Japan Is More Than Just A Macro Trade (by Louis Gave, GaveKal Capital) - The market's reaction shows that most investors were taken by surprise by Friday's...
Japan Is More Than Just A Macro Trade (by Louis Gave, GaveKal Capital) - The market's reaction shows that most investors were taken by surprise by Friday's announcement from the Bank of Japan. They should not have been. BoJ governor Haruhiko Kuroda has declared time and again that he watches growth numbers closely, and would act on any signs of a deterioration. Those signs were officially acknowledged on Friday when the central bank published its three-year growth forecasts, halving the outlook for this year. his evident deterioration brought the 'Kuroda Put' into play, emphasizing that the BoJ remains committed to reflating the economy. That means the yen will continue to weaken, Japan will become more competitive on a relative basis, and corporate profits will continue to rise. As time goes on, foreign investors will find it hard to stay away from a stock market rally neatly orchestrated to coincide with the rebalancing of the Government Pension Investment Fund's portfolio towards equities (with other domestic pension funds likely to follow). Read more - (VIEW LINK)
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