Nikkei and DAX Showing Strain of Flu Pandemic Fears

Charts yesterday for The Nikkei 225 and the DAX in Germany shows that the leading export based economies would perhaps be most immediately affected if a flu pandemic causes further consumer retrenchment. This would only augment fears that any recovery in business momentum, already somewhat fragile, would have even more adversity to contend with.

This adds additional emphasis to the point that I was making in one of my posts yesterday about the weakness in the Larry Summers' notion that economic crises can be separated into discrete episodes. The point is not so much that swine flu may turn into a pandemic - let's certainly hope that it doesn't - but rather that once a system becomes vulnerable and exposes a weak link there is a danger that some other de-stabilizing factor will emerge to prolong and accentuate the crisis.

The chart above (click to enlarge) for the Nikkei is not looking at all constructive at present with a break down from the uptrend in place since early March now clearly visible.

Should the Japanese index fail to find support around the 8300/8400 level this could trigger a rather abrupt drop to lower levels last seen in March.

Comments

[jeandit75:]

you guys are dreaming

Apr 29 07:30 AM

[Mad Hedge F...:]

Here's a drag on the economy. If you can’t find jobs for your workers, just deport them. That seems to be Japan’s answer to the soaring unemployment rate brought on by a collapse in the country’s exports, down 45.6% YOY. During the late eighties, when companies were wringing their hands over labor shortages, the government launched a program to import workers from Brazil and Peru. Thousands of decedents of Japanese plantation workers who emigrated there a century ago applied, with names like Juan Suzuki and Pedro Tanaka. Today there are thought to be as many as 366,000 in the Japanese-Latin American community. The government has offered free air fares and moving subsidies. The move is reminiscent of the mass deportation of Turkish workers by Switzerland, the “gastarbeiters”, during the eighties, also for economic reasons. The policy is especially puzzling, given that with the world’s lowest fertility rate, a labor shortage is believed by many to be the greatest challenge to the country’s long term economic viability. But ethnic purity has always been a priority of many conservative Japanese politicians who found the move towards a multiethnic society unsettling.

May 01 09:18 AM