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Today, Jeremy Powell made remarks at Jackson's Knoll suggesting that they try lowering interest rates for now . So the market cheered today. In particular, the Dao Jones Industrial Average hit an all-time high for the first time this year . Ethereum also hit a new high for the first time in four years .
Ethereum hit 4,850 during the 2021 bull market, but it has surpassed that. So, in today's video, I will first briefly explain why it has risen, whether it will continue to rise, and what points we should be concerned about . First of all, Wall Street said today that it received a signal from Powell for the rally it had been expecting, and in some respects, it is being called a late summer rally.
Recently, the SP fell for five consecutive days, so there was talk that August would be a bit difficult . However, Jeron Powell received a signal to cut interest rates, just as President Trump had said this time, and his stance was to try cutting rates in September and see what happens. For reference, this is a paparazzi photo of Federal Reserve Chairman Jeron Powell at the airport in Jackson Hole, and he looks very tired, doesn't he?
It is also understandable that he likely received a great deal of political pressure from President Trump . Recently, President Trump has also threatened several times to fire Federal Reserve Governor Lisa Cook . President Trump held a press conference today, and what he said was that the stock market rose by nearly 1,000 points 10 minutes ago.
So, while saying that Dao Jones had risen by nearly 1 point, he also implied that he had checked the stock 10 minutes ago . I didn't mention this just once; I mentioned it about three times . The content that the stock price went up . Then, when asked what he thought about Federal Reserve Chairman Jeron Powell's speech today, Powell said that interest rates should have been cut a year ago.
I also mentioned again that they are trying to implement interest rate hikes too late and too slowly. Anyway, it seems Fed President Jeron Powell has finally reached a compromise to some extent. President Trump’s political sparring, and the fact that he also has lunch with Treasury Secretary James A.
Bascent almost every week, so he must have heard some things there as well . So, I estimate an 81% probability that the FOMC will decide on interest rates next month . It originally dropped to 70%, but it rose as high as 91% when Fed Chair Jeron Powell gave a speech . However, it dropped a bit during the session and closed at an 81% probability.
What remains a bit concerning is that while it was close to 90% or 100% two weeks ago, there is still a lot of data remaining. For instance, if the PC price index released next week comes out high, the likelihood of an interest rate hike in September decreases again. So we need to keep watching how the market prices this interest rate cut .
And this chart shows the movement of the SP after Jackson Hole from 2022 to 2024, and in 2022, it fell starting the week after Jackson Hole, dropping nearly -8% that month . It fell by nearly 10% in 2023 and by about 5% in 2024 . So, it was falling a bit again due to concerns that Jeron Powell would take a hawkish stance at Jackson Hole .
However, this time, stock prices are rising like this due to expectations that we will enter an interest rate cut cycle . What has been different from 2022 until now is that back then it was an interest rate hike cycle, and now it is an interest rate cut cycle. So, while it dropped significantly after Jackson Hole, it now appears to be on an upward trend.
The trend we can observe here is that the market experienced major fluctuations in the week following Jackson Hole . Because there is also seasonality. There is not much trading volume in August because many people go on vacation . However, now that we have entered September after August, the vacation process is over, trading volume is increasing, and as we prepare for the refining, stock price volatility is growing.
In particular, volatility is even greater because there are also major macroeconomic movements. So, I view the week following Jackson Hole as important. In particular, Nvidia's earnings announcement is coming up next Wednesday after the market closes, and the stock has risen 30% this year alone, with its market capitalization reaching $4.3 trillion .
Microsoft is 3.7% and Apple is 3.3%, but Vidia is 4.3%. If Nvidia's earnings report is strong and the market trend rises again to near $5 trillion, it is highly likely that tech stocks such as Microsoft and Apple will start a rally again. So next week, depending on the results of Microsoft's earnings announcement, the Nasdaq could move by as much as 1 or 2 percent.
