Amazing resemblance? After the "Plaza Accord", the "dollar fell, stock market boomed", then the new Fed chairman took office, followed by "Black Monday".

The devaluation of the US dollar, the new high of the US stock market, the change of the Federal Reserve Chairman... The history from forty years ago is repeating itself, will "Black Monday" make a comeback? Since the beginning of this year, with Trump's return to the White House, the US dollar exchange rate has continued to weaken, with the US dollar index falling by nearly 10%, and the US dollar against major currencies reaching a near three-year low. At the same time, driven by expectations of easing and easing trade tensions, the S&P and Nasdaq have repeatedly hit historical highs. Historically, after the signing of the Plaza Accord in 1985, the US market also experienced a similar process of "dollar depreciation and soaring US stocks". According to Wind Trading's latest report, Nomura Securities' chief economist Richard Koo pointed out in a recent research report that the Plaza Accord in 1985 opened a period of sharp depreciation of the US dollar and soaring US stock market, which is "very similar" to the current prosperity of the US stock market. The report shows that in the 17 months after the signing of the Plaza Accord, the US dollar depreciated by 36.5% against the Japanese yen, and by 30.8% to 36.6% against major European currencies such as the German mark, the French franc, and the Italian lira. Despite significant adjustments in various countries' real economies, US stock prices, like today, continued to surge to historical highs. This seemingly contradictory prosperity was largely due to the market's judgment that inflation was not out of control at that time, especially with the outstanding anti-inflation reputation of the then Federal Reserve Chairman Paul Volcker, which provided confidence to the market. However, this optimism quickly collapsed two years later with the change in the leadership of the Federal Reserve and hesitancy in policy response, ultimately ending with the stock market crash on "Black Monday" in October 1987. Now, with the Federal Reserve Chairman facing a "transition" and the outlook for policy interest rates becoming complex, will the US stock market once again follow the "old path" of forty years ago? The prosperity after the Plaza Accord: Dollar depreciation and stock market frenzy The core of the Plaza Accord was to orderly devalue the US dollar to correct trade imbalances, but no one could predict the depth of the dollar's decline. Faced with great uncertainty, exporte...