Nikkei Challenges Highs

[rffrydr]

Highs from last may. And short series of TOPIX highs back to 1991.

http://stockcharts.com/h-sc/ui?s=EWJ&p=W&b=5&g=0&id=p36115356184
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

The seeds of our bounce?

http://www.ft.com/cms/s/43725b36-c8b3-11db-9f7b-000b5df10621.html

Japanese interest rates

Published: March 2 2007 12:10 | Last updated: March 2 2007 19:56

Just what you don’t want after raising interest rates: a slew of poor economic data. Less than a fortnight after the Bank of Japan doubled interest rates to 0.5 per cent, it transpires that inflation, such as it was, petered out in January and workers’ wages slumped. Core consumer prices were flat year-on-year, after a 0.1 per cent rise in December.

For global investors, if not impoverished salarymen and Japan’s discomfited central bankers, the news may be welcome. Zero inflation, which is at the bottom end of the BoJ’s comfort zone, provides another indicator that future rises will be very gradual.


That may in turn help ease concerns about a further disruptive unravelling of the carry trade, much of which is funded by cheap borrowings in yen. The 25 basis point rate increase this month was initially shrugged off owing to a dovish outlook statement by the BoJ. Recent market jitters seem to have prompted a bit of a rethink. The unwinding of some carry positions probably explains currency movements over the past week: the yen rose 3 per cent against the dollar and high-yielding currencies including the New Zealand dollar lost ground on Friday.

It is not just investors who are nervous about sudden yen strength. Japan’s growth is partly reliant on exports, which thrive on a weak exchange rate. Domestic consumption remains weak: the best explanation for the ostensible revival in household consumption is that the data series is notoriously unreliable.

The better indication of spending habits comes from the drop in total earnings, including overtime. Consumers have less to spend. There are structural reasons why lower wages could persist – specifically, the retirement of highly paid baby boomers and their replacement with cheaper youngsters. That explains why Japan can have a tight labour market yet workers earn less. It also means the blockage between wages and consumer spending – presaging inflation – is unlikely to break any time soon.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Which identified the top conveniently enough: yet is first on my "buylist."

Long article with charts, covering carry and long-term charts:

http://financialsense.com/Market/wrapup.htm
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Today is the Tomorrow you worried about Yesterday!