In today’s briefing:
- JAPAN: No Lifeguard on Duty, Swim at Your Own Risk
- Sector Leadership Review: Bear Market Vibes?
JAPAN: No Lifeguard on Duty, Swim at Your Own Risk
- BOJ sows confusion with hawkish and dovish statements regarding its tightening policy. On a USD-basis the Japan market failed again to break its long-term resistance indicating a “Dead Cat Bounce”.
- Auto and Semiconductor sectors pressured by US trade policies and Trading Companies are affected by JPY strength. US rejection of Nippon Steel Corporation (5401 JP)merger affects Japan steel sector.
- Higher domestic yields is a catalyst to reverse the large money flows from Japan during the Kuroda years.
Sector Leadership Review: Bear Market Vibes?
- A preliminary review of sector leadership is flashing bearish vibes and defensive sectors are dominant while technology and cyclicals lag.
- A more nuanced review of factor and style leadership argues for a benign explanation of a broad-based rotation from growth to value and from large caps to small caps.
- We are inclined to embrace the benign view. Both the S&P 500 and NYSE Advance-Decline Lines recently reached all-time highs. Bear market tops don’t behave this way.
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