On Learning From Japan & Investing In Brazil

The US Treasury’s attempt to free the bond market from the Bond Vigilantes by injecting more liquidity via buybacks recalls Japan’s similar decision prior to its “lost decades.” The US economy isn’t headed for any such abyss, but Japan’s experience nonetheless highlights the tactic’s drawbacks. Liquidity can soothe a market, William writes, but not cure what’s ailing it in the first place. … Brazil’s central bank is in a tough spot: Its push to curb inflation has taken an economic toll right before a presidential election. … And: Toby points out an opportunity in Brazilian stocks. Valuations have dropped as share price gains haven’t kept pace with rising earnings expectations.