Scott,
Concerning Japan, that is the same read that I have. Just to make it clear to myself:
1) With Yen appreciating, the Japanese investments in the US will lose value.
2) Therefore, investments in the U.S. BONDS and STOCKS will not be as attractive.
3) With the tax cut and the YEN appreciating, that should reduce some of the worries of investing in JAPAN. Its not the total solution but at least a beginning, so the flight-to-safety environment should be decreasing over there and confidence in the Japanese market should start increasing.
3) Since the US MARKET is at high levels, such should intensify withdrawal of JAPANESE moneys, since the risk of a pullback here is increasing, at least in the stock market - not sure about the bond market.
Now Patrick had indicated that also, but he first stated that there would be an inflow first into our market, then the selloff. What is not clear to me is why would there be a rush into our STOCK and BOND markets first before the exodus.
I just took a look at 2 JAPAN indexes, the JPN and EWJ and both indicate that it is in the overbought region per my short-term technicals and it should top out within days or start to pullback. This is based on data prior to Japan's confirmation of the tax cut. If it can extend this current rally and at least match the previous peak then it would be the first technical sign that it is breaking out of its current downward trend, which has been setting lower lows and lower highs since early FEB.
Now that I think Iam getting a better understanding, soneone is going to throw something else into this hodge-podge, and I will get confused all over again.
Seeya |
