Wash Fed Chair Hints at September Rate Hike

Fed Chair Wash warned in his Jackson Hole speech that credit and lending markets are showing few signs of policy tightening. This indicates the Fed's reaffirmation of its price stability goal and its concern over the sustained 3% Personal Consumption Expenditure (PCE) inflation rate.

The presenter stated, "Credit and lending markets are showing few signs of policy tightening," and added that the Fed does not view wage growth as a predictive indicator for future inflation.

The Fed expressed skepticism about market expectations that artificial intelligence (AI) technology's productivity gains would alleviate inflation. It was noted that the timing for AI technology to actually translate into profits is unclear, and waiting for it is unrealistic.

The presenter remarked, "Because it's unclear when that will actually translate into profits or when it will appear, just waiting for that also doesn't make sense," expressing caution about some market segments' excessive expectations.

Following Fed Chair Wash's Jackson Hole speech, the possibility of a September interest rate hike surged. According to CME FedWatch data, the prediction for no change in rates at the September Federal Open Market Committee (FOMC) meeting significantly decreased from 70%. This indicates that the market has begun to seriously acknowledge the possibility of a rate hike.

The presenter noted, "The possibility of a September rate hike has increased... The no-change prediction for September was 70%, but it dropped sharply," emphasizing the sudden shift in market sentiment.

This change is interpreted as the Fed reaffirming its firm commitment to price stability, thereby increasing the market's vigilance regarding further tightening policies.

Fed Chair Wash successfully established his independence and credibility as the Fed Chair by maintaining a hawkish stance in his Jackson Hole speech. This is considered an important process for him to gain trust from the bond market.

The presenter stated, "Ultimately, every Fed chair wants to gain the trust of the bond market, and he has now achieved that," emphasizing that the Fed chair dispelled concerns about political bias and articulated an independent policy will. As a result, the domestic stock market declined, reflecting concerns about a rate hike.

Bank of America warned that 82% of global stock markets are currently overbought, predicting a challenging environment for stock investments. It specifically forecasted that the rebound in tech stocks would be limited until the 30-year Treasury yield falls below 5%.

The presenter said, "Bank of America says that 82% of global stocks are overbought... and it won't reverse until the 30-year Treasury yield falls below 5%," also mentioning the potential for increased political volatility ahead of the upcoming midterm elections.

News broke that the United States and Venezuela signed the largest oil trade agreement in world history. Through this agreement, the US secured a majority stake in Venezuela's oil reserves of over 65 billion barrels.

The presenter stated, "The US signed the largest oil trade agreement in world history with Venezuela, securing a majority of the US's interest in Venezuela's oil reserves of over 65 billion barrels." It is reported that the US thereby secured 55% of Venezuela's actual crude oil production and the right to purchase the crude oil at cost with that stake. Additionally, it is noteworthy that discussions about Venezuela's withdrawal from OPEC were confirmed as true.

The schedule for the US-China summit, previously announced for early September, has been corrected to September 23rd or 24th. Ahead of this summit, there is speculation that the US may strengthen export regulations on artificial intelligence (AI) chips.

SoftBank is pursuing additional loans to repay debt related to its investment in OpenAI. This method of taking out new loans to repay existing debt incurred for the OpenAI investment, known as 'debt rolling,' is increasing market burden.

The presenter explained, "SoftBank is pursuing loans to repay its OpenAI investment debt. It's taking out loans from another source to repay the investment debt to OpenAI," raising concerns about SoftBank's financial health.

Marvell Technology is projected to continue its earnings growth, with a 45% increase year-over-year in fiscal year 2027 and a 60% increase in data center revenue. However, despite this positive outlook, the stock plummeted.

This is due to the expectation that market excitement about its collaboration with Google will not immediately translate into increased revenue. Specifically, upon news that revenue would only significantly impact from fiscal year 2029, the market decided 'expectations were too high,' leading to a sell-off for profit-taking.

The presenter explained, "In conclusion, earnings growth is continuing. A 45% increase year-over-year in fiscal year 2027, a 60% increase in data center revenue... Since it will only significantly impact from fiscal year 2029, there won't be such dramatic revenue growth immediately, which led to people thinking, 'Oh, we expected too much,' and some profit-taking occurred."