Should American investors take a cue from Japan and start unloading stocks based on taper talk?
Of the many jobs America has outsourced to Asia, add to the list the job of worrying about whether the Fed will taper quantitative easing early.
Sure, US stocks yesterday had their biggest drop this summer. And, they’re down another fraction of one percent today.
But that’s nothing compared to how much Japan is worrying for us. The Nikkei 225 Index – the benchmark for Japan’s stock market – dropped a whopping 4% last night. To put that in perspective, it’s as if the Dow fell 618 points or the S&P dropped 67.50 points.
So, what got Japan nervous? It was comments made yesterday by two Federal Reserve Bank presidents about how soon the Fed will reduce its $85 billion per month bond-buying operation. The policy, known as quantitative easing (QE), has pumped dollars into the financial system by buying US Treasury and mortgage bonds,Read More »from This could derail the markets’ rally