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BoJ Disappoints! Nikkei Drops 500 Points From Earlier Highs

Tyler Durden's picture





 

UPDATE: Nikkei futures now -500 from US day-session highs

In what must be quite a surprise to Goldman (as we discussed here), the BoJ has decided not to give in to the market's demands:

  • *BOJ REFRAINS FROM EXPANDING J-REIT, ETF PURCHASES (expected lifting of cap)
  • *BOJ LEAVES FUNDING TERMS UNCHANGED AFTER JGB YIELD VOLATILITY (expected extension from 1Y to 2Y)

The market's angry reaction... NKY -300 from US day-session highs, USDJPY gapped down 80 pips to 98.00, JGB Futs closed, JGBs unch. Full statement to follow:

 

 

which means:

 

 

 

Full statement:

Statement on Monetary Policy

1. At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided, by a unanimous vote, to set the following guideline for money market operations for the intermeeting period:

 

The Bank of Japan will conduct money market operations so that the monetary base will increase at an annual pace of about 60-70 trillion yen.

 

2. With regard to the asset purchases, the Bank will continue with the following guidelines:

 

The Bank will purchase Japanese government bonds (JGBs) so that their amount outstanding will increase at an annual pace of about 50 trillion yen, and the average remaining maturity of the Bank's JGB purchases will be about seven years.

 

The Bank will purchase exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) so that their amounts outstanding will increase at an annual pace of about 1 trillion yen and about 30 billion yen respectively.

 

As for CP and corporate bonds, the Bank will continue with those asset purchases until their amounts outstanding reach 2.2 trillion yen and 3.2 trillion yen respectively by end-2013; thereafter, it will maintain those amounts outstanding.

 

3. Japan's economy has been picking up. As for overseas economies, while the manufacturing sector continues to show a lackluster performance, they are gradually heading toward a pick-up as a whole. In this situation, exports have started picking up. Business fixed investment continues to show resilience in nonmanufacturing and appears to have stopped weakening on the whole. Public investment has continued to increase, and housing investment has generally been picking up. Private consumption has remained resilient, assisted by the improvement in consumer sentiment. Reflecting these developments in demand both at home and abroad, industrial production has been picking up. Meanwhile, financial conditions are accommodative. On the price front, the year-on-year rate of change in the consumer price index (CPI, all items less fresh food) has been negative, due to the reversal of the previous year's movements in energy-related and durable consumer goods. Some indicators suggest a rise in inflation expectations.

 

4. With regard to the outlook, Japan's economy is expected to return to a moderate recovery path, mainly against the background that domestic demand increases its resilience due to the effects of monetary easing as well as various economic measures, and that growth rates of overseas economies gradually pick up, albeit moderately. The year-on-year rate of change in the CPI is likely to gradually turn positive.

 

5. Regarding risks, there remains a high degree of uncertainty concerning Japan's economy, including the prospects for the European debt problem and the growth momentum of the U.S. economy as well as the emerging and commodity-exporting economies.

 

6. The Bank will continue with quantitative and qualitative monetary easing, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate.

 

Such conduct of monetary policy will support the positive movements in economic activity and financial markets, contribute to a rise in inflation expectations, and lead Japan's economy to overcome the deflation that has lasted for nearly 15 years.

 


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Mon, 06/10/2013 - 22:58 | Link to Comment Dr. Engali
Dr. Engali's picture

Watch out for that first step, it's a doozy.

Mon, 06/10/2013 - 23:06 | Link to Comment SilverIsMoney
SilverIsMoney's picture

Ned! Ryerson!!!!

Mon, 06/10/2013 - 23:38 | Link to Comment Groundhog Day
Groundhog Day's picture

Abe!  Abe! I thought that was you

Tue, 06/11/2013 - 01:13 | Link to Comment Monedas
Monedas's picture

I'll bet you're one of those guys who doesn't  have any PM insurance .... at all .... am I right .... am I right ?  Bingo !!!

Tue, 06/11/2013 - 06:08 | Link to Comment StychoKiller
StychoKiller's picture

Leeeerrrroooooyyyy Jenkins!

Tue, 06/11/2013 - 08:05 | Link to Comment RSloane
RSloane's picture

At least he had chicken!

Mon, 06/10/2013 - 23:04 | Link to Comment Number 156
Number 156's picture

Tuesday will be fun here in the west.

