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Misjudging The Cycle - The Bank Of Japan, Exxon And General Electric

Summary

The Bank of Japan stunned the markets today.

General Electric stunned investors last year.

Exxon has stunned income investors for several decades.

What is next for them?

Investors are divided today between those calling for a 'helicopter drop' by the Fed and those arguing that the Bank of Japan possibly doesn't have a clue about what it is doing. In all this, US Treasuries, commodities, and volatility have sent mixed signals in recent days.

In a private chat with one of my readers a couple of days ago, I said: "VIX up 10%, 10yr Trs up, gold up, dollar relatively strong, stocks down -- it's coming."

He replied: "These are scary days, Ale. I have about 30% in cash right now. I hope to buy when there is blood in the streets. I just hope it's not my blood..."

I have more cash than that on my books. So I was pleased to see that the Nikkei 225 dropped 3.6% today, while future markets in the US point to a 125 points drop (-0.7%) in the DJIA Index when the market opens today.

Japan

Perhaps the BoJ doesn't have many other options because it finds itself in uncharted territories, so any monetary action after decades of monetary easing will likely bring incrementally lower economic benefits to its economy, which needs an attractive domestic currency to thrive. The US dollar plunged 3% against the JPY in the wake of the BoJ's announcement.

"HARUHIKO KURODA added another instance to his record of wrong-footing...


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