Tuesday, June 11, 2013

Nikkei in 2008 Mode

The moves in the Nikkei have been as violent as the moves that you saw in all the stock indices in 2008.  5% up and down moves are happening with ease.  USDJPY is trading wildly as well.  Abe and Kuroda are both clueless, they didn't know what they were messing with when they tinkered with the natural forces of the market.  They think there is a free lunch with money printing.  Only if you have the reserve currency is there a free lunch, ala Fed.  There is no demand for the money printed in Japan, more adult diapers are sold than baby diapers.  There is zero growth, of any kind, economic, population, productivity.  Japan is a zero, investors really have run out of ideas if there best one is to invest in Japanese stocks. 

Now the wave of margin calls and derisking from the short yen, long Nikkei trade is unwinding with noteable after effects in European and U.S. equities.   A lot of weak hands, a lot of hot money is in Japan.  It is finding its way to the exit as they didn't sign up for this negative volatility when they bought into the hype. 

Expecting a brutal day today, closing at the lows, probably down to 1610. 


Anonymous said...

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Market Owl said...

Glad someone is getting something out of this. No BS, or regurgitated rhetoric here.