Mon, 06/10/2013 - 23:39 | Link to Comment Groundhog Day
Groundhog Day's picture

could it be?  2 tuesday's down in a row

Tue, 06/11/2013 - 01:58 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Maybe, maybe not.  Remember the Mr. Scott-warp-speed ramp/stick save last week when the USDJPY broke 97?  If Au starts hovering around the 1414 level again, you can bet Uncle Ben will give his "blue horseshoe loves SPY" order.

Tue, 06/11/2013 - 08:33 | Link to Comment Urban Redneck
Urban Redneck's picture

Have the bears emerged from hibernation?  

It feels suicidally lonely hedging a portfolio with shorts in the face of a firing squad of FED printing presses (esp on a Tuesday).

Mon, 06/10/2013 - 22:59 | Link to Comment maskone909
maskone909's picture

¡Viva! JGBD

Mon, 06/10/2013 - 23:06 | Link to Comment SillySalesmanQu...
SillySalesmanQuestion's picture

Those extra printers and ink must have been backordered and not shipped on time...damm.

Mon, 06/10/2013 - 23:07 | Link to Comment UP Forester
UP Forester's picture

Unexpected....

Mon, 06/10/2013 - 23:12 | Link to Comment ReactionToClose...
ReactionToClosedMinds's picture

Query:  Are Angela Merkel & Draghi happy or sad - or they care (i.e., they have heavier concerns>>>)?

Is "Japan" pissed at Team 44 maybe (for how many reasons ..... see Erdogan, or any other leader eslewhere for that matter excepting Putin who came back from 'retirement' at Team 44's installation) ?  Just askin'

 

Mon, 06/10/2013 - 23:14 | Link to Comment Confundido
Confundido's picture

Oh well, next time they will give in...

Mon, 06/10/2013 - 23:14 | Link to Comment asteroids
asteroids's picture

"Japan's economy is expected to return to a moderate recovery path". After a few decades of trying and their population rapidly aging, it's not going to happen.....

Mon, 06/10/2013 - 23:18 | Link to Comment rubearish10
rubearish10's picture

We hang on the words of Bankster mouthpieces! What a disgrace to the notion of price discovery!

Mon, 06/10/2013 - 23:21 | Link to Comment ultimate warrior
ultimate warrior's picture

This just means the BOJ needs to print MOAR! 

The game of printing has just begun. Governments around the world want inflation....well they are about to get all they can fucking handle.

Economic Outlook

Bullish: wheelbarrows, cheap whiskey, easy women, encrypted computer/cell phones

Bearish: freedom, liberty, rights, prosperity, an honest government 

Mon, 06/10/2013 - 23:21 | Link to Comment Hongcha
Hongcha's picture

Indeed rube ... the whole thing is so collaterally rigged, I barely even pause to think of it.  One day we will wake up and U.S. stock futures will be down 5% ... I want to be short that day ...

Mon, 06/10/2013 - 23:27 | Link to Comment rubearish10
rubearish10's picture

There's been so much anticipation, that day will not come when expected. When you say "one day" it really could be any day. This means be prepared to the extent you could afford to be, since all rising boats will capsize with limited life preservers. The premium for a lifesaver is well worth it if you choose to be involved in the first place! Good luck!

Mon, 06/10/2013 - 23:47 | Link to Comment otto skorzeny
otto skorzeny's picture

Everything is wound so tight it will happen in the blink of a HFT's eye.

Tue, 06/11/2013 - 00:09 | Link to Comment alphamentalist
alphamentalist's picture

I think you mean rife pleservers.

Tue, 06/11/2013 - 07:23 | Link to Comment FreeNewEnergy
FreeNewEnergy's picture

I went short - via August DIA puts - yesterday. I don't play much anymore, being the market is so rigged, but I go exclusively short about twice a year. Worked last fall (Nov DIA puts) and a nice 100-point dip on the Dow would be a good start for me.

Just from a purely technical, chartist position, I think we may be entering a bear market. The bull has been in charge since March 2009, and is now 52 months old. Nothing lasts forever, even $85 billion-a-month-liquidity-driven Ponzi schemes.

I need the money to buy moar PMs and begin my campaign to root out and fire 90% of the nation's spies. Really, do we need 1.4 million people with Top Secret security? Besides, "Top Secret" isn't very secret when nearly a million and a half people have access.

Wish me luck. Go, Abe!

