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Goldman Has A Blue Nikkei Special Deal For What Muppets Are Left

Tyler Durden's picture




 

Whenever Juncker is lying, or Goldman openly commands the muppets to buy, you know the situation is serious, and Goldman has a lot of unwinding to do. Which is precisely what just happened following the Squid's reco to buy Nikkei September futures (NKU3) ahead of the BOJ meeting. What is Goldman's thesis in a nutshell: hope may be fading in Abenomics, but the "incentives for Governor Kuroda to use the [upcoming BOJ] meeting to signal a firmer and clearer commitment to the easing course, and to highlight the potential to do more, are high and rising." In other words, please bet the farm on more of the same jawboning that lead to a 20% loss for anyone who bought as recently as 2 weeks ago. Oh, and by the way, complete the sentence, whenever a client is buying from a Goldman flow trader, the Goldman flow trader is [____].

Trade Update: Go long Nikkei September futures (NKU3) ahead of BOJ meeting

 

After a sudden decline of nearly 20% from May highs, the NKY is now back to levels that had prevailed before the April 4 BOJ meeting, when massive quantitative easing was announced. Beyond a very large unwinding of positions, the fundamental worry – to the extent that there is one - is clear: the market has backtracked significantly on its belief in the commitment and efficacy of BOJ policy. Nervousness over local bond market volatility, amplified by concerns about Fed tapering, has raised fears about whether QE policies can be effectively delivered. We think those fears are overdone and are recommending long positions in Nikkei September futures (NKU3) with a target of 14,500 and a stop on a close below 12,700.

 

With the April BOJ “boost” almost fully unwound, we think that the market is underpricing the scale of the policy shift. While implementation is risky and success ultimately not assured, the risk reward from positioning for easing expectations to ramp up again is attractive, particularly against the backdrop of the upcoming BOJ meeting. Our central expectations for Tuesday’s BOJ meeting are relatively modest – we expect the term period for fund-supplying operations against pooled collateral will be extended to two years. But the incentives for Governor Kuroda to use the meeting to signal a firmer and clearer commitment to the easing course, and to highlight the potential to do more, are high and rising.

 

On the macro side, we have analyzed the impact of Japanese monetary policy shifts by looking at the levels of inflationary expectations as implied by the FX market and how success in lowering real rates through those channels flows to other asset markets (see Global Economics Weekly 13/13: 'The market consequences of the BoJ regime shift', April 10, 2013). On those measures, 30-year market inflation expectations have dropped below 60bp, levels also not seen since before the last BOJ meeting and down from a peak of more than 1% in May. Based on these measures, on the way up the equity market did overshoot other markets in mid-May and so the subsequent damage there has been particularly large. But if anything, Japanese equities now appear somewhat “cheap” to where FX and rates are trading, based on this analysis.

 

From a Strategy perspective, Kathy Matsui’s more neutral short-term view of Japanese equities was based, in part, on the pace of the run-up. However, beyond that, our Portfolio Strategy team remains firmly bullish over longer horizons. Moreover, the sharp selloff took the TOPIX below our 3-month target and well below our 12-month target of 1,400 (our Nikkei-equivalent target is 17,000), and so the medium-term picture remains supportive.

 

Beyond Japan, our view is that fear of Fed tapering has also been excessive. And with our Global Leading Indicator (GLI) heading tentatively into Expansion territory, even as markets head lower, we think the opportunities to take on more cyclical risk in general are rising again. The risks are that the BOJ does too little to regain market confidence or that position adjustments have further to run. But we think the risk-reward has improved considerably

Now the only reason we are not all in short on the Nikkei following this plea to buy whatever NKU3 Goldman's flow is selling, is that Tom Stolper did not endorse the recommendation.

As for the final outcome...

 

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Sun, 06/09/2013 - 21:41 | 3640836 EscapingProgress
EscapingProgress's picture

selling

Sun, 06/09/2013 - 23:17 | 3641105 aint no fortuna...
aint no fortunate son's picture

sucking dog balls

Sun, 06/09/2013 - 23:21 | 3641115 xtop23
xtop23's picture

....nailing a midget with a strap on while he hangs suspended from the ceiling by his ankles with waxed twine and octogenarians throw walnuts at his anus?

Sun, 06/09/2013 - 23:29 | 3641134 imaginalis
imaginalis's picture

a lying cunt?

Mon, 06/10/2013 - 10:05 | 3641942 GMadScientist
GMadScientist's picture

"What's the matter? These aren't the work programs you envisioned, Mr. Reich?"

 

 

Sun, 06/09/2013 - 23:34 | 3641144 Xanthias
Xanthias's picture

It's not easy being green.

Mon, 06/10/2013 - 00:40 | 3641252 Mr. Saxby
Mon, 06/10/2013 - 05:43 | 3641450 prains
prains's picture

fucking BBC is openly calling Japan's economy a "success"........wtf!

