[Morning Report] 24 years of generative AI, Apple and Google are aiming for rise with “vertical integration,” and there is a possibility that the yen will appreciate in the short term due to the Ishikawa Prefecture Noto Earthquake

Market Overview
The Dow Jones Industrial Average fell slightly for the first time in 4 business days in the US stock market on the 29th, and ended at 37,689 dollars 54 cents, down 20 dollars 56 cents (0.05%) from the previous day. The Nasdaq Composite Stock Price Index, which has a high tech stock ratio, ended at 15011.35, down 83.79 points. While the S&P 500 stock price index was approaching its highest value, there was no major material on this day, which was the last transaction of the year, and the rise came to a standstill, ending at 4769.83, a 13.52 point drop. The Tokyo Stock Exchange will be closed on the 2nd.

Top news
2024 is an election year, a comprehensive inspection of the world events that are attracting attention in the market
There is a high possibility that the world's political economy will fluctuate greatly from 24 to 23. This is because important elections in the world, such as the United States and Taiwan, will be held, and the monetary policy of Japan and the United States will reach a turning point. There are many views that the volatility (fluctuation rate) of stocks and exchange rates will increase even more, so vigilance is necessary. Let's take a look at key events related to politics and monetary policy in 24 that have had a major impact on the market.

Expect 40,000 yen for this year's Nikkei Average and the rising dragon according to the market price adage “Tatsumi ceiling”
The year 24 corresponds to “Koshin” in the “Ten Zodiac Signs.” “A” is the first letter in the Jukan, and it means the beginning or growth of things. Also, “ten” is also the only imaginary dragon in the twelve zodiac signs, and it is said to represent “good luck” and “prosperity of power,” etc., and is positioned in the securities industry as “a year where expectations for rising markets increase” (domestic securities), like a rising dragon. For this reason, the Nikkei Stock Average hit the high price of 38,915 yen 87 yen on December 29, 1989, and bullish predictions are heard that there is a possibility that it will rise to 40,000 yen for the first time in history.
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24 years of generative AI, Apple and Google aim for the rise through “vertical integration”
Companies with strengths in “vertical integration” are likely to emerge in 2024 in the generative AI (artificial intelligence) development race that automatically creates sentences and images. Develop smartphones and semiconductors in-house $Apple(AAPL.US)$Major US technology companies such as Google are representative examples. As both companies compete against US Open AI, which handles Chat (chat) GPT, which was the “protagonist” in '23, competition for technology and services intensifies.

There is also a possibility that the yen will appreciate in the short term due to the Ishikawa Noto earthquake - strategist
Suzuki Hiroshi, chief exchange strategist at Sumitomo Mitsui Banking Corporation, expressed the view that in response to the earthquake with the epicenter in the Noto region of Ishikawa prefecture, there is a possibility that Japanese companies' repertory (fund flow) observations will increase, similar to past earthquakes, and there is a possibility that the yen will appreciate in the short term.

“Negative interest rates will be lifted in the first half of 24” and the exchange rate is expected to rise by 50%
What will happen with the Bank of Japan's monetary policy in 2024 and the direction of the yen exchange rate against the dollar? In a questionnaire to market participants conducted by Nikkei Veritas, the most common response was that the Bank of Japan would cancel negative interest rates in the first half of the year. Interest rates were cut in the United States, and interest rate differences narrowed in Japan due to monetary normalization, so there were many views that upward pressure was likely to be applied to the yen against the dollar.

US S&P 500 faces high valuation barrier - after strong performance in the past 10 years
The extraordinary positive performance of the US stock market over the past 10 years has brought high returns that surpass any other asset class for people by honestly adopting long-term holding investment strategies. Since returns so far have been so large, no matter how booming the future market becomes, it can be understood with extremely simple calculations that an increase in corporate profit and valuation close to a miracle is necessary in order to reproduce good performance like the past 10 years, Jordan Brooks, the principal of QR capital management, points out.

Positive returns on US bonds since 2020 - yield declines due to FRB change in attitude
US bond market indicators recorded positive performance since 2020 on an annual basis. Views spread that there is a high possibility that the US Federal Reserve's interest rate hike campaign has ended due to a slowdown in growth and inflation.

Led by NVIDIA and AMD, the semiconductor stock index rose sharply for the first time in 14 years - AI boom
2023 rice $PHLX Semiconductor Index(.SOX.US)$The year ended with a 65% increase from the previous year, and since it rose 70% in 2009 after the financial crisis on an annual basis, it ended the year with a significant high for the first time in 14 years. $NVIDIA(NVDA.US)$Sales surged against the backdrop of strong semiconductor demand for AI, and it was the first semiconductor manufacturer to break through 1 trillion dollars in total market value. $Advanced Micro Devices(AMD.US)$It also rode the AI boom and became the second highest rate of increase after NVIDIA among SOX constituent stocks.

Sales of EV incentives have slowed to 2 times the average in Toyota, Nissan, and the US
$Toyota Motor(7203.JP)$Ya $Nissan Motor(7201.JP)$Incentives paid by Japanese automobile manufacturers to sales companies etc. to encourage sales of electric vehicles (EVs) in the United States have increased more than twice the market average. The background is a slowdown in EV sales in the US as a whole and poor sales of EVs from Japanese manufacturers. Japanese manufacturers, which are refraining from investing huge amounts of money in EV production in the US in the future, are under pressure to take a difficult step.