Minsky Moment (Asset Collapse) and the Chinese Economy [Kou Mori / Akira Mori]

※This article is a reprint and republication of an article from FX攻略.com January 2018 issue. Please note that the market information written in the body is different from the current market.

Powell Selected as Next Fed Chair

After the IMF annual meetings, the United States has fully entered autumn with Halloween orange decorations, and enjoyable events like Thanksgiving and Christmas lie ahead. The author is more curious about how personal consumption will trend toward these events than about enjoying them. This year, Amazon’s profits from online shopping are expected to be strong, but we also hope that profits at physical stores will grow. This is a personal opinion, but when buying a product you have never purchased before, you tend not to feel inclined to buy unless you actually hold the product. I wonder if this is generational. Dear readers, what do you think?

Now, the term of Janet Yellen as Chair of the U.S. Federal Reserve Board (FRB) ends on February 3, 2018. The next chair candidates were narrowed down to two: FRB Governor Powell and Professor Taylor (Stanford University), and Powell was chosen as the FRB Governor. Recently, past FRB chairs (Greenspan, Bernanke, Yellen) have held doctorates in economics and have become FRB chairs after serving as chairs of the National Economic Council. On the other hand, Powell is a lawyer and has insights in financial innovation. The stance of economic policy centers not on labor economics like Chair Yellen, but on economic growth (capital formation and Total Factor Productivity).

One memory that comes to mind from the speeches of past chairmen is former FRB Chair Greenspan’s lecture in 1996. Greenspan described the stock market as a “irrational exuberance.” This famous phrase is said to have occurred to him while he was bathing. It took three years from that lecture for the IT bubble to actually burst, which proves the farsightedness of the economy among historical FRB chairs.