I went to Busan on Tuesdays and Wednesdays and Daejeon on Thursdays because I had a provincial schedule for three consecutive days. Maybe because I was so tired. Yesterday, I passed out as soon as I lay down a little after 12 o’clock. I was a little surprised when I woke up this morning. That’s because the Nasdaq, which had been rising sharply as I heard that Nvidia saved the Earth just before I went to sleep, closed down sharply. The overall asset market, led by tech stocks, fell by 2%, and the price of the coin was set to fall further. U.S. Treasury yields have fallen, but they are still high. What was more noticeable is that the dollar index has exceeded 100.

Yes, the dollar index has bounced back from its low of 96 in July-September, and now it’s strengthening above the 100th mark, and this trend has some impact on the euro, but… The yen’s ultra-weakness seems to be at the center of it. I think I’ll have to tell you about the movement of the Japanese yen in my weekend essay. Maybe… Maybe this weekend’s G20 will cover a little bit of the dollar’s strength. Or I’m just waiting to see if there’s a little bit of an issue about the currency war. And in the aftermath of that tremendous dollar rally in November of 2022, it was the G20 that made a difference… I’m looking forward to seeing if we can help again this time. Yes, I think the strong dollar is also having a significant impact on the center of the financial market’s wobble right now. Let’s continue a little bit further. In this essay, let’s think about Lisa Cook’s comment that seems to have shaken the market today. First of all… I quote the article.

“U.S. Federal Reserve (Fed) director Lisa Cook assessed that asset prices are historically high, which is likely to fall significantly. As mentioned in the Fed’s financial stability report, in a speech to Georgetown University on the 20th (local time), “Our assessment is that asset valuations are higher than historical benchmarks in various markets, including stocks and corporate bonds, leverage loans, and housing,” Cook said.

“Right now, my increase is that asset prices are likely to fall significantly,” he said.

“Considering the overall resilience of the system, we don’t see any weaknesses of the kind that were very painful in the Great Recession (right after the global financial crisis),” Cook said, adding, “So we don’t think a potential asset price decline will pose a risk to the financial system.”

Regarding private credit, which has recently gained interest in the market, he pointed out that it is a potential vulnerability to watch. “Whenever we see such a rapid increase in credit in such a short period of time, our attention is focused on,” Cook said after introducing that the Fed’s staff estimates that private credit has almost doubled over the past five years.

“There is no possibility that private equity credit will affect the unexpected credit crunch as in the 2008 asset-backed corporate bill (CP) market,” he said, “but it is worth keeping a close eye on the development.” (Yonhap Infomax, 25.11.21)

Wow… I can hardly see anything to delete in the article… Since the quotation is long.. I think the essay will have to be long.. T.T First of all, the first paragraph says that the valuation of the asset market is quite burdensome. As I’ve covered often in previous essays… In the past, the Fed continues to say that the valuation of asset prices is a burden at the FOMC. Powell is still drawing the line that it’s not excessive, but that sense of caution seems to be growing among the Fed members. So, the second paragraph is… It’s scary. It’s saying that you’re looking at the possibility of a significant drop in asset prices. Yeah, that means that the leverage of the market… So… is this going to be a huge shock…. There’s another line underneath that. It’s unlikely that it’s going to spill over into a system crisis. And then it’s referring to the risk to private equity. Just a month ago, Bank of England Governor Bailey warned me about private equity. I think it’s in a similar vein. Asset prices are falling significantly…. I think they are saying that the possibility of a financial system crisis is not high… What does this mean..

First of all, we have to be a little wary of such interpretations. It means that Lisa Cook, who is vindictive of the Trump administration, is using bad words with her personal feelings… Let’s take a look at the following quote. This is a comment from director Cook on November 4th.

“The risk of further weakening of the job market outweighs rising inflation,” said Lisa Cook, a Fed director, at an event held at the Brookings Institution in Washington. “Policy is not on a set path. All meetings are live meetings,” she said, leaving open the possibility of a December cut.

“The impact of tariffs is temporary,” Cook said, predicting that President Donald Trump’s tariff imposition will keep inflation somewhat high over the next year. “If this impact disappears, prices will gradually converge to the Fed’s 2% target level.” “The decision to cut interest rates last week was appropriate because we judged that the downside risk of employment was greater than the upward risk of inflation,” Cook stressed. (E-Daily, 25. 11. 4)

Yes, Mrs. Cook said she was in favor of a rate cut… Inflation is temporary… Says I’m more worried about slowing growth, although I’ll have to be cautious about further rate cuts… I’m not saying that you can’t cut interest rates. It looks like a middle… or a dove. If you’re vindictive… Shouldn’t we say that we can’t cut interest rates… The FOMC that Myron did last time was wrong? It feels different from the majority of Fed members that perhaps a rate cut will be difficult.

So how should I interpret the above story… That means asset prices could fall… But… when you have a lot of debt, when you have assets