Warren Buffett did know this (Macro Update)

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Warren Buffett did know this (Macro Update)

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In this article you’ll find:

🎯 Japan is resurging – American Century Investments 👇

  • WORLD’S OLDEST POPULATION
  • NIKKEI IS RESURGING
  • JAPAN MAY PRESENT OPPORTUNITIES

🎯 Resilience in 2024 (First cut in May)- Invesco 👇

  • THE FED COULD START CUTTING IN MAY
  • THE FED PATIENCE
  • EASING RECESSION FEARS

Here you can find other Macro articles:

  1. Reasons why the FED may disappointing rate cuts Markets Expect
  2. How to view the US Inflation regime in 2024 (Macro Update)
  3. Clear Market Expectations trends in 2024 (Macro Update)

ENJOY THE MACRO ARTICLE

🎯 Japan is resurging – American Century Investments 👇

WORLD’S OLDEST POPULATION

Warren Buffett

  1. Japan has the world’s oldest population, with 30% of the population aged 65 or older and one in 10 people beyond 80.
  2. The country’s population peaked at 128.1 million in 2009 and has dropped by 5 million. If current trends persist, the United Nations projects that it will drop below 100 million in the second half of the century and below 75 million by 2100.

NIKKEI IS RESURGING AND WARREN BUFFETT DID THIS

Warren Buffett

  1. These challenges have hastened a decline in labor productivity that presaged Japan’s economic and financial stagnation.
  2. For years, it has ranked lower than all other Group of Seven developed economies and currently sits about 40% below U.S. productivity.
  3. Perhaps not surprisingly, the Nikkei 225 Index has yet to scale its previous peak, remaining about 20% below the record high it hit almost 34 years ago.

JAPAN MAY PRESENT OPPORTUNITIES

Warren Buffett

  1. Investors have tended to ignore Japan’s stagnant economy and inert financial markets for much of the past 30 years.
  2. But while some developed global markets battle high inflation, elevated interest rates and slowing growth teetering on recession, Japan may represent an attractive outlier.
  3. The country’s accommodative monetary policy, relatively moderate inflation and relatively cheap equity market valuations have raised eyebrows from global investors. The recent corporate government reforms – with more likely to come – should only increase their interest.
  4. As a result, once-buoyant but long-avoided Japanese financial markets finally appear to be regaining their footing. And for investors that warrants a closer look.

Warren Buffett

🎯 Resilience in 2024 (First cut in May)- Invesco 👇

THE FED COULD START CUTTING IN MAY

Warren Buffett

  1. Given the resilience of the US economy, and a softening, but still tight, labor market, the Fed will be cautious.
  2. It will likely continue to gather evidence on disinflation to raise confidence that inflation is on a sustainable path toward its price stability target.
  3. March looks early for the Fed to start its cutting cycle, but cuts could begin in May. Having said that, this is a close call, and data will likely dictate the timing.

THE FED PATIENCE

Warren Buffett

  1. The US economy is already growing around its potential, if not above, financial conditions are finally easing, and the unemployment rate is near historical lows.
  2. Firms are still hiring and clearly not firing. The Fed needs to be patient.
  3. Starting the cutting cycle in May is a good option for the Fed. This would allow it to proceed with greater confidence, mitigating the risk of “sticky” inflation.
  4. The 2024 election should not affect the Fed’s big picture decisions, but it might affect the timing of policy somewhat.

EASING RECESSION FEARS

Warren Buffett

  1. The US rates market has factored in a more aggressive Fed policy stance.
  2. Market pricing is appropriate, since, in the event of an adverse economic outcome, the FED could be compelled to implement more aggressive rate cuts than in a more favorable scenario, in which current interest rates would suffice.
  3. Financial conditions are easing, easing recession fears. And will likely soften further as the odds of a soft landing increase.
  4. That will likely limit the number of Fed rate cuts, as the market will likely do the job for it.

Warren Buffett

Join the conversation with your own take on these topics in the comments below.

About the Author

Alessandro is a Professional Financial Markets researcher and he loves to share with you the most interesting charts and comments.

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