Factoring in Tuesday’s 10.5% plunge in Japanese equities, it appears as though the market may be overreacting to the horrible events in that country. We note indiscriminate selling in futures markets, currencies, and equities. For example, the most logical fuel alternative for Japan going forward, natural gas, is dropping instead of rising in price. The Canadian dollar, which should benefit from an uptake in raw materials, is also falling. Considering that Japanese stocks were trading at about 1.2 times book value (compared to 2.3 times book for the S&P 500 index) before the earthquake, we believe the risk-reward dynamic is beginning to shift toward the buy side.