Kristina Hooper, Chief Global Market Strategist at Invesco, pointed out that the market is overly concerned about the US economy falling into a recession. Although the Federal Reserve's decision not to cut interest rates in July did increase the risk of an economic downturn, the employment market is still in relatively good shape. It is almost certain that the Federal Reserve will cut interest rates in September, and it is very likely that they will cut rates again in November and December. Currently, the global interest rate estimation system estimates a 75% probability of a 50 basis point rate cut in September. Hooper stated that in July, the US non-farm payrolls added 114,000 jobs, far below the expected 175,000 jobs. The job additions for the previous two months were revised down by 29,000. The unemployment rate jumped significantly from 4.1% to 4.3%. The market is concerned that the Federal Reserve is taking too long to cut rates, leading to a policy mistake. Treasury yields have significantly declined, and the market has begun to anticipate a 50 basis point rate cut in September. Due to lower-than-trend economic growth and sustained slowdown, Invesco's strategic indicators have shifted towards a defensive stance. However, the market is overly concerned about the US economy falling into a recession. Even though the Federal Reserve's decision not to cut interest rates in July did raise the risk of an economic downturn, the job market is still relatively strong. It is almost certain that the Federal Reserve will cut interest rates in September, and it is very likely that they will cut rates again in November and December. Currently, the global interest rate estimation system estimates a 75% probability of a 50 basis point rate cut in September. Invesco's fundamental scenario is that it is not too late for the Fed to start cutting rates now. If the Fed starts easing monetary policy in September, the US is likely to avoid falling into an economic recession. Economic growth in the US could potentially accelerate again towards the end of 2024 or early 2025. With strategic indicators turning conservative, Invesco will maintain a cautious stance in the short term. However, their medium-term outlook is driven by policy responses, normalization of Treasury yields curve, and resilience of the US economy. Therefore, in the long run, as in the past, the focus should be on risk assets rather than economic recession. Kristina Hooper pointed out that the recent sharp decline in the Nikkei stock index seems to be caused by several factors. The strengthening of the yen is one of them, and the Bank of Japan has signaled tightening monetary policy. With the central bank believing that there is an increasing possibility of inflation remaining at 2% in the long term, and holding a more optimistic view of future economic activity in Japan, more rate hikes could be seen within the year. There are still some closing trades or profit sales taking place. The Bank of Japan's rate hike is a key event, and many expect further yen strengthening. In some years, over half of total sales of large Japanese stocks are settled in dollars or other foreign currencies. Therefore, investors' concerns are not unfounded. It is worth noting that Japanese bank and financial stocks have dropped significantly. Normally, a Bank of Japan rate hike would benefit related industries (net interest margins would improve). Japanese bank stocks have already risen by over 40% this year (before the recent sharp drop), and many have prepared for the Bank of Japan's actions. This may also be a market concern that, if interest rates rise too quickly, their holdings of financial corporate bonds could face book losses. Kristina Hooper believes that this recent pullback in Japanese stocks is a healthy breather following a recent investment frenzy. Moreover, considering that the Japanese economy still has structural positives for the long term, the selling pressure is only temporary. Wage growth in Japan is far exceeding recent historical levels, driving domestic demand growth. In terms of the yen, considering the possibility of multiple rate cuts by the Federal Reserve before the end of 2024, the yen against the dollar may continue to appreciate. Looking ahead, the movement of the dollar against the yen may depend more on the Fed's monetary policy path, rather than the gradual actions of the Japanese decision-makers. The historical correlation between the USD/JPY exchange rate and the Nikkei stock index has been quite high. However, it is not advisable to withdraw from the Japanese stock market or take too tactical an approach towards the yen, as this may miss out on what could be structural positives for Japan in the coming years.