Dow Drops To One-Month Lows

Stock futures have been fading since China's PMI missed expectations but this weakness, we suspect, is more about the BoJ's somewhat less dovish comments last night - "as long as steady progress is being made toward the 2% target, we do not see a need for additional monetary accommodation." All US indices are tumbling this morning with the Dow now at its lowest level in over a month.



While there is slowing China growth, a credit event on the horizon, and a clear liquidity crisis; we suspect the BoJ's comments last night are more crucual given the near 1.00 correlation between US equities and JPY crosses...

As we noted yesterday,

"Needless to say, a delay in QE would crush Abenomics, as it would mean a surge in the Yen, a plunge in the Nikkei - really his only accomplishments so far - even as wages never rose, pushing the economy back in the deflationary limbo from whence it came as everyone rushes to sell financial assets. "

Of course, the Nikkei is getting crushed...down over 400 points from yesterday's highs



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