The Market Sentimentalist - Monetary Delusions

Amareos

Ryan Shea

Thematic (Sector/Industry)

The BoJ has just announced a very significant policy change; one that has far-reaching consequences.Amazingly, many financial market participants have failed to comprehend this as evidenced by the sceptical post-announcement commentary and the swift reversal of the knee-jerk sell-off in the JPY.The lack of belief in Japanese reflation (as patently evident from our crowd-sourced sentiment indicators) and doubts over the BoJ's credibility to deliver may well be the reasons why investors are blind to the significance of the policy regime change that has just been announced.However, once investors look beyond the perceived lack of immediate monetary stimulus, and begin to comprehend more fully the longer-term ramifications of the BoJ announcement, there is potential for a very significant price move in both Japanese equities and the currency.

The BoJ has just announced a very significant policy change; one that has far-reaching consequences.Amazingly, many financial market participants have failed to comprehend this as evidenced by the sceptical post-announcement commentary and the swift reversal of the knee-jerk sell-off in the JPY.The lack of belief in Japanese reflation (as patently evident from our crowd-sourced sentiment indicators) and doubts over the BoJ's credibility to deliver may well be the reasons why investors are blind to the significance of the policy regime change that has just been announced.However, once investors look beyond the perceived lack of immediate monetary stimulus, and begin to comprehend more fully the longer-term ramifications of the BoJ announcement, there is potential for a very significant price move in both Japanese equities and the currency.

Listed Index Fund JPX-Nikkei Index 400 (1592 JP)

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