Dow futures are off by 45, as the yen breaks 108 to the dollar. The NIKKEI is plunging lower by 1.4%, diverging from the corrupted Shanghai–which is higher by 1.67% on inflation data.
Heading into the trading week, all eyes will be on the Yen, even more than oil. You have to understand, upwards of 30% of all sovereign bond yields are negative. The consensus has been, hitherto, that negative yields would produce a weaker currency and more inflation. Being on the front lines of this experiment in central bank overplanning, the Bank of Japan officials are having an increasingly arduous time explaning the 11% gain in the Yen v the dollar for 2016.
Should this experiment fail, through the explicit and pervasive strenghtening of the Yen, I suspect a similar trade will appear in Europe, at which point world equity markets would be hamstrung by debilitating losses.
My bias is abundantly clear. This will not work. Ergo, being long treasuries, aka ‘The Ark’, will produce the safest and most effective measure of returns for the forseeable future.
NOTE: SPY futs are off by 2.5–panic and blood are flowing through the streets.
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