Jobs, Yield Reaching, And Profit Taking

Supposedly 203K jobs were added last month and the unemployment rate dropped to 7%. Amazing how when the Fed really needs some good data to hide behind, they get it.

Far more important to me is that Japan's Government Pension Investment Fund (GPIF) is in the news again. Japan’s GPIF Needs to Start Selling Bonds Now, Ito Says

As always, it is the Why that is important. An advisory group has recommended that the GPIF seek higher returns. Takatoshi Ito, chairman of the advisory group, made some shocking comments: “GPIF needs to start reducing bonds as soon as possible,” Ito said today. “Now is the right time to sell, while the BOJ is buying.”

1) He's right. Now is the time.

2) He's dead wrong. To reach for yield now magnifies an already insane risk level.

This is dangerous stuff. It was French banks that I thought would blow up the world. Now it could be Japan. So basically Kyle Bass is out front on this one.

The extreme irony is that both the Nikkei and S&P futures are sky high this morning. 1800-1806 should be on tap today in the regular session. 1800 also lines up nicely with a 1:1 Fib extension.

This should be a profit-taking level. The way the waves are structured the market could be on the precipice of a significant decline. Only a close firmly above the 1806 would change this.