The depreciation of the yen and the collapse of the AI bubble? GS raised the probability of a US recession, and UBS also warned that Japanese stock sales will continue
The number of people employed in the US non-farm sector in July fell short of market expectations, the rise in the unemployment rate also greatly exceeded market expectations, the shadow of a recession loomed on Wall Street, and the market began betting on large-scale interest rate cuts.
On Monday, the Japanese market spearheaded the decline in Asia-Pacific stock markets. By the end of trading, the Nikkei Stock Average had fallen by 12% or more, making it the biggest drop in history. According to the closing price, the Nikkei Stock Average fell 26% from the July high, and the Tokyo Stock Price Index fell 24% from the record high, both of which entered the technical bear market area.
On Monday, Goldman Sachs chief economist Jan Hatzius raised the probability that the US will fall into a recession next year from 15% to 25% in a report. Meanwhile, he believes there is no need to worry too much about a recession even if the unemployment rate rises. He believes that the economy continues to be “generally good,” there are no major financial imbalances, there is plenty of room for interest rate cuts in the Federal Reserve (Fed), and that they can act quickly if necessary.
The bank's analysts expect the Fed to cut interest rates by 25 basis points in September, November, and December, respectively. Furthermore, if the forecast is off, and employment statistics for August are sluggish as in July, there is a high possibility that interest rate cuts of 50 basis points will be carried out in September, the bank's analyst pointed out. Meanwhile, JPMorgan and City revised their forecast that the Fed would cut interest rates by 50 basis points in September.
According to the CME Group's FedWatch tool, FF interest rate futures traders will temporarily wait until September4.5% probability that a 25 bp interest rate cut will be implemented、The probability that a 50 bp interest rate cut will be implemented is 95.5%,By the end of the yearThe probability that a 125 bp interest rate cut will be implemented is estimated to be 92.18%.
Kelvin Tay, regional chief investment officer at UBS Global Wealth Management, commented that the only reason for the rise in Japanese stocks over the past two years was the depreciation of the yen. He said that the appreciation of the yen is a “weather vane” that judges the performance of Japanese stocks, and at the same time, it is also the main driving force behind the previous rise in Japanese stocks, and since the Bank of Japan announced interest rate hikes, the return of the appreciation of the yen triggered the collapse of the stock market.
“Once the situation is reversed, we must withdraw from the market at the right time. I think investors are now withdrawing because of that,” he said.
In Tay's opinion, re-entering the Japanese market at this point would be like “grabbing a falling knife with your bare hands.” Mr. Tay predicts that there is a possibility that the US dollar/yen will fall further to the 135 yen level as Japan's life insurance and government pension investment funds (GPIF) carry out large-scale yen refunds.
“Unfortunately, Japanese stocks will continue to be under greater pressure,” he said.
Mr. Takatoshi Itoshima, a strategist at Baxter Asset Management, commented, “It seems that individual investors have no choice but to sell.” He also added, “There is a possibility that the sales wave will reach its climax in the near future, but I'm still not sure.”
Sumitomo Mitsui DS Asset's chief strategist Masahiro Ichikawa also points out that there is a possibility that people without long-term investment experience have not experienced such a crash, and the shock will be considerable.
“I think it will take longer for the market to stabilize after such a big drop,” he said.
The Bank of Japan raised interest rates unexpectedly last Wednesday, but the market sees that the US Federal Reserve (Fed) will begin cutting interest rates as early as September. The interest rate difference between Japan and the US is expected to shrink, and the yen exchange rate soared, hitting a high price since January. This puts pressure on Japanese trade and export companies, and as a result, it also puts pressure on the Japanese stock market. Furthermore, according to the Bank of Japan Governor's statement, there was no denying the possibility of further interest rate hikes.
$BRK.A.US$ In the 2nd quarter $AAPL.US$Shares have been reduced by nearly half, and the valuation value of shares held has decreased from about 140 billion dollars at the end of March to about 84 billion dollars now. Notably, this sale saw Apple shares rise 23%, $.SPX.US$ It was carried out during a sharp rise in US stocks, which recorded an all-time high.
Many analysts believe that the sale is for risk management rather than questioning Apple's long-term outlook. At the same time, there are analysts who think that Buffett's sales may be due to concerns about a recession.
Joe Gilbert, senior portfolio manager at Integrity Asset Management, pointed out that Buffett sold Apple shares simply for risk management, and he would have liquidated his position if he had concerns about Apple's long-term outlook.
Multiple analysts, including Wedbush analyst Dan Ives, have also expressed a bullish view on Apple's future, and Ives points out that Apple is in the midst of a large-scale upgrade cycle that will drive revenue growth until 2025 and 2026. There may be a tendency for the market to interpret Buffett's current sale as an indication of lack of confidence, but he said that Apple has just released a strong quarterly report, and they don't think now is the time to retreat, as the AI-led supercycle is ahead.
Meanwhile, CFRA Research analyst Cathy Seifert has a different opinion. He believes Berkshire is simply trying to reduce concentration risk. He pointed out that there is a possibility that Buffett's sale was motivated by recession concerns, and described Berkshire as a company “preparing for deterioration in the economic environment.” Also, even after this sale, $AAPL.US$ Is $BRK.A.US$I pointed out that there is no change that it is the biggest position of
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Source: moomoo, Bloomberg
This article uses automatic translation for some of its parts
Source: moomoo, Bloomberg
This article uses automatic translation for some of its parts
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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182441810 : None of them went beyond the scope of criticism after the incident. As the saying goes, “Noroma wisdom you notice later,” no one can see the future. The mass media, experts, and NHK are all scammers. I want to say it to the government that incited Nisa. with Zamamiro.