David R. Kotok
March 11, 2013
Japan is on a tear.
After two decades of financial repression and deflationary suffering, a new government has changed policy in a fierce way. Japan now seeks inflation. It will get it. It seeks higher asset prices. It will get them.
It seeks economic growth. It may get it if there are reforms to allow it.
The yen will head over 100 and to 115 to the dollar in the shorter term. Longer-term it may get much weaker still. The Japanese stock market is rallying, after endless malaise.
Disclosure: we are in that market, using DXJ, the Wisdom Tree currency-hedged ETF, to participate.
In the near term the Japanese central bank will be the catalyst to take the G4 central banks’ total assets above $10 trillion. The G4 currencies are the yen, dollar, pound, and euro.
The Fed and the UK will boost that $10 trillion even more, and the ECB will struggle with what to do but eventually succumb. We expect the G4 total to top $11 trillion by yearend.
Zero interest rates are bullish for asset prices. There is more ahead.
David R. Kotok, Chairman and Chief Investment Officer, Cumberland Advisors
Category: Think Tank
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
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