Among the Developed: Japan Will Rapidly Inflate First

I expect markets will run out of steam very soon, but if they do not, there will be major breakouts in various assets. Crude is probably headed for $100 if the brakes aren't applied soon. If the market continues rising and the forces carrying the yen lower (USDJPY higher) remain intact, the yen is in striking distance of four-decade resistance, about 4 percent away. Shorter-term, the yen is coming up on resistance and could top out in the days ahead. If not, it will complete a base with a target around 125. Given what is happening right now and assuming no Japan-specific event, a breakout in USDJPY will probably accompany rising commodity prices. I don't expect the yen will drift higher. If this move continues, I expect USDJPY and crude will sprint higher. It looks like the carry-trade is back, but the question is when do Japanese interest rates make a meaningful advance? That is the crisis moment for Japan and the global economy.