And next week, the PCE price index will be released. Since the announcement of reciprocal tariffs in April of this year, the price index has been rising for two consecutive months . With the producer price index coming out high again last week, there are forecasts that it will rise. Although a consensus has not been released yet, if the PC price index released next Friday comes out high again, there is a possibility that the market, which has risen, will fall back down .
US interest rates are between 4.25% and 4.5%, so a single rate hike won't cause them to drop significantly. Jereon Powell’s stance is that since the head of the board’s term lasts until next May, let’s try setting interest rates and see how things go. However, if it appears that the inflation index will start rising again, he could freeze interest rates again in October.
And what's interesting is that while there is an 80% chance of a rate cut in September, there is only a 50% chance of a rate cut at the October FOMC meeting . Therefore, the current market anticipates two to three interest rate cycles. Depending on future indicators, the rate cycle may continue, or if inflation rises, there is a possibility that rates will fall as the market moves toward a freeze.
Anyway, to summarize, next week is likely to see high volatility again due to the release of Microsoft's earnings and the PC price index, and generally, market volatility has been around 8% to 10% since Jackson Hole. Of course, it is true that expectations are higher because it was an interest rate hike cycle back then and this is a rate cut cycle; however, since it is a rate cut cycle, it seems highly likely that the market will continue to trend upward if the economy performs well .
Also, something worth keeping in mind is that while it was mentioned that the Department of Justice has started an investigation into Federal Reserve Governor Lisa Cook, there is new news today suggesting that there is a possibility that she committed mortgage financial fraud while serving as a Federal Reserve Governor.
So today, President Trump once again strongly stated that he would fire Federal Reserve Governor Lisa Cook if she did not resign . Uh, judging by Trump's actions so far, it seems he thinks Lisa Cook committed financial crimes and there is sufficient reason to fire her. If Federal Reserve Governor Lisa Cook leaves, the possibility of even a 50bp rate cut at the September FOMC meeting increases.
Currently, the Federal Reserve consists of seven governors, with Governors Boeun and Waller supporting President Trump's policies, and Governor Azuanaler recently leaving. They appointed a new Fed board member . Federal Reserve Governor Miranda was appointed on a temporary basis, and if Governor Cook also steps down, it is highly likely that four out of the seven members will follow President Trump's policies.
In that case, Michael, Jefferson, and Jeron Powell will be the neutrals left . So, to summarize, it currently appears very likely that a majority of the Federal Reserve Board members will be pro-Trump, and if that happens, they will be able to continue pressuring for interest rate cuts. Of course, there could be talk of a 25bp rate cut, and even a 50bp rate cut.
However, lowering interest rates is not always a good thing. Since 1980, economic recessions have occurred as interest rates were lowered, and while people usually expect a soft landing this time, saying it is different, that has not always been the case . Economic recession followed interest rate cuts in 1990, economic recession followed interest rate cuts in 2000 , economic recession followed interest rate cuts in 2008, and economic recession followed interest rate cuts in 2020.
And we need to wait and see if talk of an economic recession arises again this time as interest rates rise . Whenever we said an economic recession was coming, it never came, and whenever we said it wouldn't, it always did . The market is currently in a very unfavorable state, but it is moving significantly upward .
So, since the impact could be severe if bad news were to break out here, I think keeping that in mind when viewing the market might allow you to protect your profits more safely. So, to summarize today's video, Fed President Jeron Powell gave a speech suggesting that the Bank of Korea should now lower interest rates, and President Trump continues to pressure him to cut rates .
And with the acquisition of Federal Reserve board members, it now seems highly likely that four out of the total seven board members will become Trump supporters . There is talk that President Trump bought a lot of bonds, and he bought nearly $100 million. Policies are fluctuating wildly and the economy is in turmoil, but due to the nature of bonds, demand rises when an economic recession occurs .
With demand for safe assets rising, the market is unlikely to remain strong just because President Trump pushes for interest rates. Rather than assuming that stock prices will continue to rise, it would be helpful to keep questioning whether raising interest rates is the right move, considering market movements when the rate cut cycle begins and especially given that inflation is not fully under control and tariffs are being raised .
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