A note from Société Générale's Albert Edwards

The first part he spends pretty much talking about himself and how wrong he has and continues to be. Fair enough.

But, after that caveat he goes on to discuss the Japanese economy, BOJ policy and the like.

He asks:

  • Most western commentators do not give developments in Japan as much attention as it deserves. Could it be that a surprise monetary tightening in Japan will finally burst the global asset price bubble?

Then follows his take on the Japanese economy which is not any different

to

most

Western commentators

Go figure.

He covers themes we have been banging on about for many months now, in brief:

  • the enduring strength of the Japanese economy, the one consistent disappointment has been the inability to hit the 2% core inflation target.

Edwards concludes:

  • For it is now entirely conceivable that the improved economic and inflation picture we discussed above prompts a surprise BoJ tightening, leaving the market badly wrong-footed and prompting a massive 2008-like unwind of carry trades (CFTC data shows extreme short yen positioning). If investors are looking for the major surprise that could end this equity bull market, could this be it?

Note Edwards avoids putting a date on any surprise BOJ tightening.

The next Bank meeting is January 23. it won't be then, K?