Now is the time of "lying in wait". The true second bottom will come after the change in investor sentiment in the US based on the question "Will the FOMC lower long-term interest rates by 0.25% or 0.50%?"
Hello. I may not be an old-timer, but I trust my "gut feeling". Today's "fall" is due to the "weaker-than-expected US August employment statistics" ⇒ "easing of inflation, increase in unemployment rate + decrease in manufacturing index" ⇒ "the economy is not strong, but rather a resurgence of recession concerns🔥", which has led to a "decline in the three major indices of the US market" ⇒ "selling yen and selling Japanese stocks", reflecting the significant "investor anxiety" seen in the rise of the VIX index.
In that case, how much is the "necessity of monetary easing by the Federal Reserve as a central bank" determined? It seems that it is after the "announcement of the interest rate cut amount in public" that it becomes a factor that influences the direction of the American market "investor sentiment".
If the interest rate cut is 0.25%, the market has already been factored in, and the "investor sentiment" will stabilize, and the funds will return to the semiconductor industry and other struggling industries, stabilizing the stock market. However, the "interest rate difference between Japan and the United States will also decrease by 0.25%", so there is no choice but for the yen to strengthen and the dollar to weaken. My assumption is an exchange rate of "1 dollar @ 134 yen to 138 yen" around May last year. It is inevitable for the yen to strengthen from now.
The problem is when it is judged that the FRB's response is actually too late. It is when the American economy is already judged to have entered a "period of recession". According to a Reuters article dated September 6, the "10-year Treasury yield in the United States" temporarily dropped to a 15-month low interest rate of "3.648%". Despite the fact that many economists are expecting a "soft landing in the American market", the bond market is factoring in "aggressive interest rate cuts over the next year and a half".
According to CME Group's FedWatch, the interest rate futures (FF) market predicts a 0.25% interest rate cut at the FOMC on September 17-18, and a 0.50% interest rate cut is 73% likely and a 0.25% interest rate cut is more likely. However, at the same time, there is already a view that "a total decline in long-term interest rates of 2.51% = 251bp by the end of next year 2025" has been factored in. This is based on the expectation of "multiple additional interest rate cuts (= 0.25% each time)" within this year 2024, even if the economy remains solid, as well as "multiple additional interest rate cuts within next year 2025". It raises the question: "Is the American economy really solid?".
So if there is an unexpected interest rate cut such as "a 0.50% cut at the FOMC on September 17-18" and "additional 0.25% cuts in October, November, and December", there is a concern that "recession fears" may reignite, and the exchange rate may rise to around "1 dollar @ 115 yen to 120 yen".
I remember that the exchange rate during my last overseas trip about 14 years ago was around "1 dollar @ 85 yen to 88 yen". Young people may not remember, but there was a time when it was common for the yen to strengthen and the dollar to weaken. Although I don't think we can go back 14 years, if the interest rate in the United States becomes about 2.5% and the interest rate in Japan becomes about 1.75% as a result of the interest rate cut, the interest rate difference between Japan and the United States will be "less than 1%". With this level of "interest rate difference", Japan may be willing to buy Japanese government bonds, but I have a feeling that American investors will have no rational reason to buy Japanese stocks. This raises concerns that the trading volume of the Japanese stock market will decrease. However, by that time, Japanese people will be buying US stocks and mutual funds through NISA investments, which could result in a "selling yen, buying dollars = strengthening yen stopper", and the exchange rate may stabilize around "1 dollar @ 130 yen". Is this too much of a hope?
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
日米株&投信/兼業投資家/投資歴20年&日本株10年以上/国大&経済学部卒/西日本/大手&孫会社/経理&財務&イベ&外務等◯億担当/高配当
32Followers
51Following
284Visitors
Follow
株ドリーム : Mr. Big Loser Cat
No need to respond to the following comments.
Good morning. Thank you for following Stock Dream today. It's not that I'm taking you lightly by not following back. Every morning, I check various news and updates from the people I follow, but because I'm following 45 people, the workload in the morning has become quite large. Thank you for your understanding. I look forward to continuing our relationship. (I remember you well, Mr. Big Loser Cat. You're the comrade who is concerned about a 50bp rate cut and yen carry reversals, right? Please continue to share your past investment experiences with me and other individual investors like me. I'm learning from you.)
Unlike the old Twitter (now X), this investment community gives me a sense of security as everyone here is involved in some form of investment. In the future, I hope we can inspire each other in different ways and continue to enjoy investing together.
(I live a FIRE lifestyle, where I watch the Tokyo Market Wide Stock Voice program every day to research the stocks that interest me and buy them for the medium to long term if I'm convinced... That's my life. I enjoy investing while doing various research. Additionally, I maintain discipline and take care of my exercise and diet. I don't lead a lazy life. (In fact, health management is one of my hobbies, haha. If we have the chance to meet in person at a moomoo Securities event or elsewhere, please feel free to say hello.)
株ドリーム : Please don't worry about responding to the comments below...
We have stopped following the moomoo community group that disseminates information on preventing investment fraud and have switched to following Mr. Daikake Neko. Thank you for your continued support.
Let's ride the waves in today's market well. We are also paying attention to the Middle East situation.
大負けネコ OP : Good morning
But, I must admit that I don't remember writing anything particularly good in my profile, and in each comment, I mentioned that 'I am not a professional in investing or finance', and 'I am a beginner in the American market'... Being followed by someone like me might make you wonder, 'Are you really okay?' and actually worry.
' as the main battleground in the 'Japanese stock market', seeing it as a point of 'consensus of views' and 'being of similar opinion'...
️ Ugh, what a bother. Since today is a 'fever-free day' and I have to go to the 'city hall for procedures', I must 'step away from the market at some point'. This 'blank time is dangerous'.
️
Are you an early riser? I admire that. As for me, my early awakening is due to 'getting older' rather than just being an early riser.
I appreciate you 'following back', thank you
Well, it is reassuring for me to find someone who shares the 'concerns about the recession
Earlier today, I checked the 'exchange rates and Nikkei average stock price futures' of 'moomoo Securities', and similarly checked my 'certain online securities app', both showing a 'significant drop' in the 'Nikkei average stock price futures' starting around △2,400 yen
As you mentioned, the 'deterioration of the Middle East situation' is bad news. The fact that last week, the 'crude oil futures price was around $100 per barrel', and the 'increase in production and price drop' was a good direction for Japan. I really hope they stop at just the '6th Middle East War'.
Meanwhile, this week I had plans to do some 'probing buying' of 'Indian and Southeast Asian stocks'. Fortunately, the 'stocks that significantly increased at the end of last week' with 'upward earnings revisions' and 'news', are also showing 'strong bullish trends in the pre-market and might hit the daily upper price limit' in the 'PTS market'. Based on these 'price movements', shall we go for an attack?
So, let's 'enjoy our investment activities?' today as well
Thank you in advance for your continued support and let's keep in touch