Mon, 06/10/2013 - 23:21 | Link to Comment Yen Cross
Yen Cross's picture

     I read that Dennis Gartman did a reco, long aud/jpy earlier @ 93.60 area. I looked at the hourly chart on usd/jpy and lmfao. How's that a/j long trade working out for you now Dennis? BTFD

Mon, 06/10/2013 - 23:50 | Link to Comment disabledvet
disabledvet's picture

how's that end of the yen trade looking as well? hmmm. "going down swinging" as they say. better watch those economic growth numbers next time Yen Cross...there's are in the 4% range...not ours. we've got a "lot of cleaning up to do" and it would appear it's not going to happen anytime soon. Canada just posted big jobs numbers too...something that make the current regime look totally Out There still. Ironically our asset prices are still inflating..save for labor and "certain debt products" now...for how much longer though. hmmmm. "that's not dollar positive" should that reverse.

Mon, 06/10/2013 - 23:58 | Link to Comment Yen Cross
Yen Cross's picture

     What? I'm short aud/jpy and usd/jpy.

Tue, 06/11/2013 - 01:26 | Link to Comment Bohm Squad
Bohm Squad's picture

lol...I was long the USDJPY and got stopped out...what I get for catching a falling knife.  Think of me when you spend my 56 pips, Yen Cross.  

Mon, 06/10/2013 - 23:22 | Link to Comment Frank N. Beans
Frank N. Beans's picture

nikkei.com shows down 1 point, what's up wit dat

Mon, 06/10/2013 - 23:30 | Link to Comment Yen Cross
Yen Cross's picture

 

Japan 225 13,284.50 13,514.20 13,584.00 13,154.50[ -229.70 -1.70%] 3:29:01
Mon, 06/10/2013 - 23:45 | Link to Comment Frank N. Beans
Frank N. Beans's picture

tank you

Mon, 06/10/2013 - 23:58 | Link to Comment Yen Cross
Yen Cross's picture

     Anytime :-)

Mon, 06/10/2013 - 23:24 | Link to Comment Bunga Bunga
Bunga Bunga's picture

How do you say 'moar' in Japanese?

Tue, 06/11/2013 - 00:08 | Link to Comment alphamentalist
alphamentalist's picture

Mouru

Tue, 06/11/2013 - 01:15 | Link to Comment Monedas
Monedas's picture

Manchuria ?

Tue, 06/11/2013 - 04:17 | Link to Comment Non Passaran
Non Passaran's picture

Watch some Japanese porn and you'll learn.

Mon, 06/10/2013 - 23:34 | Link to Comment adr
adr's picture

I like how yesterday the better economic news from Japan weakened the currency. Of course it wasn't really better, but the headlines made it look that way.

New normal assbackwards. Confirm the lowest wholesale gasoline sales in decades, rbob and crude soar.

Better economic news, currency weakens because the free money punchbowl might be taken away.

The new 2013 meme, "don't take my easing, bro!"

Mon, 06/10/2013 - 23:38 | Link to Comment Freedumb
Freedumb's picture

Yesterday really put a damper on my joy at the Nikkei dying. But looks as if all is well in the shire again so far in this afternoon session.

Mon, 06/10/2013 - 23:40 | Link to Comment disabledvet
disabledvet's picture

Where's Yen Cross these days? hmmm. "this feels like the 70's" only instead of inflation we have deflation this time. my personal view is that these Japanese yields must be held "at or near zero" to the end because of the dire condition of the State because of Fukumshima. 'tis only rational. It is interesting to view Europe as somehow different of course (they seem to welcome deflation). The USA is definitely different because we have a war going on...a "global war on terror" as it were...and this puts a bid in...well, it would appear just about every asset class there is. http://www.youtube.com/watch?v=FOV8xLGnUks

Mon, 06/10/2013 - 23:43 | Link to Comment Zgangsta
Zgangsta's picture

The Nikkei has not dropped anywhere near 500 points! (yet)

Mon, 06/10/2013 - 23:46 | Link to Comment GOLD AND SILVER...
GOLD AND SILVER NATZI's picture

Yeah, I don't see the 500 point drop either.  Of course, I don't see a lot of things......

Tue, 06/11/2013 - 00:06 | Link to Comment Bernankenstein
Bernankenstein's picture

The Nikkei futures indeed dropped almost that much (500 pts.) from the day's highs. 

