Today, the U.S. market was very unstable. The stock market fell sharply, and the VIX index soared. Several indicators were released today, including the JOLTS report and the manufacturing PMI index. To summarize briefly, the JOLTS report showed that the number of job openings reached 840,000, an increase of about 300,000 compared to the previously recorded 771,000. This can be seen as a slight improvement in employment conditions. On the other hand, the ISM manufacturing PMI index recorded 47.1, indicating that the manufacturing sector has still not escaped the contraction phase. However, under normal circumstances, these indicators would have influenced market movements, but today, this issue overshadowed everything. News about Iran launching missiles at Israel emerged, causing significant turmoil in the U.S. market. As I mentioned, the VIX index rose sharply. The details were as follows: Iran launched two ballistic missiles toward Israel, and in fact, the attack...

Most of the missiles were intercepted, and the damage is limited, with almost no casualties reported in Israel. No matter how strong Israel's air defense is, nearly all missiles were shot down. This is a fact. There is no scenario in which Iran can win; they are just doing this because they have to. In short, there is no chance of victory, but the current Iranian government finds itself in a situation where it must show some form of action. On the same day that Iran launched missiles, Israel promised retaliation again. Looking at Biden's actions that day, what did he say? He issued orders for the U.S. military to actively assist in intercepting all missiles. Even though the U.S. keeps telling Netanyahu not to create disputes, when a situation arises, the U.S. is inevitably forced to protect Israel thoroughly.

I will show you how this issue has affected the presidential election. If you look at the Polly Market betting, you can see that Kamala Harris has been consistently leading recently, but in reality, there hasn't been much change. Harris still has a slight advantage. As I mentioned yesterday, China's massive economic stimulus and the resulting rise in stock prices are still hot topics. Today, I brought insights from two industry giants, Larry Fink, CEO of BlackRock, and Ray Dalio, who recently shared their thoughts on this matter. 

To summarize Fink's perspective, particularly regarding the presidential election, he simply states that there won't be significant changes regardless of who wins. Both candidates share similar views on making America strong, and while their methods of achieving this may differ, our role is to cooperate with any political stance. Much will not change depending on the outcome of the U.S. election.

We do not follow the daily movements of the market; instead, we look at whether the U.S. is a good place to invest for 5, 10, or 20 years. Sometimes, we may experience a 10% or 20% drop in the market, but historically, those who ran away during those times lost more money. We evaluate this situation carefully. When it comes to questions about whether the U.S. economy will have a soft landing or face risks, I respond very firmly. I believe there will be no landing. The economy is continuously growing at 2% to 3%, so what kind of landing are we talking about? The term landing implies a descent, but since I believe the economy will keep growing, I think the use of that term is misplaced. Corporate performance remains strong, and while there are certainly struggling sectors, we do not need to spend too much time worrying about them. I cannot understand why we are discussing a landing when the current indicators suggest otherwise.

I believe the leading indicators are incorrect. The leading indicators showing a recession are misleading; in other words, the economy is currently good and will continue to improve, so the interest rates that the market predicts will not occur. This is how Pink sees it. Regarding the perspective on China that I mentioned earlier, recently there have been significant changes in China's fiscal and monetary policies. Before that, China was already deteriorating. Now, it seems they have clearly recognized that the economy is declining. However, we need to see if this will stabilize the economy. In conversations with Chinese executives, I sensed a fear that they have not yet found the bottom. Additionally, more and more companies are diversifying their supply chains. There are options like India, and the Philippines and Vietnam are good choices due to their proximity to the United States, along with Mexico.

COVID-19 has taught us many lessons. Before the pandemic, the focus was simply on the importance of efficient supply chains. However, after the supply chain was disrupted by COVID-19, all companies are now concentrating on broader and more diversified supply chains. I believe this will be a setback for China. Dalio has emphasized for a long time that China needs to undergo a beautiful deleveraging. Deleveraging means reducing debt. But what does beautiful deleveraging mean? It refers to removing the debt bubble that has accumulated. When the risk of recession arises, incomes decline, and consumption decreases, liquidity will dry up. During this time, the government needs to inject money to prevent the economy from falling deeper into recession and to ensure that the stock market does not crash. Then, as we move forward...

If they reduce debt again and think it's going wrong, they will pour more finances into it, and in this way, they keep tightening and loosening without causing a significant recession, artistically driving the economy. This is what Ray Dalio refers to as beautiful deleveraging. He believes that China's current measures remind us of the moment when Mario Draghi, as the ECB president, said he would do whatever it takes to prevent the collapse of the Eurozone after the financial crisis in 2012. So, in conclusion, for China to avoid falling into a long-term situation similar to Japan's lost decade, it needs to support this with more extensive reforms. Ultimately, the heavily indebted local governments in China must undergo massive debt restructuring. Additionally, the inefficient tax system needs reform, and the demographic structure issues must be addressed. This is fundamentally what the overall Chinese government is facing.

Stance, that is, President Xi Jinping's statement that even if mistakes arise while trying hard to promote policies, there will be no punishment, allows for innovative and bold approaches. This is a positive aspect. The beautiful debt leverage works when both the bad debts are denominated in the local currency and both debtors and creditors are citizens of the country. In this case, China fits this criterion, which creates favorable conditions. However, the problem is that this is very difficult because the interests are highly fragmented. It is quite challenging to determine how policy decisions should be made to achieve the right balance. This reflects Dalio's mixed expectations and concerns about the Chinese economy. It would be good to keep this in mind. Also, the 2CB CPI has been released, but the actual inflation rate for 2022 is...

At its peak, it was higher than the United States, with the CPI exceeding 10% at the end of 2022. But what does the latest data show? The policy target of below 2% has resulted in a figure of 1.8%. Historically, looking at data from sources like Fred, we can see a strong correlation between Europe's CPI and the United States' CPI. The fact that the CPI has dropped below 2% is an example of how fears regarding inflation are gradually diminishing globally. I will conclude the video prepared for today here, and I kindly ask for your support by subscribing and liking. Thank you.

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