Japan

In retrospect it appears Tom DeMark was spot on with his Wednesday prediction, made just as the Dow Jones was down some 500 points that that very day was "an interim low" to be followed by a 5-8% rebound (at which point the selling would resume). In fact, those trading Japanese stocks saw virtually the entire predicted rebound take place in just one day as the Nikkei soared by almost 6% overnight, or nearly 1000 points, the biggest jump in 4 months, while risk everywhere else around the globe has likewise exploded higher, as crude has stormed back over $31/barrel.

In the aftermath of the latest Chinese near-panic intervention to keep its currency from an out of control collapse when as reported yesterday, the PBOC announced it would raise the RRR for offshore Yuan deposits, a move which would reduce the amount of the currency available in the market, squeezing supply further (and breaking Hong Kong HIBOR markets again in the process) and making it more difficult and expensive for speculators, the Chinese stock market went exactly nowhere, closing up 0.44% suggesting that when it comes to manipulating asset classes, China can do either stocks or

"It’s difficult to see the fall stopping today," warned one Japanese equity strategist and rightly so as Japan's broad TOPIX idnex just entered a bear markets (down 20% from the August 2015 highs). With the Nikkei well below 17,000, Kuroda is due to speak at the Diet today as Japanese corporate bond risk surges to 20-month highs.

TOPIX enters Bear Market

And now the Nikkei:

It has been another choppy, illiquid, volatile overnight session, which started with weakness out of China, whose Shanghai Composite dropped 20% into another bear market in early trading, then further slammed by news of a terrorist attack in Jakarta, only to rebound back over 3000 as the Chinese National Team decided to intrevene again, this time in the ChiNext small cap index, pushing it higher by 5.6%.

Excerpted from JPMorgan CIO Michael Cembalest 2016 Outlook,

Something is wrong with this picture.  In the US and Japan, corporate profits sank during the global financial crisis.  In the US, the profit recovery was accompanied by a recovery in household income.  In Japan, however, corporate profits and household income moved in opposite directions, as dynamics that helped profits recover did not help consumers.