If anyone is confused why the BOJ refused to do anything of note until January 1, 2013 at which point it would proceed with open-ended monetization a la the Fed and the ECB's OMT, the reason is simple: it allows the country's (transitory) leaders to jawbone, threaten, cajole and coax, in what will be daily attempts to talk the currency lower without actually implementing any monetary action: just like the ECB has done so far. Case in point: the now daily speeches by Japan's economic and fiscal policy minister Akira Amari, who every single day of the past week has been talking to reporters, on many case openly contradicting himself, and whose only purpose is to spook any remaining Yen longs into submission. Sure enough here comes today's sermon:
- AMARI: ABE CAREFULLY CONSIDERING BOJ GOVERNOR CANDIDATES
- AMARI: ABILITY OF BOJ CANDIDATES MORE IMPORTANT THAN BACKGROUND
But funniest of all:
- AMARI: GOVERNMENT HAS NO TARGET FOR STOCK MARKET
Wait, back up, what? It was just four days ago that Amari himself made it very clear that he would not sleep until the Nikkei hit 13,000 by the end of March. From Japan Times:
Economic and fiscal policy minister Akira Amari said Saturday the government will step up economic recovery efforts so that the benchmark Nikkei index jumps an additional 17 percent to 13,000 points by the end of March.
“It will be important to show our mettle and see the Nikkei reach the 13,000 mark by the end of the fiscal year (March 31),” Amari said in a speech.
The Nikkei 225 stock average, which last week climbed to its highest level since September 2008, finished at 11,153.16 on Friday.
“We want to continue taking (new) steps to help stock prices rise” further, Amari stressed, referring to the core policies of the Liberal Democratic Party administration — the promotion of bold monetary easing, fiscal spending and greater private sector investment.
Amari said the Nikkei’s recent surge translates into combined share appraisal gains of some ¥38 trillion among domestic corporations, including financial institutions.
The key index started rallying from around 8,600 points in mid-November when then-Prime Minister Yoshihiko Noda decided to hold a general election Dec. 16 that saw his ruling Democratic Party of Japan trounced by the LDP. Share prices have risen largely in response to the yen’s depreciation against other major currencies on expectations for aggressive monetary easing measures by the Bank of Japan since the LDP’s return to power.
Ignoring for a minute the fact that an status quo minister finally let one slip and told the truth behind all the lies of inflation, personal consumption, NGDP, and other "targeting" and admitted it really is all about "stock market targeting", it is simply humiliating and surreal that government leaders treat those who listen to their daily lies like lobotomized cattle, who can't remember what they said a few days ago. But the bigger issue here is that it appears that even the Japanese economy minister has backed off his stock market target, because suddenly he doesn't feel so confident it can be achieved.
Does this mean the Nikkei will drop, and drag the USDJPY, and the yield on the 30 Year down with it. All signs suddenly point to yes.
The only question is why the flip-flop. We hope to find out soon, although the answer may be as simple as the political pushback that Abe is getting in his pick of the next BOJ, as we explained a week ago, which as most know is Kuroda.
Should Abe's pick for his personal printing lackey not be chosen, then all bets about the Japanese reflation are immediately off as the political wedge will once again be inserted and all attempts to send domestic energy prices into the stratosphere will be crushed.