Central Banks Join The Herd, Openly Buying Stocks In Record Amounts

Tyler Durden's picture

When tin-foil-hat wearing digital dickweed blogs first suggested that Central Banks were actively buying stocks, the mainstream media scoffed at the idiocy and un-independence of such an idea. However, it is clear the central banks themselves are now not only actively buying stocks but are activley encouraging it and propagandizing their efforts to lever this last policy tool left in the toolbox.

As Bloomberg reports, 23% of central bankers surveyed said the bank owns shares and plans to buy more. From the Bank of Japan to the Bank of Israel and with the SNB and the Czech National Bank now at over 10% allocation of reserves to stocks, is it any wonder there is an inexorable bid under the 'free' markets. Rick Santelli is rightly concerned that, "there is a danger that everyone is loaded in the same direction," asking what happens if all the Central Bank pump-priming does not work, given these equity valuations, "who gets caught holding the bag? What chairs are left when the music stops?"

 

Via Bloomberg,

Central banks, guardians of the world’s $11 trillion in foreign-exchange reserves, are buying stocks in record amounts as falling bond yields push even risk- averse investors toward equities.

 

...

 

In a survey of 60 central bankers this month by Central Banking Publications and Royal Bank of Scotland Group Plc, 23 percent said they own shares or plan to buy them. The Bank of Japan, holder of the second-biggest reserves, said April 4 it will more than double investments in equity exchange-traded funds to 3.5 trillion yen ($35.2 billion) by 2014. The Bank of Israel bought stocks for the first time last year while the Swiss National Bank and the Czech National Bank have boosted their holdings to at least 10 percent of reserves.

 

...

 

“If reserves are growing, so are diversification pressures. Equities are not for every bank tomorrow, but more are continuing down this path.”

 

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The survey of 60 central bankers, overseeing a combined $6.7 trillion, found that low bond returns had prompted almost half to take on more risk. Fourteen said they had already invested in equities or would do so within five years.

 

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Even so, 70 percent of the central bankers in the survey indicated that equities are “beyond the pale.”

 

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Some central banks, including the Fed in Washington and the Bank of England in London, have no mandate to buy stocks directly.

 

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the SNB has allocated about 12 percent of assets to passive funds tracking equity indexes.

 

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“Central banks are looking at assets that I wouldn’t have necessarily expected in times gone by,”

Finally, when all the central banks have bid up all stocks to just shy of infinity using electronic monetary equivalent 1s and 0s (which can be created to precisely infinity if and when needed), will the BOJ, Fed and ECB be forced to start shopping in the JCPenney 90%-off closeout rack next?

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Edward Fiatski's picture

But... but... but... the Moral Hazard of being able to conjure a Trillion USDs and buy tangible thinges with it... Ah, fuck it - no one gives a damn; 100 years & running.

toys for tits's picture

In the near future they will begin buying intangibles to increase GDP.

knukles's picture

Krugman's gottabe pulling on his Great Breasted Purple Throbber like there's no tomorrow.

http://www.bing.com/images/search?q=Purple+Throbber&id=E7C6E60A3569EDBDE...

 

Seriously, I thought that there was a bird named the Great Breasted Purple Throbber and this was what was delivered....

 

Come on, what could go wrong?

redpill's picture

"Central banks, guardians of the world’s $11 trillion in foreign-exchange reserves"

 

These fucking fascists aren't guardians of anything.  Deliberately destroying the integrity of global stock markets is financial totalitarianism and is an act of war against the people of the world.

fonzannoon's picture

Cramer told me to embrace the fraud.

Boris Alatovkrap's picture

Central Bank is buy stock "openly"... How to parse!? Central Bank previously buy "secret"?! This cannot is have happy ending (except at SEC when agent is restore porn through anonymous proxy).

redpill's picture

Correct, the survey just means that 23% are actually admitting it now.

Boris Alatovkrap's picture

Now Boris understand, 23% is admit to 25% of purchase. Nice to print money in wild abandonment and buy real asset with impunity.

Get popcorn and soda (Boris is get vodka and cabbage roll) - this is to be exciting to watch!

BoNeSxxx's picture

Central Bankers and 'Risk' in the same sentence?  

LOLZ... there is no risk to the owners of the printing press.

