Yen

JPY Plunges To 6-Year Lows, Nikkei Tops 16,000 As Japanese Deficit Runs 41st Month In A Row

For the 41st month in a row, the Japanese Trade Balance is in deficit (around JPY1 trillion). Of course, the fact that exports fell 1.3% (but but devalued currency means competitive?) means nothing as all that really matters is the collapsing JPY (now at 108.60) at its weakest against the USD in 6 years. That can mean only one thing - a surging Japanese stock market - as the Nikkei breaks 16,000. What is odd - just as in the US - is the rising equity index (no doubt helped by Japanese pension funds buying JPY393billion in Q2) against a backdrop of plunging indivdidual stocks. Sony is limit down (as we explained earlier) with offers outnumbering bids 8-to-1. And that's Japan...

Abenomics Crushes Sony: Electronics Giant Forced To Cancel Dividend For First Time Ever

Minutes ago the Yen hit another multi-year low against the dollar, which sure enough, is great for the nominal value of Japanese stocks, if horrible for the actual Japanese companies, the Japanese middle class, and pretty much everyone except for a few superrich people. Such as Sony. Because the (now former) electronic giant, which once upon a time was the target of an activist campaign by none other than Dan Loeb who mysteriouly saw value in the company, once again stunned everyone when it reported overnight that it expects its annual loss to swell to $2 billion, but, far worse, canceled the payment of its dividend for the first time ever after writing down the value of its troubled smartphone business.

Frontrunning: September 17

  • -0.07%: Germany Secures Record Low Funding Cost at Bond Auction (WSJ)
  • Pentagon Sees Possible Role for U.S. Ground Forces Against Islamic State Militants (WSJ)
  • China Joins ECB in Adding Stimulus as Fed Scales Back (BBG)
  • Stealthy or Normal? Analysts Diverge on PBOC’s Action (BBG)
  • Sony Forecasts Massive $2B Loss as Smartphones Lag (AP)
  • Islamic State campaign tests Obama's commitment to Mideast allies (Reuters)
  • Brent Crude Rebounds as Libya’s Sharara Oilfield Shut (BBG)
  • Market calm over Scottish vote at odds with disaster warnings (Reuters)

Bizarre Japanese "Respect Old People Day" Holiday Is Sign of The Times

Today is a rather peculiar public holiday in Japan: “Respect Old People Day”. And judging by the official demographics, an increasing proportion of the population should be revered today. One in eight Japanese is aged 75 or older. People over 65 will reach 33 million, the largest ever, roughly 25.9% of the population. The thing about demographic trends is that they’re like a huge oil tanker - once they’re on their course it’s very hard to steer them around in another direction. These are monumental, generational changes that are very hard and slow to reverse.

Why The Collapse Of Abenomics Is Important: It's A Large-Scale Failure Of Keynesian Stimulus In Real Time

We have frequently discussed the nonsensical attempt by Japanese prime minister Shinzo Abe and BoJ governor Haruhiko Kuroda to print and spend Japan back to prosperity. By now it is well known that devaluing the yen has not achieved the desired effect, but rather the opposite. Not only have exports not really received the expected boost, but Japan’s trade and current account surplus have decreased markedly, even posting negative numbers for the first time in decades. Of course, currency debasement never works: it cannot work. This is Keynesian logic and brilliance in all it splendor.

What If The Easy Money Is Now On The Bear Side?

File this under Devil's Advocate: what if the easy money in the stock market is no longer the "guaranteed" Bull melt-up but the Bearish bet on a sudden air pocket? Just as a thought experiment, put yourself in the shoes of the money managers who have the leverage to move the markets.

Dollar-Yen Pumps Then Dumps As Kuroda Punks Algos

Sometimes we wonder what world Japanese leaders live in. This morning's mind-blowing lies and propaganda from BoJ chief Kuroda show one thing and one thing only - Japan has reached Europe's Juncker moment - "it's serious enough that one has to lie." But it's the market's reaction to his every word that is whipsawing JPY around and running algos wild as first he said more QE is to come then rejected it saying there is no need for more QE now...

US Equity Futures Levitate As Yen Fireworks Continue; All Attention Still On Scotland

While overnight US equity futures have done nothing notable, what everyone's attention has been fixed on, in addition to the GBP and the read-through to all things UK-ish ahead of the Scotland independence referendum, is the sudden flare up in USDJPY trading and volatility, which exploded by some 100 pips in the past 24 hours hitting fresh post-2008 highs, on what appears to be a major capital reallocation move (it surely is not driven by any news) and/or forced squeeze. What is more perplexing is the change in correlations signals, because while until recently the USDJPY was synonymous with the E-Mini, and thus the S&P, as of late the USDJPY pair has moved tick for tick with the 10Year yield: almost as if the NY Fed's favorite HFT trading shop was instructed to change its vast array of signal inputs away from the S&P and to force a gentle levitation in the 10Y.

Obama's Former Chief Economist Calls For An End To US Dollar Reserve Status

"...what was once a privilege is now a burden, undermining job growth, pumping up budget and trade deficits and inflating financial bubbles. To get the American economy on track, the government needs to drop its commitment to maintaining the dollar’s reserve-currency status...The privilege of having the world’s reserve currency is one America can no longer afford."

- former Chief Economist and Economic Adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team.

Frontrunning: September 8

  • Scotland split jitters send sterling to 10-month low (Reuters)
  • S&P 500 Beating World Most Since 1969 Doesn’t Spark Flows (BBG)
  • Happy ending guaranteed: Vietnam building deterrent against China in disputed seas with submarines (Reuters)
  • China Posts Record Surplus as Exports-Imports Diverge (Bloomberg)
  • Russia, U.S. to hold talks on 1987 arms accord (Reuters)
  • Halcon’s Wilson Drills More Debt Than Oil in Shale Bet (BBG)
  • Deadly Disappointment Awaits at Ebola Clinics Due to Lack of Space (WSJ)
  • Latinos furious at Obama on immigration delay, vow more pressure (Reuters)
  • Japan GDP Shrinks at Fastest Pace in More Than Five Years (WSJ)