Nomura

Japan Q2 GDP Misses, Unchanged From First Quarter, As Business Spending, Exports Slide

After a flurry of disappointing GDP reports from the US and Europe, not to mention last week's uniformly poor Chinese economic data, Japan was the latest country to report that nominal economic growth in the second quarter rose a disppointing 0.2% annualized, missing expectations of a 0.7% increase, and down from the revised 2.0%  GDP growth in Q1, while on a sequential basis GDP was flat with the first quarter.

The Bank of Japan Will Be The Top Shareholder Of 55 Companies By The End Of 2017

With the BOJ already a top-five owner of 81 companies in Japan’s Nikkei 225 Stock Average, the BOJ is on course to become the No. 1 shareholder in 55 of those firms by the end of next year. Just as insane, the central bank owned about 60% of Japan’s domestic ETFs at the end of June. This is up from just over half as of a few months ago suggesting that the BOJ is gobbling up equities at an unprecedented pace.

Insanity, Oddities, And Dark Clouds In Credit-Land

Distortions in financial markets keep growing, as central banks all over the world are desperately intensifying monetary pumping. What is currently happening in various bond markets as a result of this and other interventions is simply jaw-dropping insanity. It is not so much that it defies rational explanation – in fact, all of these moves can be explained. What makes the situation so troubling is the fact that investors seem to be oblivious to the enormous risks they are taking.  They are sitting on a powder keg.

Angry Chinese CFO Kicks Out Analyst Who Rated Company A "Sell"

A CFO threw an analyst out of a company presentation in Hong Kong because he disagreed with the analyst’s negative views (not to mention his Sell rating), in a vivid example of a company lashing out personally and publicly against its critics.

Frontrunning: August 10

  • World stocks hit one-year peak, dollar sags on weak U.S. data (Reuters)
  • Trump's remarks on gun rights, Clinton unleash torrent of criticism (Reuters)
  • Newly Released Emails Highlight Clinton Foundation’s Ties to State Department (WSJ)
  • One-in-five U.S. Republicans want Trump to drop out: Reuters/Ipsos poll (Reuters)
  • Soaring Debt Has U.S. Companies as Vulnerable to Default as 2008 (BBG)
  • BOJ to defend QQE in Sept policy assessment (Reuters)

US Futures Flat; Bonds Rise, Dollar And Oil Slide Over US Productivity Collapse Fears

Following yesterday's muted action which saw the S&P500 close unchanged, it has been more of the same listless trading overnight, with US equity index futures little changed as the Nikkei fell on the back of a stronger Yen, while government bonds rose and European stocks reversed early gains following the BOE failed bond monetization operation. Crude oil dropped for a second day after Saudi Arabia told OPEC that it pumped a record 10.67 million barrels of oil a day,

August Corporate Bond Issuance Breaks All Records Thanks To Relentless Demand For Yield

It has been a scorching August for the continental US, with the government predicting, for the first time on record, that every square inch of all 50 states is forecast to see above-average temperatures for the next three months. However, that is nothing compared to what is taking place in the blistering bond market, where new bond issuance is on pace to blow away all records.

Japan's Top Credit Analyst Predicts 30Y Treasury Yield Plunging To Zero In 2 Years

In a time when one strategist after another is pointing to the latest rebound in rates and bond yields, and furiously declaring - to anyone who cares to listen - that this is it, yields are now and forever done going lower, Toshihiro Uomoto, Nomura Holdings’s chief credit strategist, in a report issued overnight, forecast that the yield on 30-year US Treasuries could plunge to zero in two years as a result of yield-starved "Japanese money" flooding the US and chasing returns of US Treasuries.

Japanese Government Bonds Are Crashing

Ahead of tonight's 10Y JGB auction and reportedly the unleashing of Abe's fiscal stimulus, it appears the world's investors are losing faith in the Bank of Japan's buying power and the MoF's credibility as Japanese government bonds are collapsing for the 3rd day in a row. With the biggest crash in prices (JGB Futures) since May 2013 (back to 5 month lows), yield across the entire JGB curve are exploding higher since Kuroda punted last week and questioned monetary policy effectiveness.

Euro Stocks Reverse Early Gains Dragged Lower By Slumping Banks; US Futures Flat; Crude Slides

Following last Friday's shocking weak US GDP print, Asian stocks jumped to an 11 month high on reduced prospects of a near-term rate hike, while the region also digested mostly encouraging in conflicting Chinese PMI data. European bank stocks initially rose following the release of the 2016 stress test then declined, tempering gains in global equity indexes, amid investor skepticism over the usefulness of stress-test results and weaker oil prices.

Monte Paschi Bailout In Peril As 3 Banks Walk Out: Are More "Pensioner Suicides" Next?

According to Reuters, Morgan Stanley and Italian lenders UniCredit and Intesa SanPaolo have rebuffed a proposal by Italy's third-largest lender, Banca Monte dei Paschi di Siena to back its proposed 5 billion euro cash call, a development which may lead to a bail-in of the troubled lender, and potentially spark contagion across the Italian banking system.

Richard Koo: If Helicopter Money Succeeds, It Will Lead To 1,500% Inflation

"if businesses and households were to resume borrowing in earnest, the US money supply could balloon to 15 times its current size, sending inflation as high as 1,500%. The corresponding ratios are 28 times for Japan and Switzerland, five times for the eurozone, and 11 times for the UK. Once private-sector demand for loans recovers in these countries, confidence in the dollar, euro, and yen will plummet."