リーマンショック再来!? 止まらない株価下落の要因を考えてみた！
Yesterday, following last week's risk-off trend,stock prices plunged sharply. Moreover,risk-off intensified on President Trump's remarks, leading to a record decline. The drop is on the scale of the Lehman shock. Since Japan was closed, only futures were traded, but they fell well below 20,000 to the 19,300s. Today’s Tokyo market is expected to be extremely volatile. The USD/JPY has also fallen to the low 110s.
◎ Current key risk-off factors
1)Resignations of Trump administration aides one after another
Trump admin departurespic.twitter.com/Yyk7bq13WK
— zerohedge (@zerohedge)December 24, 2018
It's a tweet from zerohedge listing those who had resigned so far. What’s drawing attention now is Defense Secretary Mattis. In the Trump administration he was seen as a "voice of reason" who provided stability to Trump, but now the successor is being watched closely.
Additionally, there are reports that ousting Fed Chair Powell is being considered. While there are denials, President Trump continues to criticize the Fed and Chair Powell on Twitter.
In this way, personnel issues remain a constant risk factor.
2)Independence of the Federal Reserve
As noted above, criticisms of the Fed and Chair Powell continue.
However, this conduct is eroding trust in the Fed’s independence. The Turkish lira shock was caused by concerns over independence.
Although the President cannot directly remove the Fed chair, if Powell were to resign, the market would likely be in turmoil.
3)Financial Market Working Group
They held a “stock market defense team” meeting, a first since the 2009 financial crisis. Moreover, after the working group, Secretary Mnuchin held phone discussions with the six major U.S. banks to check market liquidity.
Based on the Lehman shock experience, they acted promptly, but the market’s response was more about anxiety than reassurance.
Mnuchin aimed to reassure the market by showing proper coordination, but the market interpreted it as indicating the need to convene the crisis-era Working Group again, amplifying anxiety.
4)Partial government shutdown
With the temporary budget rejected on the 22nd, some government agencies were shut down. President Trump did not sign the budget bill citing the absence of $5 billion for the border wall with Mexico. If this continues, the partial government shutdown could extend into the new year.
5) Shrinking balance sheet
About the shrinking of the balance sheet
Regarding the balance sheet, please refer to the above. It is shrinking.
Until now, with large-scale accommodative policy, there was plenty of money in the market. That excess money was circulating into stocks and other investments, but the shrinking balance sheet is reducing that excess money, which seems to be another factor pushing down stock prices.
At the latest FOMC, Chair Powell said the balance sheet reduction would proceed steadily. Going forward, liquidity from the accommodative money in the market is expected to lessen.
6)Rise of the VIX index
The VIX, often called the fear index or volatility index, rises when market anxiety (risk-off) increases. The baseline is 20. The VIX has continued to rise, reaching 37 yesterday, signaling substantial anxiety in the market.
With this many risk factors, it seems hard for stock prices to turn up. While compiling this article, a news bulletin reported that the Nikkei fell below 20,000. There are also rumors of Mnuchin's dismissal.
The current 12-week decline is on par with the Lehman Shock period.
It feels like there are no clear catalysts for a stock price rebound as we head toward year-end. I will be watching reactions after the Christmas holidays.
