Wednesday, June 12, 2013

Yen Has Biggest JUmp in Three Years - Dow Drops on BOJ Disappointment - Big Day Coming for The Nikkei and Japan


As famous baseball player Yogi Berra was once quoted as saying, "It's tough to make predictions, especially about the future." So we all know that only fools make predictions.... So, I'm a fool.

I'm guessing that today will be a big day in the Nikkei 225 and a big day for JGBs and the entire Japanese economy. Why? Well, something will happen today!

Chuckle.

Please refer to my post of yesterday entitled: Japan's Pachinko-nomics - The Two "S-Moves" - Abenomics Roller-Coaster

...Further down in the same article, it does point out the 800-pound gorilla in the room: 

"Highlighting the volatility, the Nikkei has had 10 sessions where intraday swings exceeded 2.5 percent since May 23, compared with 16 such trading days for the year up to May 22 and four such days in the whole of 2012. The U.S. S&P 500 only has had one such trading day in 2013, and the Euro STOXX 50 index has 11."


Gorilla? Yes. Read that first sentence again with my notes:


"Highlighting the volatility, the Nikkei has had 10 sessions where intraday swings exceeded 2.5 percent since May 23 (folks, that's 10 out of a total of 12 trading days!) compared with 16 such trading days for the year up to May 22 and four such days in the whole of 2012."


Day before yesterday, the Nikkei had another massive swing and yesterday it was weak and hanging on until a huge drop off a cliff in the last 30 minutes.



Today, I predict that what will happen will not be so unusual (when one is considering the Nikkei has had 500 points swings (or just about) for 11 of the last 13 days). But I'm predicting a big movement today of 500 points again. 

Why? Look at today's Yen dollar exchange rate (courtesy of Bloomberg):


 Uh, folks, it was over ¥98 yen to the dollar about 12 hours ago. a 2.74% drop is massive! See: JPY Surges the most in over three years...

Let's look at the Dow over night:



Why does another 500 point swing in the Nikkei matter today?

Well, because last week, the word in the Lame Stream Media was that faith had been lost in Pachinko-nomics, er, I mean Abenomics. Then, after Monday's +600 point jump, the same media was claiming faith was restored. Even though, that same day, Japan's trade balance plunged to near-record deficit levels... No problem, right?

No, I predict that after yesterday's 150 point drop in the last 30 minutes; a nearly 3% increase in the yen overnight; coupled with a poor showing in New York (that's is being blamed on the Bank of Japan), that we are headed for another wild day in Japan...

Let me say that if that wild swing is to the upside (which, hell, it could be, like I said this is like pachinko) then I will be VERY surprised.

I'm looking for a very rough day on the Nikkei today... Like another massive bashing to be exact.

For you faithful bulls, be warmed that I am always wrong, right? And, as my wife would abscond me, "If you were so smart, then why ain't you rich?"

I plead the 5th!

I told people to get out of Japanese equities while they had the chance on Monday. Monday would have been great!   

I should have been in the popcorn selling business. This is going to be a good show! 

I don't think this is rocket science.... Folks, get your popcorn ready! If you took my advice and got out of Japan equities then it's going to be a great show... If you didn't, then not so much....)

(Thanks to my friend Dingbat and Martin King for the inspiration!)

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