Japan's Hope-Based Rally, And Election-Triggered Reality

Tyler Durden's picture

The strength of the Japanese stock market over the past few weeks has been at once heralded as anticipation of Abe's policies and the renaissance of this island nation's faltering reality. However, as Bloomberg's chart of the day points out, this performance trend (just as we saw in sentiment and market performance in the US) is absolutely normal heading into an election. As the chart below shows, the election day (on average) has marked a significant short-term top in the market 12 of the last 13 previous cycles. So while Jeff Gundlach is short JPY and long NKY, we suspect there will be a better entry point for the latter 'lomg' leg just a few days after the election landslide. As Daiwa's Soichiro Monji noted "Investors buy on promises and ideals up until the election. When the parliament starts a normal session, they will start trading on reality."



Charts: Bloomberg

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JackT's picture


IridiumRebel's picture

Nice to see our chart about 4-20 years ahead of the inevitable.


Catflappo's picture

And probably nice to see the Japanese charts about 6-9 months ahead of when they'll surely do it all again....

suteibu's picture

Japan has been running on "hope" for decades.  And, with the average government lasting about 1 year during that period (Koizumi being the outlier), this hope manifests on a regular enough basis to keep the nation treading water.  On the other hand, there's plenty of data available to make those charts extremely reliable.

ball-and-chain's picture

Japan is abosolutely screwed.

America is screwed, too.  We're the new Japan.

But Japanese food is delicious. 

And the women are somewhat attractive.

Such is life.



Angus McHugepenis's picture

WARNING: If your Japanese erection cycle lasts long than 4 hours, consult your doctor and broker.

Tommy Gunner's picture

Go to Tokyo - go to Roponggi - go to Gas Panic - you can shag sexy 188-20 yr olds who flock to that bar for one reason only - they want to fuck westerners.