest rates to be determined by 'market conditions and data.' Since the Fed no longer guides future rate directions—and this policy was driven by Powell himself—he is even less likely to signal a hawkish stance at the global central bank symposium. After all, Powell did not explicitly support a September rate hike. Under this data-driven framework, next week's release of August's PPI and CPI figures will be the most critical economic data ahead of the September Fed meeting.

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Currently, the Fed is effectively implementing quantitative tightening (QT) by allowing its holdings of Treasuries and MBS to mature without reinvestment. The Fed's total assets as a percentage of U.S. GDP surged after the 2020 pandemic, peaking at 37% in 2021. It has since declined to 21%, yet the U.S. stock market continued to hit new highs, driven by corporate earnings growth.

On August 31, Asian markets pulled back due to expectations of a September Fed rate hike, with declines exceeding those of the three major U.S. indices on Friday, August 28. The market correction, driven by the false perception of Powell's hawkish tone, actually presents a new entry opportunity.

The yield on the U.S. 30-year Treasury briefly hit a nearly 20-year high, prompting Treasury Secretary Bessent to introduce a Treasury version of a twist operation (QT), effectively tightening the market and reducing the necessity for further Fed rate hikes. For the stock market, corporate earnings and technological innovation remain the true drivers of upward momentum.

Nvidia's next-generation Vera Rubin platform has already entered mass production and is expected to significantly ramp up in Q4. It is projected to become the main product by 2027. The Vera Rubin platform will boost CPO (co-packaged optics) penetration, adopt 100% full liquid cooling, and increase the use of high-end M8 and M9 materials and PCB layers. Key supply chain players to watch include:

CPO: IET-KY (4971-TW), UniOpto-KY (4991-TW), Shang Chuan (3363-TW), Powertech (3163-TW), United Microelectronics (3081-TW), Largan Precision (3008-TW), United Microelectronics Corp (2303-TW), ChipMOS (6147-TW)

Cooling: AcBel (3017-TW), Twinhead (3324-TW), JCET (3653-TW), Fushida (6805-TW), Yichuan (2486-TW), Gaody (8996-TW)

CCL: Lamoid (6213-TW), Taiga Electric (2383-TW), Nan Ya Plastics (1303-TW), Fu Chiao (1815-TW), Kingboard (8358-TW), Dah Hong (5475-TW)

PCB: Gold Circuit Electronics (2368-TW), Compeq (2313-TW), Zhending-KY (4958-TW), Apex (8021-TW), MTS (3167-TW)

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Source: Moore Investment Advisory – Analyst Yeh Chun-Min

The securities recommended and analyzed by our company have no improper financial interests. Past performance does not guarantee future profits. Investors should make independent judgments, conduct careful evaluations, and assume investment risks on their own.