Media outlets are all talking about an economic downturn, and when I look at YouTube, they are all talking about an economic downturn. When an economic downturn comes, how should we respond? There are no videos explaining when the stock prices will rise. So in today's video, I will explain about how to deal with an economic downturn and when stock prices can rise. Before you watch, please press like and subscribe. Let's get started. A major signal of an economic downturn has emerged, with risky assets all dropping and only safe assets like bonds seeing price increases. Economically, if everyone anticipates an economic downturn, people's expectations and behaviors can impact the economy. When almost everyone is thinking about an economic downturn, consumer sentiment worsens, leading to reduced spending and a real slowdown in economic activity. When consumer spending decreases, it results in reduced company revenues, leading to a decrease in production and employment.

It leads to contraction, and corporate investment is also decreasing. When companies anticipate an economic downturn, they may reduce or postpone investments. As a result, capital injection into the market decreases, which can hinder economic growth. Additionally, in the financial market, if investors expect an economic downturn, asset prices such as stocks and bonds may decline. Consequently, this can have a negative impact on the economy. If people believe that an economic downturn is imminent, it can actually lead to one. So, what is needed here? Good news. What is a definite piece of good news? It's Federal Reserve Chairman Powell raising interest rates. Recently, the Fed has frozen interest rates, but with the next FOMC meeting just a month and a half away and an ongoing economic downturn, will the Fed remain idle? The person currently under the spotlight is none other than Jerome Powell.

I received a lot of questions about why I didn't raise interest rates at the press conference. However, the job market is still strong, and I mentioned that if the job market deteriorates, we can lower interest rates. But suddenly, the market sentiment is turning negative, leading to an economic downturn. So, something needs to be done, and that is Jackson Hole. The Jackson Hole Economic Policy Symposium will be held on August 24th. Therefore, before the FOMC meeting, Jerome Powell will have an event to officially discuss monetary policy. What is Jackson Hole? It is a small town located in Wyoming, USA, with beautiful scenery. It is a great place for healing as it is a small rural area. Since 1978, this place has been hosting discussions on major global economic issues and central bank policies. Central bank governors, finance ministers, economists, and financial experts from around the world gather here.

Members are present. Last year, Jerome Powell mentioned about monetary policy here. If the economic situation really worsens and a recession comes, instead of a 25bp rate cut, mentioning a big step rate cut of 50bp can help promote market stability. So, right now, that's why Jerome Powell won't be able to sleep. Because he should have raised rates in July. He will keep thinking about it and come up with a plan. The plan is likely to be unveiled at the Jackson Hole Economic Policy Symposium in August. Today, the Bank of England cut interest rates. The European Central Bank also cut interest rates, and now the Bank of England has cut interest rates as well. Global central banks are starting to cut interest rates. However, the Bank of Japan has not cut rates yet. So, globally.

The central bank that maintains the most concise stance, so there is still about a month left until the FC meeting, during which a lot can happen. Wars could break out, a real economic downturn could occur, there are many variables. If the economic sentiment improves again, the stock market may think the same. If an economic downturn has come, then what to do next? Interest rates should be raised. However, instead of a 25bp rate hike, it may be necessary to cut rates by 50bp, as was done when raising rates by 50bp. So, if expectations for this rate cut start to rise, stock prices could rise again. However, what needs to be noted is that since the stock market is now reflecting the economic downturn, stock prices could continue to fall. Let me explain while looking at the chart. The Dow Jones is still near its all-time high, so the market is just beginning to reflect the economic downturn.

The stock price is expected to drop as it converges towards 200. So, in terms of timing, it is now reflecting an economic downturn and will continue to decline. If a war were to break out, the situation would worsen. Therefore, it will drop significantly. However, as the economy weakens, expectations for a rate cut will increase. So, when the stock market drops like this, reflecting an economic downturn and when stock prices have already fallen a lot, the expectation of a 50 basis point rate cut by the Fed will start to emerge, leading to a rebound in stock prices. When you think they will cut the interest rate by 50 basis points and consider buying, that's the situation. When stock prices have fallen a lot, and overall the stock market is declining, there is also a possibility that stock prices will rise as the likelihood of a 0.5% rate cut signal at the end of August at the Jackson Hole meeting is factored in. So, to summarize today's video, the long-awaited economic downturn has finally arrived.

Many people actually think that when an economic downturn comes, it is reflected in consumer spending, companies reduce investment, stock prices fall, and the capital market freezes. Then, stock prices will continue to fall. The FOMC has just ended, so we have to wait for almost close to two months until mid-September for interest rates to be adjusted. The person who is currently in a difficult position is Jerome Powell. He should have raised interest rates in July, but he didn't. If an economic downturn comes, it will be Jerome Powell's fault. Therefore, he must be preparing measures. So, if we continue to monitor the situation and actually enter an economic downturn, inflation will decrease significantly. Therefore, we need to raise interest rates significantly from that point on. When we raise interest rates, if we go up to 25 basis points, it will be too late. In that case, we can raise interest rates by 50 basis points. And we can send that signal right at the end of August.

I can send a signal from Jackson Hole, and that could be a high point for the stock market. It's still a volatile market. We need to look at the unemployment rate, and there are announcements still pending. There's also the CPR announcement coming up soon. We need to continue monitoring if the economic sentiment is deteriorating significantly. However, in the current situation, the possibility of an economic downturn is increasing significantly. It's time to consider how to respond. Therefore, I have been thinking about what measures Jerome Powell is planning to take. In the next video, I will provide more insightful information.

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