Nikkei has for decades been a rapidly up and down market. While Nasdaq, Dow, Footsie, move in 1% big moves, Nikkei moves in 3% big moves. I have never known why and still don't. It's not as though it's a small market. <The Nikkei 225 closed 7.32% lower at 14,483.98, which compared with a 2% gain, and its biggest one-day drop since March 2011. >
There is obviously a reason.
Traditionally, over many decades, markets move up and down 20% a year, with the trend being long term up as dilution of the measuring stick [money] makes them seem to become more valuable. Sometimes there are decade-long pauses while major economic transitions and ends of speculative irrational exuberance beat enthusiasm out of investors/speculators. We have just finished a decade of pounding. Now the Dow is near the 16,000 it should have been at in 2002 but for the irrational exuberance, subsequent pounding, US$ gerrymandering by the Fed, housing irrational exuberance, and bust, along with the financial relativity theory pounding of sub-prime speculative mania based financial institutions who depended on the greater fool theory to cover their mortgages and mortgage backed derivatives.
Life will go on with legions of newbie enthusiasts learning, working, saving, investing, hoping for a jackpot and lining up ready to climb on board the latest irrational exuberance. The older, wiser, and bust, reach the end of the line, go into old age care and take their long term memory with them to the grave.
But first, there's some quantitative easing to be dealt with and government leviathan spendthrift wastrelism to be undone with hordes of government "workers" having to get real jobs. As they seek employment in productive activities, they'll keep a lid on inflationary expectations, as do the billions of people who are coming on-stream in China, India and elsewhere, working for low pay, competing with high paid Americans. Made in China is still holding the line on expectations of pay in the wealthy world.
Mqurice |
