40 Years Of Dueling Devaluers

Tyler Durden's picture

Japan's Nikkei 225 equity index is now within one day's new normal range of nominally crossing above the US Dow Jones Industrial Average for the first time since April 2010. The convergence of the two indices coincides with the rapid convergence of the two countries' trade-weighted  currencies that dislocated last in March 2009 (suggesting that indeed Abe has achieved his initial goal of devaluing back to the USD). The move off the November lows in the Japanese equity market is stupendous - as the chart below shows, it is a perfect exponential arc (linear on a log scale chart); leaving only the question (as we noted here) - which index hits 40,000 first as they continue to devalue themselves to economic nirvana (or valhalla).

Equity indices converging...

 

Trade-Weighted FX converging...

 

as the Nikkei 225 move off the November lows is a perfect linear trend (98% R^2) on a log-scale chart...

 

Sustainable? If you were wondering, at this rate of 'growth' the Nikkei will be at 40,000 in May 2014 (just one moar year)...

 

All this was discussed in great detail by Dylan Grice here

Meanwhile, JGB implied vol has collapsed overnight - another mission accomplished...

 

Charts: Bloomberg