Last week was another down week for the Nikkei, albeit very limited, but the Friday close of 13,942 was over 3.5% off the weekly high and the second consecutive week of a sub-14,000 finish. So, while the Nikkei had been showing signs of promise and not simply selling-off on every piece of bad news, a move beyond 14,500 has proven elusive. The N225 is up over 19% from its year-to-date and multi-year low of 11,691, but there are just not enough positive catalysts to push stocks higher, at present, in the face of all the bad news that continues to hit the wires day in and day out. And this month, we have hedge fund redemptions that could be putting further downward pressure on equities.

Nikkei 225 futures in Chicago tanked 500 points to 13,765 on Friday, compared to a 13,960 close in Osaka, so along with the broad sell-off in the U.S., you know what that means. Friday feels like a long ways away, and there will be no guarantees with May CPI (including June for metropolitan areas), industrial production and employment data, among other reports out on the last trading day of the week.

As of Friday’s close the N225 is trading at 16.1x trailing and 16.5x forward earnings, 1.62x book, 1.50% trailing yield and 1.58% forward yield. By comparison, TOPIX (1st Section) is trading at 17.3x trailing and 16.6x forward earnings, 1.50x book and 1.70% trailing yield and 1.76% forward yield. Not to be forgotten, the Topix-1 25 DMA of advancers/decliners had a steep fall to 84 on Friday, likely only to worsen on Monday. Interestingly, this level seemingly makes for a safer entry point based on historical readings, although the days of 110%-plus may be gone for awhile.

In the meantime, get used to all the “inflation is welcome in Japan” rubbish. More interesting is the yen/dollar and implications of sustained yen weakness considering the carry. Samurai bonds to bail out Western banks?