Don’t give up on Japan
I spent much of the 1990s in Tokyo and it was without a doubt the most vibrant place I have ever lived in. So watching the city empty out is very strange indeed. I have only one friend left in the city and his wife and child have already fled to Osaka. I hope they will be able to return soon. Obviously we have looked at the effect of the Japan crisis – from the equity market to the oil price – quite thoroughly in this issue. However, the first thing we should say is that we are approaching everything with caution.
The earthquake joins global food inflation, turmoil in the Middle East and north Africa, and the ongoing debt crisis in Portugal in creating a potentially explosive cocktail of global nasties. We have been relatively bullish on markets for the last year or so on the basis that while quantitative easing might not do much for American workers, it is very good at supporting stockmarkets. However, we have also been very wary of emerging markets and have recognised that, on long-term valuation measures, many Western markets look pricey too. So we are not discounting the possibility that the falls of the last few days could develop into a full-blown global bear market…
• Read the full editor’s letter here: Don’t give up on Japan