I’m going to briefly summarize my perspectives for the past 1 to 2 months and study them

I’m going to briefly summarize my perspectives for the past 1 to 2 months and study them
(Please read today’s article carefully.)

1. The market is currently very optimistic about inflation
   -Tips (interest rate minus inflation) hit a one-year low of 1.68%, and are rebounding 1.71%
   -BEI (expected inflation) hits a three-year low of 2.04% and is rebounding to 2.15%
   -My point of view: What you actually see in fed is core pce, super core pce, and the monthly change rate fed expectation of core pce is around 0.18%, but it keeps coming out in the low 0.2% range and I think it will continue to be
   -In addition, supercore pce hits three-month high monthly growth this July
   -Possible additional price hikes: 1) dollar weakness, 2) recent rise in international oil prices 3) increase in insurance costs due to hurricane season as Supercorepce suggests 4) recent additional tariffs on China
2. The market’s expectations of a rate cut are at the level of a market price measurement of a whopping 200bp over a year
   -Expect interest rates of 325-350 bp by 9/17 2025 in cm fed watch real time
   -But given Jerome Powell’s tenure characteristics/incidents to date/candidates’ pledges, he is likely to be replaced by the next chairman
   -My point of view: I want to remain as an independent institution, and I want to be remembered for my history of setting interest rates well, so I wonder how much interest rates will be lowered (I think I’ll stop and watch a few times)
3. Encarry Trade Clearance Is Not the Only Problem
   -As much as Japan, many countries, including China and Korea, have attracted and invested Japanese samurai funds and Wangseobang funds in the United States, and the scale is equivalent to $6 trillion in Japan alone and $2 trillion in China alone
   -Now, rather than Japan raising interest rates, how much the U.S. will lower interest rates and how weak the dollar will weaken will accelerate the yen carry liquidation
   -Currently, USD/JPY stands at 146.1, with the US dollar rebounding a little from the recent 143 yen range
   -My Perspective: The current dollar DXY is 101.7 and I think this is likely to be further lower
   -The reason for this is that the Fed will lower interest rates three times this year, a total of 0.75 to 1%
   -This is because Japan’s renewed inflation has opened up the possibility of further hikes in interest rates (recent remarks by the Bank of Japan’s vice president)
   -If the U.S. dollar weakens, the yuan and the yen will strengthen, and the enormous amount of money invested in the U.S. is likely to return to the country
4. U.S. Stocks’ High Valuation Status
   -The current average PER on the SNP500 basis is 25 times higher, the highest in history
   -If you fall close to the Siegel constant (the average return on shares of economist Jeremy Siegel), you usually get a huge drop, and if you rise close, you get a huge rise, which is now down to the 14%->9% range
   -Buffett Index (SNP500 Price Sum/GDP) Over 200% All-Time High
   -My thought: Has AI achieved a better performance than the previous technology bubble? If you look at it, your head is tilted
5. The current geopolitical crisis coupled with the U.S. presidential election
   -In short, it’s giving uncertainty to the market
   -Presidential candidate speaks daily as if he doesn’t care about the economy (exHarris: 25% tax on unrealized returns, Trump: abolition of income taxes, etc.)
   -This uncertainty is whether the geopolitical crisis will end in a short period or last depending on which U.S. presidential candidate becomes president: Wu/Russia, China/Taiwan, Iran/Israel
   -My thoughts: I think the uncertainty of what will happen in the run-up to the U.S. presidential election, less than three months away, will make us reluctant to invest in risky assets
6. What kept America going and the direction it is going to take
   -We actually experienced a recession from the end of 2021 to 2022 (the index fell by more than 30% and achieved a minimum of 0% in personal consumption expenditure)
   -Treasury released astronomical money again from late 2023
   -Some of the economic indicators that the Fed was expecting, including GDP, personal consumption expenditure, ISM service index, CPI, PPI, and unemployment claims, have been released
   -But there’s only one keyword that runs through all of those indicators: consumption. In common, consumption has been good, and these consumption have saved many of those indicators
   -The characteristic of this consumption is that it fits perfectly with the trend of new influx of illegal immigrants and immigrants
   -From the beginning of 2024, the Biden administration began blocking inflows and indicators show a sharp drop in inflows of immigrants
   -My thoughts: If we push GDP and consumption in the second quarter of 2024 with the so-called immigrant-inclusive population, I think consumption and GDP will fall from this point when this immigrant population will decline (GDP will slow down and the core PCE will likely rise again)
7. How to protect our property (not a buy-and-sell recommendation) assuming a recession is coming
   -There was a firestorm in which short-term bond rates fell faster than current long-term bond rates, which had a negative impact on stocks in history
   -Currently, the short- and long-term interest rate gap (10y-2y) has been reversed and is being reversed again, and at this time, a recession usually came (there is also an analysis that 10y-3m is more accurate)
   -When these things happened, defensive value stocks had an average annual return of 8% over 10 years and risky assets had an average annual return of -30%
   -Raw materials, gold, usually rose at a time like this or kept their profits in place
   -My thoughts: As I mentioned last time, even if there’s a real recession, NBER usually publishes it late, from six months to a year and a half
   -For about six months to a year, when you invested in defensive value stocks before others, the average return was 70%
   -If you look at the trend in the history of defensive value stocks, they’ve been peaking out their annual returns during the downturn and now they’re at their lowest (most of the funds are invested in growth stocks)
8. Bitcoin And Crypto’s Current And Possible (My Thoughts)
   -In fact, the correlation with the S&P 500 has been almost similar since it was incorporated into the Bitcoin ETF (similar on the chart)
   -Except for Bitcoin