Today, we look at the Japanese markets and their big monetary policy gamble that has yet to pay off.
Interest rates went to zero, then negative. How far will policy makers go to create growth? We will likely find out soon if Japanese markets continue to lag and/or inter market relationships continue to move against Japanese policy makers. So far, this has been a failed Keynesian experiment. But it may not be over yet…
Here’s a recap of events:
- The BOJ cut interest rates in half, then did it again, and eventually took them negative in early 2016.
- The BOJ took the Japanese Yen (CURRENCY:JPY) down 20%, did it again, but on last interest rate plunge the Yen bounced 20%.
- Meanwhile the Nikkei 225 Index (INDEXNIKKEI:NI225) doubled, tacked on another 50%, then dropped 25% on Yen bounce.
The Great Keynesian Fail of 2016 – rates to zero then negative – punished the economy and markets (Yen strength).
They are at a Keynesian Event Horizon of sorts. What’s next? Helicopter Money (i.e., monetary financing)? We shall see…
Recently, I have partnered with Arun Chopra, an experienced investor/analyst and good friend who holds a CFA and CMT. Together, we have been blending longer-term fundamental indicators with technical indicators to do historical studies. The content above was also shared on our newly created non-public site. Note that we will be launching a premium service soon – details to follow.
Thanks for reading.
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The author does not have a position in mentioned securities by the time of publication.  Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
