Nikkei 225 update

nikkei 225 dec 225 2012 arith.nikkei 225 dec 25 2012 log

The turned on a dime on New Years Eve, 1989, maybe it will do it again this year. We have had this scenario (count) for almost two years. It is absurd and cannot be correct. But here are a few other facts that no one would have believed prior to the peak.

In central Tokyo a single square meter (about 9 sq. ft. for those that are measurement challenged) went for $79,000 at the then prevailing exchange rate of 135 Yen to a dollar.

Downtown Tokyo land values were about $800 mln. an acre and the Emperor’s palace was reputedly worth as much as the entire State of California, or all of Canada.

From 1949  ( the Japanese surrendered on the battleship Missouri in Sept of 1945) to 1989 the Nikkei 225 was up 221 times in yen terms and 559 in US dollars.

In 1989 Bankers Trust Canada issued 3 year put warrants on the Nikkei in Canada. They were priced in C dollars and side stepped all the then existing regulations. You could buy them in an RRSP.

After 23 years of on and off stimulation the Bank of Japan has just recently decided to up the ante again by adding about $120 bln. , far too little according to some but at least a start. The country’s debt to GDP ratio is running at about 230% but there is no cause for alarm because it is mostly domestic.

Japan has a population of 128 mln. dropping by about 1 mln. each year. By 2060 it is expected to have a population of 87 mln. with 40% over the age of 65. About 98% of the Japanese are ethnically Japanese.

If the Nikkei will in fact go much lower remains to be seen. It would take a break of about 11000 before the count is negated. For the moment this still appears to be the best interpretation. How absurd it really is, is demonstrated by this semi-log Wikipedia chart with my annotations.

nikkei 225 dec 25 2012 semi log