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We had a bad month, a very bad month. The timing is unfortunate as the government is moving forward to the end of the year, which is typically a year where we see a significant move in the Nikkei. What happened last month was a surprise and a disappointment to us.
It is the worst, if not the worst, monthly performance since the early 1990s. We almost never saw negative monthly performance. We had the worst month of the 2000s and 2000s, and January of this year was the first time we had negative results since the early 1990s.
Even a weaker yen would not have been enough to make it so negative, but it has come in an extreme environment. It was also the worst performance when there is a trade dispute with China. I won’t say that the Fed was the reason, but the Fed is certainly part of the reason why we had a bad performance.
The issue with that is it relates to financial conditions, and we have not seen a major broad-based weakening in financial conditions. It has been a little bit of progress, but there has not been a strong reaction from banks. Banks’ capital levels have risen, but it was not a strong run-up in asset prices. I think we may have a little bit of a bounce. I am not sure we have completely digested it.
The last time I looked at markets we were – not just the Nikkei but most of the major indices in the US and overseas – at a multi-year low. I expect it will take a little bit of time for the markets to fully recover, but I think we have the potential to make some progress. We have seen a small gain in volatility in the US.
This has been a pretty volatile year, so that is a positive sign. I would rather have volatility when people want risk to come in and be at low levels. It means people are testing opportunities, which is a good thing. I am hoping that volatility can be given a chance to settle down, so I would like to see a bit of a pause in the markets. Volatility should be higher when markets are lower, and I would like to see a bit of a pause.
As expected, the US authorities had quite an expansion of an increase in the main stock index target, so there will be some contraction in the dollar and 0b46394aab