The Nikkei moved above 14,000. That is still below its 2008 high but is nearly the kind of top set recently by the Dow and Nasdaq indexes. The two American measurements are much more likely to sustain their lofty positions than the Japanese index is. Japan’s economy and financial future remains very dim.

Nikkei bulls can point to at least two reasons for the sharp increase. One originates outside Japan. The United States, a tremendous importer of Japanese goods, may have begun a sustainable recovery. This should help large Japan multinationals that have America as their primary market.

The second reason for the Nikkei top is a movement by the Bank of Japan to buy $1.7 trillion in bonds over the next two years. Bank officials hope this will peg inflation at about 2% and increase consumer and enterprise spending. It also could negate reasons for individuals to invest in Japanese paper because yields should fall in the process. The Japanese can put their money in a relatively small numbers of places, which include stocks and the purchase of real estate and consumer goods.

The case that says the Nikkei will fall is straightforward. The recession in Japan is too deep for the central bank action to mean much. Part of the future of the recession depends on a lack of recovery of exports. The European market is devoid of demand. China’s GDP improvement has slowed. And the recovery in the United States may be an illusion. Recent data on consumer confidence and business activity show that higher taxes and government spending cuts have taken their toll.

Japan’s economy grew at an annual rate of only 0.2% in the fourth quarter of last year. On paper this is not a recession. However, as Americans who cannot find jobs have found, the impression that an economy is in recession can overcome technical measurements. Japan sits on the recession fence with one foot just slightly on the positive side. That is not enough to support a soaring stock market.

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