Again taking a step back from the human tragedy that is Japan right now and analyzing the market response (however difficult and insensitive that seems to be but what we do for a living), the continued instability in their nuclear reactors remains the main factor impacting market action and psychology. Any hint of stabilization in the reactors will result in a sharp snap back. When that happens hopefully quickly, combined with likely massive money printing, the yen and JGB’s will fall and Japanese stocks will rise. The BoJ continued to inject money into the Japanese financial network, particularly by buying etf’s and reit’s today. The Fed today will certainly reiterate that the $600b asset purchase program will continue as is. I’m most interested to see what their commentary will be on inflation. With the ECB and BoE stepping closer to a rate hike, we’ll see if they back off from that possibility in response to the events in Japan.
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