The Quiet Bull Market You’re Not Paying Enough Attention To

Via Kevin Muir of “The Macro Tourist” fame Although US stock markets are getting all the attention, Japan is quietly knocking up against 20-year highs. In 1995, Nick Leeson bankrupted United Kingdom’s oldest merchant bank with his Nikkei futures trading, but at least he has kept his sense of humour about it. I doubt Barings Bank shareholders find it quite so funny, yet it did give us a thrilling trader-turned-OJ chase through southeast Asia, and a not-half-bad-Ewan-McGregor movie. And here we are, some two decades later, and Nick is finally almost even on his trade. Kidding aside, Japan has been a decent little long trade over the past couple of months. Even though we were trading at these levels in 2015, that was when the Yen was 125, as opposed to the much stronger current quote of 112. This divergence between the Yen and the Nikkei is the story that is going most unnoticed. Since the start of Abeconomics, the Nikkei has been tied to the hip of the Yen. The BoJ floods the system with Yen, this causes the value of the Yen to go down, and Japanese stocks get a bid. Well, you could argue the BoJ is still flooding their financial system with liquidity, but the Yen i