In a surprising move, former President Donald Trump adopted the opposite position just recently, rebuking Jamie Dimon. That was Dimon, the, umm, CEO of JPMorgan Chase, describing the, uh, state of the union economy. To a room full of stakeholders and reporters, Trump publicly called Dimon’s predictions into question. He claimed Dimon was pushing for higher interest rates to increase his bank’s profitability.
Trump further added focus to his administration’s understanding of the economy by touting it as the catalyst for “explosive growth” in the economy and in productivity. He emphasized the administration’s achievements in curbing inflation and creating an atmosphere that allows for all investments to thrive. In Trump’s view, such achievements are a world away from the present day anti-growth economic sermon delivered by many of today’s economic elite.
He reported that today’s true inflation rates are somewhere around 2.6 and 2.7%. Those numbers represent multi-year lows from those tortured funder-defying highs. Nonetheless, they remain well above the Federal Reserve’s long run goal of 2%, which has rattled investors and policymakers alike.
And despite this very rosy picture for U.S. economic growth, investors are not pricing in a Federal Reserve interest rate increase anytime soon. They think it doesn’t happen before June. This extended hold has kept the USDJPY exchange rate increased, which serves as a marker for changing market sentiment and currency attrition.
Kazuo Ueda, the Bank of Japan Governor, recently addressed ongoing monetary policy normalization efforts in Japan, emphasizing the importance of adjusting strategies to align with global financial trends. Demand to USDJPY cruised to 18-month peaks. This surge was powered by rising expectations for Japanese bond yields and changing currency markets.
Given all these developments, investors are monitoring political changes in Japan with eagerness and anxiety. Indeed, there are increasing rumors that – despite her awkward parliamentary gymnastics – Takaichi will soon dissolve parliament herself and call for new elections as early as February. These political changes would deal an additional blow to current Japan economic policies and U.S. investor confidence.