FED chairman Jerome Powell made his statements. The market was waiting with excitement and anxiety. However, I wasn't too worried. I was expecting a dovish speech, that is, not too hawkish. There was such a conversation. Let's talk about the hawkish side of the conversation first. "Our 2% inflation target continues," he said. This is already hawkish in itself. Because as far as I understand, we will witness an extremely bloody struggle between 3% and 2%. He talked about it and when we look at the economic history of America, 2% is not very average inflation. There are many periods when they go above and beyond this. There is a difficult struggle in this context. Secondly, we believe that inflation will continue to decline. Inflation will decline again, especially from the second half of the year. But our confidence in this regard has decreased a little, he said. Here again, the hawkish inflation data, especially in the first quarter, of course frightened the central bank a bit. This is the hawk part again. "In this context, we will use all the tools at our disposal to fight inflation," he said. Again, this is a hawkish statement.

But after that it was always pigeonholed. One of the first things he said, and the most important one, was that an interest rate increase is not on our agenda. Of course, we know from the past how quickly this agenda can change. But at least that's what he said for now. He said, "Interest rate increase is not on our agenda and there may be three paths ahead of us." This is very important, first of all, if the economy continues as vigorously as it is today and inflation does not fall, we will keep the interest rates at this level, because it is restrictive enough. Secondly, if the economy slows down and inflation goes backwards, we can reduce interest rates. Thirdly, if there is a serious deterioration in employment, and we have started to see the first signs of deterioration, he said, we can reduce the interest rates again. In other words, we will either keep it constant or reduce it, and there seem to be two different scenarios regarding interest rate reduction.

Markets loved this, another important issue is salary increases, you know. I'm a little worried about that. They asked: "How do you think this will affect inflation?" He said, "I'm not worried about that." Because salaries actually increased in 2023, but it did not negatively affect inflation. We want citizens to earn good money. As the central bank, we are responsible for both employment and inflation. He said high employment and good wages are not a problem for us as long as they do not lead to inflation. Another important statement he made was about the stagflation nonsense. He said there is neither stag nor inflation. In other words, there is no recession, the economy is still growing, and there is no inflation. He said there would be no stagflation with 3% inflation. This is something close to my explanation.

Of course, today's data is like this. So we cannot guarantee that it will not break down in the coming period. In fact, certain signs that this balance will be disrupted have begun to appear. I think the central bank is taking this interest rate thing too long. He said there is no stagflation at the moment. Of course, these were received positively by the markets. Also, yesterday, the American Central Bank made a statement that it would loosen its monetary tightening program more than expected. So, roughly, the situation is as follows: Let's say the American Central Bank withdraws and burns 60 billion dollars of money from the markets every month. He's trying to get the money back from this covid. We thought it would reduce this to 30 billion dollars, but they made a statement saying we are reducing it to 25. This is a more dovish statement than expected. Because they reduce the liquidity constraint in the market considerably.

In assets like Bitcoin, for example, liquidity is very, very important. In that respect, it is also positive news for crypto assets, and as you know, the American Government can bring liquidity to the market through the back door with its own expenditures and the support it provides to banks, especially the American Federal Reserve. So actually nothing much has changed. It seems that the liquidity abundance will continue and the FED confirmed this yesterday. In addition, the American treasury started a program to buy back government bonds. They haven't done it for many years. This is probably due to China first. China has not been buying American government bonds for a while now, either for geopolitical reasons or for its own economic reasons. Let that be a topic for another discussion. There is also a problem in Japan. The Japanese economy is experiencing its own troubles right now. In this context, the demand for bonds decreases. This raises interest rates. The increase in interest rates also worsens all economic conditions. Of course, Biden, who is running for election, does not want this. That's why the treasury said we are buying our own bonds again. How this will be financed is a separate issue. Tax revenues were high this April and the treasury has some excess money. I was wondering where they would spend it, they are spending it here. This seems like it will last America for at least a while until the election. In this way, the pressure on bond interest rates is somewhat reduced.

