The central bankers of the world are going to always err on the side of easy monetary policy. It is far more politically tolerable to push on a string than to have the dog end his run with a solid yank of the leash. Nothing is feared more, nor will precipitate more desperate actions than “deflation” (defined as a fall in the CPI). From the CPI-down-bad-CPI-up-good point of view: 2014 was the best year in more than a decade for Japan. The good marks for Abenomics coupled with fear that any cessation of easing could bring about new rounds of CPI decline will undoubtedly keep the hawks in a political hotseat. Plus, Mr. Abe’s power to maintain easing is looking like it may increase. So the current primary downward trend for the Yen remains in swing and I don’t think that one year with a positive CPI changes the fundamentals.
All that said, we all know what happens when governments distort asset allocation for large developed economies through monetary expansion: “I ain’t never seen so much green than when I seen when my team hit the scene.” “Bout Ta’ Bubble”. The current global asset bubbles will ultimately lose buoyancy and the flight to cash will put the Yen back in black. I just hope it happens over a long enough duration under conditions of liquidity whereby I can trade accordingly and profit.
The above shix was written under the condition of sobriety so don’t give it too much credit.
