Jodi, I think the question should be broader, why is the Japanese Market tanking? If now that answer, we'll be able to better guess tomorrow and the next few weeks (and the disapearance in no time of my dear year end rally <VBG>).
I think the Nikkei is slumping because the LDP does not read english very well, particulatly the words of one turnip truck driver. The market had a chance to examine the tepid, hesitant, drip by drip, "rescue" package, and decided that the Japanese government might have as well kept the money in lieu of wasting 2 trillion Yen or so. This money is not sufficient to breathe life in the Japanese economy. Without a vibrantt Japanese economy, the already existing overcapacity in the rim, will have no place to go. The whole idea was to get the Japanese consumer to shoulder the solution to the rims problem (by spending more, and this money should have come from real tax cuts, not drips over multiyear and funny real estate transactions amelioration, which will do nothing but redirect resources where they should not be spent).
Thus, the problems in the rim are going to linger with us a little longer, and the danger of a real banking catastrophe in Japan (once the Nikkei goes down another 1000 points) are becoming more real.
I can see the yen going all the way to 140 yen/dollar, despite increasing sales of dollars by the Japanese. This will start will further complicate the life of our "internationals" at home (even my darling MRK will suffer, but who cares, I already wrote a deep in the money), and my scenarion of 6200 by the end of February early March, might even be advanced by few weeks (the whole thing got compressed, the rally started two days ahead of schedule and istead of two weaks, we got two days, I shopuld fire my tea leaves).
As for tomorrow, what a nice excuse for a violently volatile day, a combination of falling international markets and tripple witching.
We might get a sharp down day like 150 or more down, and if Japan goes toward 14,000 over Sunday night, we might even have a repeat of late Octrober. We have not had such double whamos within two months of each other for quite sometime, so this might be the time. Gee, cash surely feels good right now.
Zeev |