So, the markets' reaction to all this was as follows. First, the stocks turned green and we went up quite a bit. The S&P 500 was up about 1% at one point in the day. But after Powell's speech ended, a sharp decline began. Frankly, I was a little bit confused. Powell spoke as I said. He even spoke more dovish than I expected, but the stocks closed the day on a negative note. I don't know what the reason is. At that time, there was some news that the Russia - Ukraine war was accelerating. I attributed it to him in the first place because Odessa was bombed. But then I looked and there seems to be no such connection. There are probably some profit takers or some fund managers wanted to evaluate Powell's speeches a little more.

There is such a thing as a one-day option in America. They even call it zero day option, maybe there were excessive long positions and they were closed. It's hard for me to know, but the closing was negative. However, as far as I can see today, the markets look quite green in the early market and pre-market. They seem to compensate for yesterday's losses. This makes sense, because when we look at Powell's speech, there is nothing that will turn the markets extra red. He already said the things we expected from the hawkish side. He didn't have any extra hawkishness, but he also added a few rather dovish statements. I predict the markets will go a little higher from here. But all this does not mean that there are no problems in America.

Frankly, I was super optimistic in 2023. I'm coming this far in 2024 as a bit more cautiously optimistic, and some new data is bothering me. There is a decline in the turnover of retailers that appeal to middle and lower income groups, such as McDonald's and Starbucks, in America, and the CEOs of both companies say that there is a decrease in the number of visiting customers. He also says that there is a decrease in earnings per plug, which should increase in an inflationary environment. So in America, it seems like citizens in the lower income segments are in real trouble. On the other hand, the rich are broke, interest rates are high, and they earn money without risk. The economy keeps them afloat, but it looks like a problem has begun here. Yesterday's Jolt data was also an indication of this.

Jolt means open positions in America, there is a serious decrease there. At one point, there were more than two open positions for every job seeker. Now it has dropped to 1.30 and is declining. In America, the historical average is around 1.25. We see signs of deterioration there too, and anecdotally, I see from both my friends and social media that it is becoming harder to find a job in America. There are currently layoffs in many companies, and as far as I can see, this will now be reflected in non-tech companies as well. For example, I expect layoffs in the automotive industry. Tesla hit the road a little early. I think others will come to that job too. There are sales declines in more traditional companies such as UPS, Starbucks and McDonald's compared to last year. These are always bad signs, but I guess they will manage until the election.

That's why I'm still bullish on these policy relaxations that I've described, and my end-of-year S&P 500 target of 6200 continues. But let me tell you, just like Jerome Powell, I have a little bit of a loss of confidence. Because the news coming from here is not good and believe me, reading the balance sheet reports of companies helps a lot in this regard. You should definitely do it too. What the CEOs say there is decisive. Also, I think it's a bit frightening, the news was that both Amazon and Meta had slightly reduced their future revenue expectations. I mean, that's remarkable, especially for Amazon, as there seem to be signs of a slowdown in the economy. In other words, the effects of high interest rates seem to come and hit slowly.

On the other hand, the effect of high inflation reduces and eats up money, especially in lower income groups. They seem to be running out of money to spend. So I'm not super comfortable right now. But it still seems like we will be hanging on until the election, especially with these economic games. Then we'll see what's going on and follow up together. Apple's earnings report comes out today, half an hour before American stock markets close. A very important balance sheet. Not as much as before. In the past, Apple would be decisive. Now the main thing is Nvidia. It's coming next week, and yesterday Nvidia went way back. Actually, I think it's for a stupid reason. AMD's poor results pulled Nvidia backwards. However, this actually means that Nvidia beat AMD. But such things happen in the markets. But despite everything, Apple's balance sheet is still an important balance sheet.

Apple's balance sheet will especially show us the breakdown in consumer power. We know that Apple will be hit on the Chinese side. They have lost a lot of power there now. But what is he doing in America, Europe and other countries? How things are going at Apple is very important. I am an Apple investor. I am an investor of the day when Apple will announce good things on the artificial intelligence side. But I am not this quarter's investor. We will see what kind of balance sheet this quarter will bring. It's not a balance sheet that I'm super hopeful about. Despite not-so-good balance sheets, stocks can rise.

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