By Graham Summers, MBA
Japan just reported inflation of 3.5%.
This is a big deal.
First and foremost, it’s significantly higher than expectations: 3.5% vs 3.2%.
Secondly, it shows that inflation is turning back upwards in Japan. Last month’s inflation data was 3.2% which was down from the prior month’s 3.3% which was down from the prior month’s 4.3%.
Put simply, after trending down for three months, inflation is turning back upwards in Japan.
And finally… Japan remains the last central bank that is still easing monetary conditions.
The Fed is aggressively tightening monetary conditions. So is the European Central Bank as well as the Bank of England. Only the Bank of Japan remains engaged in Quantitative Easing.
With inflation coming in hot in Japan, the Bank of Japan will soon be forced to end its money printing. Which means the financial system would lose its last and final source of excess liquidity.
Put another way, the great monetary easing from 2020-2023 would completely over. Every major central bank would be tightening. Liquidity would be exiting the system at an even more rapid clip.
What do you think this would do to stocks?
My proprietary crash trigger knows. It just triggered its 3rd confirmed “SELL” signal in 25 years.
The last two time sit signaled?
2000 and 2008.
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