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Japanese Prime Minister Shinzo Abe's aggressive monetary attack on his nation's economic malaise may provide a welcome boost to North American equities. For North American investors, the importance of Japan's new policy direction lies in the increasing attractiveness of the yen carry trade – borrowing funds in Japanese yen, converting to U.S. (or Canadian) dollars and investing the proceeds into asset markets – to hedge funds and institutional investors. The added liquidity has historically provided a significant boost to stock prices.

Mr. Abe, in what has been described as "The Biggest Economic Policy Story In The World," is demanding that the Bank of Japan begin a massive money printing initiative designed to pull the nation's economy out of the deflationary doldrums where it has been mired since the early 1990s. Mr. Abe's intentions have already caused a slide in the value of the yen as foreign exchange traders prepare for devaluation against the greenback.

Kevin Ferry, President of Chicago-based Cronus Futures (and a frequent CNBC guest) was among the first to alert clients that the changes in the value of the yen were leading the S&P 500. As he pointed out, the effects were already felt far beyond Asia.

This chart shows the trend. For the majority of 2012, the yen and the U.S. equity benchmark moved completely independently. Beginning in November, as Mr. Abe's election became more likely, the S&P 500 began closely following the yen/dollar cross and the correlation went from negative to 0.62. For investors in Canada's resource-rich equity market, the news might be even better: the correlation between the yen and the S&P 500 Materials Index jumped to 0.65 for the same period.

With the yen expected to decline further as BoJ printing presses are fired up, the trade will become more profitable – borrowed funds will be cheaper to repay in a weaker currency. If upcoming foreign lending data from the BoJ confirms the trend, it would form an optimistic sign that big money institutional investors are bullish on U.S. markets, which in turn will help drive equity prices higher.

For investors, few 2013 trends would be more profitable than the increasing popularity of the yen carry trade. We would have Mr. Abe's brave new monetary policy to thank. Economy-watchers are leery of central-bank intervention in their own markets; if Mr. Abe's proposals come to fruition and the carry trade continues, he may become the western investor's most beloved policymaker.

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