china securities co.,ltd. stated that the U.S. economy continued to slow in August, with manufacturing activity hovering at a low level, non-farm payrolls weaker than expected, unemployment rate falling, wage growth rising, CPI lower than expected but core CPI rising more than expected on a month-on-month basis. The negative impact of previous rapid interest rate hikes on the economy will continue. In the short term, the U.S. fiscal deficit in August reached a high of 380 billion USD, 70% higher than the highest August deficit in U.S. history of 220 billion USD (in 2022), significantly offsetting the downward trend in U.S. GDP in the third quarter and providing a boost to U.S. stocks in the short term. Looking ahead to the mid-term, historically the impact of interest rate cuts on U.S. stocks depends mainly on whether it is "preventive" or "recessionary." After the "preventive" rate cut in 2019, U.S. stocks rose, but at that time the unemployment rate did not rise significantly, and the U.S. economy was just slowing down from an overheated state. In contrast, currently the U.S. unemployment rate has risen from 3.4% to 4.3% and triggered the Sam Rule in July. Therefore, with the current rate cut, early signs of economic recession have appeared, which is not bullish for mid-term U.S. stocks. We recommend reducing allocations at high levels.