After a very healthy buzz from the Bank of Japan (BOJ) spicket that drove its market up has Japan running into a buzz saw. Why? Well, last night Japan’s Prime Minister Abe was unable to truly outline fresh “Abenomics”.
The Bank of Japan head office in Chuo City, Tokyo
This speech which was highly anticipated delivered nothing to the market that had rallied on a promise. If there is a country that has prove me wrong cynicism attitude attached to any new age economic movement, its Japan.
The low hanging fruit on real reform in Japan is off the vine. Now the hard part comes and it’s not clear that Abe has all the support he needs to push through more difficult reform.
Investors and economists were “vaguely hopeful” on Abe’s speech last night. Abe delivered nothing.
Last night Japan’s equities (EWJ, quote) closed at fresh lows and on the lows after falling more than 5% from the intraday high, hit early within the opening moments of the session.
How many days have we had in Japan in the last two weeks that followed this script? Volatility in this market will stay as –
1) It’s a local retail driven market
2) Global players have been fresh to rush in and there is still a heavy OW Japan call out there.
3) Abe has major incentive to keep pushing so there will be positives on the tape.
You want to talk of volatility? The NIKKEI is only +7% from the Kuroda speech on April 4 that began the flood, despite a move up of 31% before the pullback.
