CHART OF THE DAY: The Haunting TOPIX Chart We Can't Let Go Of

button more charts
button chart prev
button chart next

Politicians like to compare America to Greece, but in reality the TOPIX, with its long, deflationary slog is our best historical analogy.

A chart we’ve run before, but which seems particularly relevant, is the below chart from Morgan Stanley, which shows the TOPIX — post bubble — responding to various stimuli and counter-stimuli.

The basic lesson: throughout the long bear market, stocks always popped after fiscal and monetary stimulus, and worsened when policy makers did the opposite.

Given how this market has coincided with a move towards de-stimulus (the debt ceiling/fiscal consolidation deal) we can’t help but think this is playing out again here.

chart of the day, topix, aug 2011

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at