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3/28/2011

As Japan begins to stabilize and focus turns more to a rebuilding plan…US Equities will remain a battle between QE2 bubble support and other global uncertainties.

At least one positive can be dealt to Japan’s recent string of horrible events and that is much of the uncertainty has been reduced (but not all) and the focus is on a management of the fallout and rebuilding process.  The Japanese and US stock markets adjusted accordingly as the Nikkei recouped some 10% from its lows while the major US Indexes recouped a significant chunk of their losses. 

So now what… are US stocks back to a “buy and close your eyes scenario” as QE2 bubble forces retake control?  Well…perhaps not just yet.  As the Japan situation eased considerably (but still includes some serious issues), other major events have emerged over the past week.  These include the fundamentals of the ruling forces in Egypt, continued unrest in Bahrain and the actions in Libya…we say actions because it is difficult to characterize just what is going on there.  And probably the most important, but longer term issue is the rise of oil and commodity led inflation due to US pumping of US$ into the system.  All these factors may have those blindly supporting US stock bubble policy as looking over their shoulders a bit.  Hey, most of them got burned in the fixed income market…why not stocks.

Bottom line remains, that existing policy of using stocks as a fix to US economic problems is simply horrible, but, should the bubble continue, economic numbers should also improve, but if it doesn’t….the numbers can quickly turn.  Welcome to bubble policy.  It’s a shame but the real roots to US economic extreme uncertainty are not even being talked about.