Tariffs on China… It’s a big

Tariffs on China… It’s a big issue. China’s response to this is going to be important. But the Trump administration seems to have a good understanding of the impact of tariffs, including the potential to shock markets and inflation. And that’s what I mentioned the other day, the Encarry trade. You understand exactly what was difficult during the first administration, not just China’s retaliatory tariffs. I think we’re going to have a lot of push-and-pull rather than going too rough. I’m going to keep telling you, Elevate to deelevate… I think that’s the key. It’s raising it to lower it. The market, which was very nervous about the idea that tariffs themselves could be an end, seems to be relieved as it weighs more on what it sees as a means by the current score. Yes. I think throughout the first half of this year, whether the Trump administration’s tariffs are an end or a means will have a big impact on market trends.

I was scanning the news the day before, and I was surprised to read it, so I’ll just quote it.

“There is a risk of a resurgence in U.S. inflation, so we need to be cautious about lowering interest rates,” said Austin Goolsbee, president of the Federal Reserve Bank of Chicago. According to major foreign media such as Wall Street View on the 3rd (local time), Governor Goolsbee stressed in a radio interview, “We need to be careful about how quickly we will cut interest rates.”

“We have seen strong economic growth and consumption,” he said. “It is difficult to distinguish whether the rise in prices is a sign of overheating or a one-time effect of tariffs.” He added, “We may have to slow down the rate cut amid uncertainty.” (Yonhap Max, 25.2.4)

Yes. The Fed member is saying that we should be careful about cutting interest rates because there is a possibility of a re-inflation. Well, it doesn’t seem like a big deal… The devil is in the detail. The point is, it’s Goolsbee, the president of the Chicago Fed, who has been saying this. He’s been the dove’s vanguard among the Fed members since last year. He’s always said two things. First… Inflation will continue to fall… So I’m very optimistic… Second, the U.S. benchmark interest rate is going to be pretty low after a certain period of time. It’s two things. Yeah. Everyone’s worried about inflation, but not too worried… And that’s why we can do more rate cuts… I made this argument just two weeks ago, but… The article above mentioned the threat of a rebound in inflation and asked us to be cautious about lowering interest rates. Yes. I think that’s the moment when you suddenly see the claws of a hawk from a pigeon. And by the way, Goolsbee is a confidante of Powell. When everyone says a recession is coming, it’s not going to be a recession… He argued that the US economy is going to go to the so-called Golden Path, where growth is improving but prices are stabilized… In fact, Powell has referred to that view quite a lot. Is it Goolsbee’s change of mind? For your information, one of the people who turned from a pigeon to a super hawk was James Bullard and Kashkari. Bullard is not currently in office, but Kashkari is an incumbent. Is Goolsbee… Hahaha

I’m thinking about two things. First of all, what will the pigeon’s conversion mean… While properly acting as a pigeon within the current Fed… It’s only Goolsbee and Waller that gets a boost. FYI, Waller was classified as a hawk just last year, but lately, looking at the data, they’ve shown a pigeon’s tendency to weigh in on further rate cuts. If Goolsbee, who was the most bone marrow pigeon, changes his mind…. I think the pace of the Fed’s rate cut will slow significantly.

And the second thing is, why does Goolsbee want to change his mind? First, let’s think about the sense of alertness to inflationary entrenchment. The time when the U.S. CPI exceeded the Fed’s 2% target was March 2021. Next month, it’s our fourth anniversary… February 24th of this year will be 3 years for the Russo-Woo War… The war that was supposed to end in three months… It’s going to be another tragedy in human history.) If you have this disease called inflation for so long, the expectation of inflation will remain in people’s minds. Just as Japan experienced long-term deflation and expected deflation became so strong. Inflation is going to last a long time… Right now, regardless of that number, it creates a psychology that accepts inflation so naturally and easily, but … When we kept talking about sticking, Goolsbee kept rejecting those arguments, and I don’t know if they suddenly changed course.

Just two weeks ago, I was positive about the inflation data.. Why is it making a difference.. Maybe it reflects the uncertainty of Trump’s tariffs. I think I was thinking a few things while watching the customs events related to Mexico, Canada, China, and the EU. If tariffs are imposed when the consumption economy is not bad…. And if the asset market continues to strengthen on the back of U.S. exceptionalism… This could increase inflation-related uncertainty.

A lot of investors are now focused on tariffs, by the way… We remember being quite nervous about US prices and Fed monetary policy for about two years or so until last year. I don’t think it’s time to let the guard down on this side yet. Essay line. Thank you.