Mon, 06/10/2013 - 06:36 | 3641478 terryfuckwit
terryfuckwit's picture

the uk have to play to the fairy tale balloon money story.. they are next in line for a reality check

Sun, 06/09/2013 - 21:45 | 3640851 moonstears
moonstears's picture

evil?

 

Sun, 06/09/2013 - 21:46 | 3640857 moonstears
moonstears's picture

lying?

 

Sun, 06/09/2013 - 21:47 | 3640859 moonstears
moonstears's picture

coked up?

 

Mon, 06/10/2013 - 10:06 | 3641947 GMadScientist
GMadScientist's picture

...with a limp dick and dried tears on his little cheeks (all four of em).

Sun, 06/09/2013 - 21:47 | 3640860 Yen Cross
Yen Cross's picture

    This muppet picture is moar better Tyler.

    [IMG]http://imageshack.us/a/img402/65/weareallmuppets0.jpg[/IMG]

Sun, 06/09/2013 - 21:50 | 3640870 e_goldstein
e_goldstein's picture

I wish I could up arrow you twice. Once for the pic, and once for the Gononomics spelling of moar.

Sun, 06/09/2013 - 21:56 | 3640887 ebworthen
ebworthen's picture

LOL!

All Goldman buy recommendations should have the Author listed as:  "Getyouto Bendover"

Itelligent Female analyst, mother from Japan, Father from Brussels, Harvard educated.

Sun, 06/09/2013 - 21:47 | 3640861 ABG LINE
ABG LINE's picture

Tom Stolper. LOL!

Sun, 06/09/2013 - 21:52 | 3640877 ebworthen
ebworthen's picture

"whenever a client is buying from a Goldman flow trader, the Goldman flow trader is getting a blow job while drinking some Bollinger and smoking a $20 cigar (and hitting the 'sell' button)."

Sun, 06/09/2013 - 21:52 | 3640879 holdbuysell
holdbuysell's picture

Anyone who watched/read the Snowden interview, knows exactly why ANYONE still works at GS.

Sun, 06/09/2013 - 21:53 | 3640880 Atomizer
Atomizer's picture

Goldman: "I am? playing 800 different emotions” with our Muppet client money.

Sun, 06/09/2013 - 23:26 | 3640893 jon dough
jon dough's picture

Hell, I thought that said NUK3...

Long GS glowing in the dark...in perpetuity...

Sun, 06/09/2013 - 21:57 | 3640894 ziggy59
ziggy59's picture

First there was The French Connection, then came The Chinese Connection, now...

The Rainbow Connection

http://youtu.be/jSFLZ-MzIhM

Featuring Goldman Sux and the Muppets

Sun, 06/09/2013 - 22:27 | 3640981 ShrNfr
ShrNfr's picture

Oh my, only the wishful would think that a company with that sort of prop desk would actually give out a good idea without frontrunning it or taking the other side of it.

Sun, 06/09/2013 - 22:45 | 3641037 buzzsaw99
buzzsaw99's picture

if muppets don't step in and buy those futes the bernank will. the squid does not lose.

Sun, 06/09/2013 - 23:43 | 3641163 WTFUD
WTFUD's picture

SARAH!! PALINTOINSIGNIFICANCETOLOGY

Mon, 06/10/2013 - 10:03 | 3641928 GMadScientist
GMadScientist's picture

The Dufus Whisperer.

Mon, 06/10/2013 - 00:15 | 3641220 dognamedabu
dognamedabu's picture

Enjoying a night of ritualistic sacrifice?

Mon, 06/10/2013 - 00:33 | 3641243 Freedumb
Freedumb's picture

They even engineered a big ramp to coincide with this bullshit, presumably trying to lure the muppets into the trap as exterminators do with rats and sweet tasting poison. Hopefully the muppets will mutate like NYC rats have done and come back with a vengeance.

Mon, 06/10/2013 - 02:48 | 3641377 Acet
Acet's picture

whenever a client is buying from a Goldman flow trader, the Goldman flow trader is wanking under the table!

Mon, 06/10/2013 - 04:13 | 3641407 The Contrarian ...
The Contrarian Investor's picture

the Goldman flow trader is being on the other side of the trade thinking making money has never been that easy...

Mon, 06/10/2013 - 06:07 | 3641466 swedish etrade baby
swedish etrade baby's picture

this muppet is thinking about buying the etf dxj

Mon, 06/10/2013 - 06:44 | 3641483 Wakanda
Wakanda's picture

...the goldman flow trader is looking for something to wipe his load off the screen of his Bloomberg Terminal.

Mon, 06/10/2013 - 09:52 | 3641890 Pareto
Pareto's picture

....."short selling it on the other side."

Mon, 06/10/2013 - 10:02 | 3641924 GMadScientist
GMadScientist's picture

"...handing a bagholder a bag well-earned."

Thu, 06/13/2013 - 15:27 | 3655123 diogeneslaertius
diogeneslaertius's picture

jawboning

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