The Japanese Put

  • March 15, 2001
  • Marc Dupee

Clawing for any resolution to a domestic economic crisis
that was credited with yesterday’s plunge in global stock markets, the Japanese
government said it would consider buying shares from banks and other companies
that wish to sell stocks before the end of the fiscal year at the end of this
month. 

The highly unusual suggestion would act as a kind of a
put option for traders–a government buying-wall below which stocks would have
difficulty falling.

June Nikkei 225
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suggestion. The move is also working to calm the bear market in US stock index
futures:

Nasdaq 100 futures
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S&P futures
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Dow futures
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June Federal Funds futures
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contract high and are pricing in as much as an 88% chance of a 100-basis-point
(1%) rate cut by the Fed’s June meeting. The Fed here is being viewed as the
institution of last resort in re-stimulating the US and world economy. A
stronger US economy would help Japan export its way to economic recovery. 

The
Japanese yen
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comments from Japanese financial officials and the widely held belief that the
Bank of Japan will return to a zero interest rate policy Monday. Short-term
interest rates currently stand at .15%. The yen, from the Implosion-5 List,
is down .0081 at .8284.

Front page lead stories in both the LA and NY Times
about foot-and-mouth disease in the UK and Europe are continuing to keep the
buying pressure on in the pigs. April lean hogs
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to 65.700 and May pork bellies
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levels. 

A pattern pointed out in previous futures markets
commentary, cocoa
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of a head-and-shoulders top and is trading lower in the session, down 32 at
1008.