Ahead of tomorrow's make-or-break FIFA World Cup game against Portugal, the Ghana "Black Stars" are not happy. Amid controversy over match-fixing, the players have demanded that the World Cup appearance fees they are owed be paid; and as Bloomberg reports, "The players insisted that they will want physical cash." The Ghanaian government has chartered a plane and the dollars are on their way to Brazil. Perhaps the players want to invest it in the latest grand idea - Ghana's first hedge fund has just been launched (prepare for more emails).
Weak GDP growth with major currency devaluation? This is called stagflation. And it’s causing the Bank of Japan some doubt.
While the "mysterious, indiscriminate" buyer of US stocks has been fully unmasked now, what most likely do not know is that just this is happening at a comparable record pace nowhere else but the place which is mirroring and repeating every single Fed mistake tit for tit. Japan... “Share buybacks have the effect of supporting the market when it’s weak,” Daiwa Securities Group Inc. quantitative analyst Masahiro Suzuki wrote in a report on June 10.
With almost metronomic regularity, Japan will gush forth a headline proclaiming the ever-closer time when all the nation's retirees savings will be greatly rotated to the stock market and away from the nation's largest bond market in the world. This week was no exception; however, as Nikkei Asian Review reports, it appears the "all-talk" has turned to action...The Government Pension Investment Fund and other public pensions sold about 1.8 trillion yen ($17.4 billion) more in Japanese government bonds than they bought in the first three months of the year, fueling speculation that the GPIF may be rebalancing its portfolio sooner than expected. It seems rotating away from government bonds (which the GPIF has been worried about since 2011) into junk bonds and junk stocks is a far better use of 'wealth' - we can only imagine the GPIF risk models just got switch to '11'. As we explained last year, Japan's Plan B is not only not a panacea, but it is a House of Bonds Cards that would not survive an even modest gust of wind, and an even more modest contemplation into its true internal dynamics. We would urge Messrs Abe and Kuroda to come up with a fall back plan to the fall back plan before it, once again, becomes too late.
An overview of the price action in the FX market and a look at US 10-year yields. No ride on an ideological hobbie horse or axe to grind. Just trying to make sense of the price aciton
As of this moment, US equity futures are perfectly unchanged despite what has been an almost comical reactivation of the 102.000 USDJPY tractor beam. Considering the pair has been trading within a 75 pips of the 102.000 level for the past month, one has to wonder when and what the next BOJ Yen equilibrium level will be reset to. Oddly enough, even as the USDJPY is very much unchanged, the Nikkei continues to rise suggesting that, as Nikkei reported, the GPIF is already investing Japanese pension funds in stocks. Which is great for the Nikkei catching up with the global bond bubble, what is not so great is what happens when the market realizes that the largest holder (excluding the BOJ) of JGBs is dumping, and the world's most illiquid major sovereign bond market rushes for the exits. Just recall the daily halts of Japanese bond trading from the summer of 2013 - we give it 3-6 months before it returns with a vengeance.
Following the initial de-dollarization meeting, there has been a slew of anti-dollar moves around the world (including Gazprom's shift of 90% of its clients to non-dollar payments). However, on the heels of the "anti-dollar alliance" discussions yesterday, DW reports that China would start direct trade between the renminbi and the British pound on Thursday. China's Foreign Exchange Trade System (CFETS) confirmed Sterling and yuan would be directly swapped without using the US dollar as an intermediary.
While we noted last week the death of the Japanese bond market as government intervention has killed the largest bond market in the world; it is now becoming increasingly clear that the dearth of trading volumes is not only spreading to equity markets but also to all major global markets as investors rotate to derivatives in order to find any liquidity. Central planners removal of increasing amounts of assets from the capital markets (bonds and now we find out stocks), thus reducing collateral availability, leaves traders lamenting "liquidity is becoming a serious issue." While there are 'trade-less' sessions now in Japanese bonds, the lack of liquidity is becoming a growing problem in US Treasuries (where the Fed owns 1/3rd of the market) and Europe where as JPMorgan warns, "some of this liquidity may be more superficial than really deep." The instability this lack of liquidity creates is extremely worrisome and likely another reason the Fed wants to Taper asap as DoubleLine warns, this is "the sort of thing that rears its ugly head when it is least welcome -- when it’s the greatest problem."
It is difficult to talk about the dollar in the abstract, especially when it is falling against the dollar-bloc and rising against the euro bloc. Dispassionate overview.
He's funny cause he's... funny.
We are short of Brent while long of WTI, but the political situation over which we’ve no control has taken control of this spread rendering our position intolerable and forcing us to run for cover upon receipt of this commentary. Not to do so would be trading foolishness of the first order
Because in all other situtations when Gartman "puts" on crude positions (with whose money?) which are always a function of geopolitics, he does so only when he has control over the "political situation"? Gotcha.
Financially speaking, Japan is fast becoming a Keynesian dystopia. Its entire economy is now hostage to a fiscal time bomb. Namely, government debt which already exceeds 240% of GDP and which is growing rapidly because even the recent traumatic increase in the sales tax from 5% to 8% does not come close to filling the fiscal gap. Moreover, even at today’s absurdly low and BOJ rigged bond rate of 0.6% nearly 25% of government revenue is absorbed by interest payments. Now comes the coup de grace, as Kyle Bass predicted, Japan’s savings rate has collapsed and its vaunted current account surplus is about ready to disappear.
When one thinks of millionaires and billionaires, the countries USA, China and UK usually come to mind. And while in terms of absolute numbers of millionaires and ultra high net worth individuals (those with more than $100 million in assets) this would be correct (and since these countries also have the greatest number of poor people too, it merely confirms the record gap between the rich and poor), a very different view emerges when observing the world's uber wealthy not on an absolute but relative basis. In that case, when ranked by millionaires as a proportion of the population, the top three nations are Qatar, Switzerland and Singapore where millionaires account for more than 10% of all households, while a ranking of the most UHNW individuals per 100,000 households gives Hong Kong, Switzerland and Austria in the top three spots.
Thumbnail sketch of an overview of next week.
A look at the likely price action in the forex market in the week ahead.
Meet Mieko Tatsunami, a 70 year old retired kimono dresser from Tokyo. Unlike the scores of paid actors ordered to pitch Abenomics and to spread the gospel of rising asset prices, Mieko shares a most rare commodity in this day of pervasive propaganda: the truth. “The price of everything we eat on a daily basis is going up,” Tatsunami, 70, a retired kimono dresser, said while shopping in Tokyo’s Sugamo area. “I’m making do by halving the amount of meat I serve and adding more vegetables.” Ironically, that's what Americans are doing too. Only here the "halving" of the food is done by the food producers, while the consumers rarely if ever notices that they are paying the same amount for ever lesser amounts of food. At least in Japan they are honest about the food inflation. As Bloomberg shows, Tatsunami’s concerns stem from the price of food soaring at the fastest pace in 23 years after April’s sales-tax increase. Rising prices helped push the nation’s misery index to the highest level since 1981, while wages adjusted for inflation fell the most in more than four years.