S&P 500 May Surge 40% in Duplication of Japan, haha

Discussion in 'Wall St. News' started by S2007S, Aug 30, 2009.

  1. S2007S


    These articles get better each day, I think a lost decade is more like it than a 40% surge, didnt we have a 50% surge already, the market at new highs in 2010, wow, would be certainly amazing wouldnt it. Tell me what can drive the market 40% higher besides saying we are going to "DUPLICATE" Japan. Its all one big joke!!!!!!!

    S&P 500 May Surge 40% in Duplication of Japan: Chart of the Day

    By Alexis Xydias

    Aug. 28 (Bloomberg) -- U.S. stocks are behaving like Japanese equities in the 1990s, meaning the Standard & Poor’s 500 Index may return 40 percent in the next year, according to Bank of America Corp.

    The CHART OF THE DAY shows the Nikkei 225 Stock Average since 1980 and the S&P 500 during the past two decades, when adjusted for currencies. The Nikkei doubled between October 1998 and April 2000 in dollar terms, as the chart illustrates. The S&P 500 has risen 34 percent since March when the Dollar Index, a measure of the dollar against currencies in six major U.S. trading partners, is factored in.

    A “melt-up” rally in the U.S. may be triggered by central bankers keeping interest rates near record lows, an economic recovery or an undervalued dollar, Bank of America strategists wrote in an Aug. 26 report.

    “Even in economies overcoming credit booms, rallies can be powerful and last much longer than you think,” Bank of America’s Sadiq Currimbhoy, Arik Reiss and Jacky Tang wrote. Should the similarity between the U.S. and Japan persist, the S&P 500 will keep rising, partly because of gains in the dollar, the Hong Kong-based strategists said.

    “If there is one persistent similarity between Japan and the U.S., it is they both seem to be fighting a debt problem by producing more debt,” they added. “So, for equity investors, if these relationships were to repeat themselves, the risk for the U.S. market is that like Japan, the stock market ends up with big rallies and then sell-offs.”

    When adjusted for currencies, the Nikkei 225 peaked in December 1989, while the S&P 500 reached its high in September 2000. Following its jump through 2000, the Nikkei retreated three years. On the vertical axis of the Chart of the Day, 100 corresponds to the Japanese index’s record high.