Japan is on a Tear

After two decades of financial repression and deflationary suffering, a new government has changed policy in a fierce way. Japan now seeks inflation. It will get it. It seeks higher asset prices. It will get them.

It seeks economic growth. It may get it if there are reforms to allow it.

The yen will head over 100 and to 115 to the dollar in the shorter term. Longer-term it may get much weaker still. The Japanese stock market is rallying, after endless malaise.

Disclosure: we are in that market, using DXJ, the Wisdom Tree currency-hedged ETF, to participate.

In the near term the Japanese central bank will be the catalyst to take the G4 central banks’ total assets above $10 trillion. The G4 currencies are the yen, dollar, pound, and euro.

The Fed and the UK will boost that $10 trillion even more, and the ECB will struggle with what to do but eventually succumb. We expect the G4 total to top $11 trillion by year end.

Zero interest rates are bullish for asset prices. There is more ahead.

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About David Kotok 42 Articles

Affiliation: Cumberland Advisors

David R. Kotok cofounded Cumberland Advisors in 1973 and has been its Chief Investment Officer since inception. He holds a B.S. in economics from The Wharton School of the University of Pennsylvania, an M.S. in organizational dynamics from The School of Arts and Sciences at the University of Pennsylvania, and a masters in philosophy from the University of Pennsylvania.

Mr. Kotok’s articles and financial market commentary have appeared in The New York Times, The Wall Street Journal, Barron's, and other publications. He is a frequent contributor to Bloomberg TV and radio, CNBC TV programs, Fox Business, Yahoo Finance and others.

Mr. Kotok currently serves as a Director and Program Chairman of the Global Interdependence Center (GIC) (www.interdependence.org), whose mission is to encourage the expansion of global dialogue and free trade in order to improve cooperation and understanding among nation states, with the goal of reducing international conflicts and improving worldwide living standards. Mr. Kotok chairs its Central Banking Series, and organized a five-continent dialogue held in Philadelphia, Paris, Zambia (Livingstone), Hanoi, Singapore, Prague, Capetown, Shanghai, Hong Kong, Rome, Milan, Tallinn, and Santiago, Chile. He has received the Global Citizen Award from GIC for his efforts.

Mr. Kotok is a member of the National Business Economics Issues Council (NBEIC), the National Association for Business Economics (NABE), serves on the Research Advisory Board of BCA Research, and is also a member of the Philadelphia Council for Business Economics (PCBE).

Mr. Kotok has served as a Commissioner of the Delaware River Port Authority (DRPA) and on the Treasury Transition Teams for New Jersey Governors Kean and Whitman. He has also served as a board member of the New Jersey Economic Development Authority and as Chairman of the New Jersey Casino Reinvestment Development Authority.

Mr. Kotok hosts an annual Maine fishing trip, where, it is rumored, most of the nation’s important financial and economic decisions are actually made.

Visit: Cumberland Advisors

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