Nikkei Down 10 Percent from Five-Plus Year High; Gold is the Time-Honored Safe Haven, Right?; Greece Named World’s First ‘Demerging Market’

Nikkei Down 10 Percent from Five-Plus Year High (Reuters)

The Nikkei 225 Index followed up Tuesday’s 1.5 percent loss with today’s 2.4 percent dive. After the last two sessions, the Nikkei tumbled a total 10 percent this year from its recent five-and-a-half-year high. But to say that any specific event has triggered the dive would be wrong. The drop seems to be due to investor fear, plain and simple. And it stems from the two sources, primarily:  the Bank of Japan’s decision not to increase stimulus to mollify the country’s bond market; and a chance that the Federal Reserve soon will announce an easing of its $85 billion-a-month bond and debt buying program (QE). In the end, the dips of the last two days are based on the fear of uncertainty. If the risks become reality, watch out.

Gold is the Time-Honored Safe Haven, Right?  (CNBC)

You’d think that the recent flight from equities would result in a rush to buy good old gold. Well, you’d be wrong. As of today, gold fell to its lowest level in three weeks — $1,364.50 — before staging a slight rally. What accounts for the fall?  Ironically, the exact same two reasons as described above pushing down the Japanese market – Bank of Japan inactivity regarding its bond market, and the idea that the Fed may ease off on QE. You’d be hard pressed to find too many situations where investors flee both equities and gold. No wonder bond funds are busting at the seams.

Greece Named World’s First ‘Demerging Market’ (Bloomberg)

The birthplace of civilization, Greece, has just sunken to a new economic low… It officially became the world’s first “demerging market.” MSCI Inc. has cut the country’s status from a “Developed Nation” to an “Emerging Market.” But really, if a country’s economy is imploding, can it really be emerging? And is “Frontier Market” on the horizon? Whenever Greece’s economy bottoms out, one thing’s for certain, civilized investors will have been gone for quite some time.