Shorting Japan, Again...

08/29/08 11:37AM EDT
I re-shorted the bounce in the Japanese ETF this morning (EWJ), for three reasons:

1. Japanese inflation (see chart) came in higher again (month over month) at +2.4% y/y vs. +1.9% in June. As the Yen weakens, imported inflation spikes - the chart is plain ugly. This is a 10 year high, as you can see. American wins = Japanese losses.

2. Overnight, Prime Minister Fokuda, was pleading for another 2 Trillion Yen Government bailout program for the economy. This is more of the same - a leader-less socialist government that doesn’t get it.

3. As GDP goes negative, increased government spending is going to intensify the problems associated with Japan's balance sheet. They already hold an untenable position of 787 Trillion in Yen denominated debt. That's 147% of GDP that is setup to stagflate!

It's global this time, indeed.
KM
© 2020 Hedgeye Risk Management, LLC. The information contained herein is the property of Hedgeye, which reserves all rights thereto. Redistribution of any part of this information is prohibited without the express written consent of Hedgeye. Hedgeye is not responsible for any errors in or omissions to this information, or for any consequences that may result from the use of this information.