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Historic US-Japan Wage ‘Crossover’ Tips More Market Turbulence, Albert Edwards Says
If you had to make the case against investor complacency and you could only use one chart, what would that chart illustrate?
Candidates run the gamut from the simplistic (e.g., a line chart of the S&P's forward multiple) to the over-complicated to the wholly esoteric.
But if you ask SocGen's Albert Edwards, the figure below -- which shows the Fed's favorite measure of worker compensation plotted with underlying Japanese wage growth -- really stands out.
Recall that the ECI series was a
If the yen carry trade stays away, that is a one-time and permanent decrease in global investment capital. The price adjustment to which has, perhaps, mostly been done.
However, I don’t see why the yen carry trade should completely stay away. The spread between funding costs in JPY and USD (or MXP etc) is still significant. Perhaps the funds will be directed toward lower risk investments.