francis_sawyer's picture

When you're given the franchise to print joobux for yourself out of thin air... You can buy a lot of shizz...

~~~

It's especially nice if you have a bunch of joos who control MSM & keep your eyes trained in another direction, & an otherwise joo controlled legal system who aren't interested in prosecuting fellow joos... You know ~ because there's PROFIT involved...

Junk away...

Boris Alatovkrap's picture

More question - sorry - Boris is forget, what is purpose of Central Bank!?

ATM's picture

Purpose of Central Bank is to rob people of wealth and hand over to bureaucrats and autocrats, slowly at first and thena ll at once.

SafelyGraze's picture

repeat to self: don't fight the CB . don't fight the CB

if we can persuade enough of you to front-run us on all our jawbone hints, then we don't have to actually take any action ourselves

you will do the heavy lifting for us

which is as it should be

hugs,

G20 n friends

in the meantime, we still have to buy some of the equities and stuff though.

so bear with us! pardon our dust! under construction! 

fockewulf190's picture

Phyzz. There is no other option. Get yours before it's all gone.

mkkby's picture

To keep kicking the can, they really have no other choice.  If stocks go down, pensions fail and gov collapses -- at the state/local level at least.

If houses don't recover, banks/fannie/freddie stay insolvent.  Therefore, they must keep bonds at zero yield.

If gold goes too high, confidence in fiat dies.  So they have to keep naked shorting it.  No choice.

Primary dealers get their guaranteed profit.  Same as any gov contractor.  How to play?  Wait for major correction.  Go long.  Never short in any amount you can't afford to lose.  They will be attacked as enemy of the state.

Manthong's picture

In for a penny.. in for a pound ..

But an early CB bet was in for a sheckel..

I’d be watching for sheckel exit.

fonzannoon's picture

Bob pissonmeface just making it clear that the fed and ecb are not buying stocks. just other cb's. so other cb's are now frontrunning the fed with stock purchases?

mckee's picture

Bob pissonmeface just making it clear that the fed and ecb are not "admitting to" buying stocks. just other cb's. so other cb's are now frontrunning the fed with stock purchases?

 

Fixed

NotApplicable's picture

Of course, the word Bob's looking for is "proxy."

Who needs to buy stocks when you can create a Rube Goldberg machine to do it for you?

Just think of what you could buy if you had a magic checkbook.

ATM's picture

Ding, Ding, Ding, Ding, Ding, DIng, Ding!!!!!!!

Supernova Born's picture

What the fuck ever goes for banksters.

Beam Me Up Scotty's picture

Didn't the democrats go beserk when W. Bush tried to let people invest a "tiny" portion of "their" social security in the stock market?   Now that Obama is president, its ok to GO ALL IN??

HardAssets's picture

The false paradigm of  'right' vs 'left', 'Dem' vs 'Repub' is a fraud.

It doesnt freakin' matter what the Dems or Repubs say - all of it is b.s. and not worth following or bothering with.  There will never be any solutions coming out of D.C.

Beam Me Up Scotty's picture

Oh, I get that.  I was referring more to the average democrat sheep on the street.  The majority of J6P's were against any investment of SS in the stawk market, but this will be OK, because well, its OK.  Obama said so.

FL_Conservative's picture

What, is Cramer looking for a hug?

Dyhana's picture

It might be purple, but I highly doubt that it's big.

GoldForCash's picture

Buying our stocks with the money we gave them. Worst than a ponzu.

CClarity's picture

Jim O' niell of GS Chair fame, said he thinks its a good idea this morning. And that CentrL banks (I think he meant sov. wealth funds) should take l-t approach for good of the country's people and buy assets that are longer term in I outlook and then share the wealth gains with the people. Stocks, odd currencies, all okay by him. what next, tech inventories and ag land?
Ahem, the Fed is not of the people for the people. It is for its bank members.

NoDebt's picture

Central banks are bond guys, at heart.  Now they're just going to start buying equities like they know what they're doing?  Good thing they have a printing press in the basement- they're going to need it.

"what next, tech inventories and ag land?"

Good point.  Yes, I think would be the answer to that question.

astoriajoe's picture

Its all just spreadsheets and DCFs. what could go wrong?

ATM's picture

Why wouldn't the CBs just go buy everything? They have the money.

fonzannoon's picture

and why wouldn't you front run them knowing they were going to?

NoDebt's picture

Exactly.  That's where I think this bull market has been getting it's endless bid.  Nothing's stopping it.  Not bad news and worse yet, not GOOD news.  This has to be at least in part front-running the central bankers on their equity purchases.

Would make sense since this behavior by central banks is RECENT.  Like in the last six months, perhaps.  Curiously, around the time the market starting pulling up off the November lows last year and hasn't looked back.

If you're powerful and connected all you need to do is ask your "inside guy" and the Fed (or elsewhere in the central bank world) what they're buying and selling and do the same.  The rest of us have to read what they did months later on ZH, scratching our heads why things were moving so strangely in the previous quarter/half/year. 

Jekyll_n_Hyde_Island's picture

Blackrock is behind this - ad infinitum

dontgoforit's picture

Amen G-f-C! 

Too big to fail, grown large on notes of Bernank,

They hang us on a cross with our own nails - and rustily we sank.

They wipe our blood with fiat, rag-papered we expire,

They blame our demise on us, those dirty rotten liars. 

ejmoosa's picture

Buying our stocks with the money we have yet to earn and will one day be expected to repay...

smlbizman's picture

i am proud to be associated with the digital dickweeds.....

Dr. Richard Head's picture

ZH should issue PhD's based on number of comments and up votes.  I could finally be called a real doctor then.

Jekyll_n_Hyde_Island's picture

A heirarchy would be nice.  I.E. someone like Disabled Vet would get the title Resident Dickhead for garnering over 200 down votes in a week, you'd have your troll classifications too, then we'd have McMolotov and the others Prime Chancellor, Chief Sno-Cone Provider, ad nauseum et al. 

thecoloredsky's picture

Is it ok if I cruise to the PhD by using comments like "Fuck you Bernanke!" and the like? If thats cool, then I'd like to kickstart my career with.... wait for it....

FUCK YOU BERNANKE!

Stoploss's picture

According to the COT for bonds, and gold's reaction, it would appear it is about to get ugly.

But hey, this time could be different!

Gringo Viejo's picture

Somebody got to buy 'em. Everybody else tryin' to keep the cockaroaches from eatin' they food stamps.

smlbizman's picture

you heard it...its over for gold...that most intelligent woman on cnbs says so......since thats that when  i take my metals up to the county recyling plant do i have to seperate or just dump them in with the water heaters?

sansnobel's picture

Hang all Central Bankers of the world!!!!!!  Fucking theives!!!!!

Ghordius's picture

do me a favour and lead by example before lecturing foreigners what to do or not to do

Apocalicious's picture

What part of "All" do you fail to understand? I see no reference to "ours" versus "yours" or "domestic" versus "foreign."

 

Noped, checked again - "all central bankers."

Pseudo Anonym's picture

soon the hofjuden will print enough judefetzen to purchase not only all tangible assets but our own living asses as well