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NIKKEI 225 down almost 8% today


Dan_Murphy

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Hey folks.

The NIKKEI 225 is the Japanese Stock market, and it has seen massive gains in comparison to the Dow or the NASDAQ in recent months.



However, in the past few hours the exchange has lost 7% of its opening value.

I won't pretend to know much about the Japanese but I do know they have recently announceD a massive QE program, pumping about 70 billion a month into the economy in an attempt to stop deflation. Could we see the QE they have announced be consumed by an attempt to prop up the stock market, are we watching a bubble burst in the market, is it mere a small correction, and how does this affect the rest of the world? If Japan is blaming the weakening output of Chinese factories, then wouldn't it stand to reason that we would see the same thing happen in the US and Europe?

I would be most interested to hear from those of you in the know about markets and such things.

Also, does anyone know where I can get some Squirrels fast? :oops:
 
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Howya

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There has been such a run up in the Nikkei that any bit of bad news was bound to lead to a dip. High frequency trading and black box algorithms are also likely to have had an impact on the significant selling.
 

Ribeye

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Japan is totally fckd,

Google Kyle Bass, he'll explain it to ye,

 

Dan_Murphy

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There has been such a run up in the Nikkei that any bit of bad news was bound to lead to a dip. High frequency trading and black box algorithms are also likely to have had an impact on the significant selling.
No doubt.

I'm inclined to think its going to be rough day for Japanese traders tomorrow, probably see more falls. Apparently the circuit breakers were hit and trading stopped temporarily today, we might see the same thing again?

Even with the drop today, its see a 72% gain since this time last year.

NKY Quote - Nikkei 225 Index - Bloomberg
 

Dan_Murphy

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That's the anticipated effect of braindead QE.
Japans announcement of QE was only in recent weeks though. Unless its money from the US and EU pumping into Japan I don't think thats caused it.

Wouldn't the money recently announced cause the index to rise if anything?
 

YouKnowWhatIMeanLike

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Japans announcement of QE was only in recent weeks though. Unless its money from the US and EU pumping into Japan I don't think thats caused it.

Wouldn't the money recently announced cause the index to rise if anything?
not if the market looks beyond the initial effect. market players pull cash to convert it into other financial instruments such as inflation adjusted indexed-bonds
 

Absurdo

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Process Loop:

Banks lose lots of money - seek bailouts.

Central Banks indebt their citizens - give money to banks

Banks invest bailouts in stock market instead of resolving debts. Markets rise.

Bankers trouser commissions - sales of Porches rise

Bankers overdo it and lose lots of money - seek bailouts

Repeat.

Classic rinse.
 

Carlos Danger

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Wasn't there a thread here about a week ago on about how wonderfully Abe-nomics was working?
 

LamportsEdge

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The only thing I've seen which would indicate a 'Japan' effect on western markets is of course the Abenomics QE programme which does seem to have caught a number of hedgefunds in the west on the hop.

The hedgefunds had become used to 'anchoring' their positions on the markets with the Japanese yen.

I know of one hedgefund which had its last quarter profit wiped out because of movements in the previously moribund yen. The equivalent of a football bet where the 'banker' selection is the one that goes wrong...

This would affect the western markets as hedgefunds tend to switch positions into European safe equities when their symmetric positions start to bounce around and they need liquidity.

We saw in 2008 the stock markets in the west roaring ahead inexplicably when a number of hedgefunds saw their algorhythm trading strategies turning to crap when one or more large hedge operations were selling out and taking positions in European 'safe' equities.

It's like watching badgers in a bag. The trick is trying to guess which end of the bag has teeth.
 

Pat Gill

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Not surprisingly the problem in Japan became fashionable in Europe and the US today.

European and US markets are down in sympathy.

European stock markets slide after Nikkei plunges 7% - live | Business | guardian.co.uk

I think the grand plan to save the global financial system just moved into phase 2, the inflation phase, when the printing will slow and at the same time begin to trickle into the real economy.

Of course often times the best laid plans fail to take human emotions into consideration and money men are more emotional than most. Fear is often the primary emotion.
 

stopdoingstuff

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There were suggestions in yesterdays Fed minutes that QE might be coming to an end. Given that the markets are no longer a reflection of anything other than how much money is being printed, this is likely to have had an effect. And with the Japs deciding to take a big poo all over their own currency (because apparently selling stuff for a cheaper price and buying stuff for a higher price makes you wealthy), there is a lot of money exiting Japanese Yen assets. There has accordingly been a sell off in stocks and a spike in their bond yields.
 
D

Dylan2010

There were suggestions in yesterdays Fed minutes that QE might be coming to an end. Given that the markets are no longer a reflection of anything other than how much money is being printed, this is likely to have had an effect. And with the Japs deciding to take a big poo all over their own currency (because apparently selling stuff for a cheaper price and buying stuff for a higher price makes you wealthy), there is a lot of money exiting Japanese Yen assets. There has accordingly been a sell off in stocks and a spike in their bond yields.
imagine Japanese yields rising , who'd have thunk it :p there is so much debt sloshing around the Japanese economy every qtr pt. would create a significant interest cost
 

Dan_Murphy

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There were suggestions in yesterdays Fed minutes that QE might be coming to an end. Given that the markets are no longer a reflection of anything other than how much money is being printed, this is likely to have had an effect. And with the Japs deciding to take a big poo all over their own currency (because apparently selling stuff for a cheaper price and buying stuff for a higher price makes you wealthy), there is a lot of money exiting Japanese Yen assets. There has accordingly been a sell off in stocks and a spike in their bond yields.
Where is the money going though? Surely the EU and US would have the same problem?
 

stopdoingstuff

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Where is the money going though? Surely the EU and US would have the same problem?
The Jap's debt problems are significantly worse. The pool of available savings that used to be able to buy up all sorts of debt is shrinking, pension funds are getting to the point whey they will soon be net sellers of assets and not by choice, and the trade surplus has pretty much vanished. Europe and the USA will face those problems later so it will be interesting to watch Japan and see how it plays out. I have no idea where the money will go and we have to be careful to separate the short term move from the long-term problem. I assume some wiil go back to the dollar snd some to metals, but these things play out unevenly.
 

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