Let’s start the new year vigorously. Happy new year, and I sincerely hope that you achieve everything you mean this year. At the beginning of every year, we use annual forecasts. Well, I think the seminar we held at the end of last year tended to focus more on the current exchange rate rise than on the issues penetrating the whole of 2025. I should have prepared the annual forecasts early, too. I’m writing them a little later. They will be divided into several chapters, so I look forward to your kind cooperation.

Now I think about the biggest frame that the market recognizes. It’s American unilateralism, American exceptionalism. And the prevailing expectation is that Trump’s emergence will further strengthen that frame. I noted in my end-of-year essay that everyone was looking at a big cut in the benchmark interest rate at the beginning of 2024. Well, as a kid, I think I had a lot of misconceptions that I could predict the future… I’ve been getting in a lot of trouble in the market. I don’t dare think about that anymore.

In particular, the stronger the reaction to a policy, the more cautious it feels. Past learning that if you cut interest rates, you cut them properly… And that’s led to an over-the-top market interpretation of the Fed’s comments that suggested a cut in the benchmark interest rate. And that over-the-top reaction in the market leads to an over-the-top pullback in the market rate. Lower interest rates and weaker dollars have stimulated inflation again. The original Fed dot plot at the end of 2022 says that it’s converging to the 2% target by 2025. Well, if you look at the dot plot that was released at the FOMC in December 24th, it says that it’s only converging in 2027. If the Fed expects it to … Inflation that left home in March of 21… You’re coming home by the end of 27 years… is it 6 years… If you leave the house for six years… Do I feel comfortable going back home.. Do I feel awkward.. I think the possibility of H4L is even higher, at least according to Fed’s assumption.

Anyway.. on the notice that we’re going to cut interest rates.. we’ve attached past learning and we’ve made excessive interest rate drops… It doesn’t make it easy to solve inflation… And it made it harder for the market to cut interest rates than it expected. And it made it harder for the Fed to cut rates than it had planned. It doesn’t have a set future. I think it’s more about the action to get the desired future, how the market on the other side follows the Fed or the government’s policies. Same here. There’s probably a lot of expectations that the market has after Trump’s election. What kind of financial market conditions do those expectations create now… And so pre-made, future Trump-era financial markets look… It makes me think about how it will affect the Trump 2.0 administration, which will take office later (than the mayor created in advance).

In a way, the U.S. is more of a flawless striker. It’s been going strong… As the dollar is strong, it is controlling the inflationary pressure at home to some extent while curbing the rise in import prices, and because high interest rates will be prolonged… There will be a recession… You might say that, but as much as you still have a significant number of base rate cut cards (the current base rate is still up 4.5%)… And the market is still looking at past interest rate cut patterns… Expectations of excessive interest rate cuts… As much as we can send such concerns about a recession into the sky… Even if those issues are highlighted, they don’t become a big issue. Then… Isn’t that perfect… Now that I think about it, maybe people are flocking to the United States without fear? Well, if I have to find that problem… And I think it’s inflation, after all, it’s too much money going to the U.S., it’s going to overheat asset prices, it’s going to be… Despite the dollar’s strength if the economy overheats… Inflation that cannot be beaten even by the strong dollar is highlighted… When the market recognizes that inflation is not easily resolved… I think there could be a problem, because… It’s because if inflation grows, the Fed can’t use bullets..

So one of the concerns for markets is that the Trump administration’s policies are pointing to inflation. Large tax cuts can lead to overheating of the economy… Large tariffs have the problem of raising import prices, and immigration restrictions can stimulate wage increases. Here’s the counterargument to this argument. First of all, it’s pointed out that the Trump administration imposed tariffs, but did inflation come. In fact, during the Trump administration, between 2017 and 2020, inflation hit 1.9%. It fell short of the Fed’s target. And the Trump administration is looking at large-scale crude oil production, represented by Drills, Baby Drills. So, as energy prices go down, inflationary pressures go down even further. So, isn’t that the problem solved? It continues to look flawless… I’d like to talk about these two arguments. Let’s start with the story of crude oil production.

Unlike the Biden administration, the Trump administration is trying to increase crude oil production on public land. It is also believed that this increased crude oil production will help the U.S. export its energy abroad to resolve the trade deficit and curb inflation that could rise. During the Biden administration, restrictions on energy supply through fossil fuels included international oil prices… It’s a policy that’s exactly the opposite of what stimulated inflation, a large increase in the supply of crude oil… You could point to a drop in oil prices, but I think you might think, well, you know, you know, you’re a oil miner, you’re going to have to produce oil on a large scale, and it’s going to cost a lot of money, and then the price of the oil that I’m going to produce continues to fall. So… Wouldn’t it be a little uncomfortable?

Middle Eastern countries can be a problem, too. They can be a problem in the past