Bank of Japan
In a few minutes, Janet Yellen will address a lunch session in her native SF Fed (the same place that last week finally figured out what debt is) during a conference whose topic is The New Normal for Monetary Policy (the typo from "Paranormal" is easy to make). The informal agenda will be Yellen's explanation of how she plans on achieving the yield curve which we predicted back in 2010 is just a matter of time.
"The central bank's portfolio has a book value of around 5.7 trillion yen. But soaring share prices have lifted its market value past the 10 trillion yen mark -- nearly 2% of the tally for all Tokyo Stock Exchange shares," Nikkei notes. While this may seem like a lot, Haruhiko Kuroda begs to differ.
BIS Slams The Fed: The Solution To Bubbles Is Not More Bubbles, It Is Avoiding Bubbles In The First PlaceSubmitted by Tyler Durden on 03/22/2015 16:38 -0400
"... there is a case that policy should first and foremost constrain the build-up of financial booms – especially in the form of strong joint credit and property price increases – as these are the main cause of the subsequent bust. And once the financial bust occurs, after the financial system is stabilised, the priority should be to address the nexus of debt and poor asset quality head-on, rather than relying on overly aggressive and prolonged macroeconomic accommodation through traditional policies. This would pave the way for a sustainable recovery."
- Bank of Interenational Settlements
"Because the Bank of Japan gobbles up dramatic amounts of debt, the cost of financing government spending stays low. It’s been said that a country that issues debt in its own currency cannot go broke. Theoretically that may be correct: the central bank can always monetize the debt, i.e. buy up any new debt being issued. But in practice, there has to be a valve."
And then there were none. Like dominoes, US allies have fallen in line on the heels of the UK's decision to join the China-sponsored Asian Infrastructure Investment bank and now, the stanuchest supporter of Washington's position on the venture looks set to defect as well.
"The GPIF in October slashed its targeted holdings of low-yielding government bonds and doubled its target for stocks, as part of Prime Minister Shinzo Abe's plan to boost the economy and promote risk-taking," Bloomberg notes, marking a shift into risk assets by the country's pension funds.
The BoJ may now run into the same inconvenience in its efforts to control the stock market that it encountered on the way to monopolizing the JGB market: there’s only so much out there to buy. "BOJ held 3.85t yen ($32.0b) of ETFs at end-2014 and plans to boost these holdings by 3t yen per year; at this pace, the current market value of 11.5t yen in ETFs would be entirely bought by BOJ by end-2017," Bloomberg notes.
Recall Lenin’s quote: “The capitalists will sell us the rope with which we will hang them.” Today, of course, the capitalists don’t even sell the rope; they give it away, for nothing. But what’s not to like? Stock investors are getting rich. Bondholders are making money. The government can spend as much as it likes. And the voters are bamboozled by it; they think it helps make the economy work better. This is going to be a hard habit to break. So, here’s the gist of my conclusion: Governments won’t break the habit of getting something for nothing. It will break them. But how?
All Good Things Must End... this may not be the end of the world exactly. But the end of the fiat money system President Nixon gave birth to in 1971... when he cut the dollar loose from gold. And it may feel like the end of the world, because of the social chaos it will provoke.
It started off as the perfect storm for futures: after Sunday night's latest plunge in WTI, which saw it drop to the lowest price since Lehman, the double whammy that has now forced Deutsche Bank to become the first major institution to forecast no growth for S&P500 EPS in 2015, namely the strong dollar, reared its ugly head and the EURUSD seemed dangerouly close to breaching the all important 1.04-1.05 support level we first noted last week. However, overnight parties tasked with preserving "financial stability" appear to have once again stepped in, and not only has the EURUSD rebounded off 1.05, but crude is now just barely down from the Friday close as all firepower is put to the same use, that sent the Shanghai Composite soaring by 2.3% overnight, and which sent the Dax over 12,000 for the first time ever.
Fed to lose patience. Many expected Norway and Switzerland to cut rates. Could they be disappointed?
Someone call the ECB because it looks like the game is well nigh up. Greek FinMins are taking time away from photo shoots and looting pension funds to call out QE for creating equity bubbles and the mainstream financial news media has figured out that there’s an acute collateral shortage and that buying €1.1 trillion in bonds €15 million at a time probably indicates a forced deviation from the original plan.
"Mario Draghi and the ECB’s manipulation of asset prices makes Greenspan’s Fed look like a rank amateur. More shocking though than the plunge in the euro, and more shocking even that 25% of sovereign eurozone bonds now trade in negative territory, is what has happened to eurozone equity valuations. For, as we approach the sixth anniversary of the US cyclical bull market, the PE expansion of eurozone equities is simply off the scale!" - Albert Edwards
Plunge Protection Exposed: Bank Of Japan Stepped In A Stunning 143 Times To Buy Stocks, Prevent DropSubmitted by Tyler Durden on 03/11/2015 18:10 -0400
The BoJ has now gone full intervention-tard - buying Japanese stocks on 76% of the days when the market opened lower.