Tue, 06/11/2013 - 00:06 | Link to Comment Bunga Bunga
Bunga Bunga's picture

Can you read? I clearly see a 500+ drop as described. http://finviz.com/futures_charts.ashx?t=NKD&p=m5

Tue, 06/11/2013 - 00:48 | Link to Comment Zgangsta
Zgangsta's picture

The misleading headline says nothing about futures.

Tue, 06/11/2013 - 04:16 | Link to Comment Non Passaran
Non Passaran's picture

Screw you, read the content and not just the headlines.
How is your lack of attention for detail our problem?

Tue, 06/11/2013 - 08:09 | Link to Comment Zgangsta
Zgangsta's picture

It's not the lack of attention to detail, it's the lack of any substance.

So futures moved big.  The Nikkei didn't.  You think Ms. Watanabe cares a Gucci shoe about any of that?

Meaningless melodramatic tripe.  Move along.

Tue, 06/11/2013 - 00:21 | Link to Comment nomorebuyins
nomorebuyins's picture

The Nikkei is open and trading, down around 100 now.

Tue, 06/11/2013 - 00:47 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Japan is imploding  before all of our eyes, in real time.  The information releases and other official statements by those who command the public consumption channels in Japan reminds me of the utter incompetence and easily detected lying propagated by the Japanese Government and TEPCO in the wake of the Fukushima Daiichi disaster.

It's no longer a case of whether Japan will implode, but merely how long before its economy and Modern Money Mechanics monetary system takes the big dirt nap.

It will be the first to do so in a long and storied list.

Tue, 06/11/2013 - 00:51 | Link to Comment Freedumb
Freedumb's picture

I'm sure we all agree on the end result for all of this, but the audacity of what central banks are doing today is unbelievable. My biggest nightmare right now is a vision of this continuing onward on a global scale for years, the same way Japan has maintained their Keynesian policies and thus engineered themselves stagnation on a domestic scale for decades. That's why more than anything I hope for a major Keynesian policy failure so obvious and severe that no one can deny it, ideally forcing this farce to end. But then the nightmare progresses further -- obviousness isn't even enough in this environment to change people's behaviour.

Tue, 06/11/2013 - 00:57 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Despite all those who will reflexively reply with the sloganeering of "they'll keep it propped up indefinitely," things such as basic arithmetic and the immutable laws of physics (e.g. gravity) can now be cited as a firm and complete rebuttal to this mindless cheerleading.

Central banks and purported "sovereign governments" have now come, one by one, to the fork in the road (the one they feared most), and despite Yogi Berra's sage wisdom, they can't just "take it."

Tue, 06/11/2013 - 04:14 | Link to Comment Non Passaran
Non Passaran's picture

The word is not indefinitively, but for a while.
Say, a year, 5 or 10.
How many ZH-ers gave the fiat system 5 more years in 2008?
And here we are with the roaring markets, fucked up PM charts and crashed PM miners.
(Vote me down I don't give a fuck, I am all in PMs and miners and I'm still buying every month).
There is no reason why this can't go on beyond end of this year.
Just sayin'.

Tue, 06/11/2013 - 07:10 | Link to Comment onewayticket2
onewayticket2's picture

Agree. One factor to consider is bernanke's exit. That alone could be a tell.

How egotistical is he? Does he want to go risk going out a failure with the Dow at 6500?

Will he act to prop up/kick the can....at the risk of an even bigger, swifter crash?

How to play this?

Tue, 06/11/2013 - 00:57 | Link to Comment TheMeatTrapper
TheMeatTrapper's picture

@Freedumb:

 

Great comment. Unfortunately I fear you are correct. I think the bastards can keep this shit up indefinitely. It seems that, in this life, the people that most desperately deserve to get it between the eyes - never do. They end up in a comfortable, secure retirement while the rest of us die an early death from stress and worry. 

Tue, 06/11/2013 - 01:00 | Link to Comment monkeyshine
monkeyshine's picture

I may have been dreaming but I thought I saw it up 4% on Monday, on Yahoo finance.  Was Monday a massive day or maybe it was a glitch? 

Tue, 06/11/2013 - 01:06 | Link to Comment Freedumb
Freedumb's picture

Monday = Goldman muppet promotional event, sponsored by the BoJ (they told everyone to go long on Japan and the Nikkei yesterday -- see, e.g. http://www.zerohedge.com/news/2013-06-09/goldman-has-blue-nikkei-special... )

Tue, 06/11/2013 - 01:00 | Link to Comment q99x2
q99x2's picture

Dead muppets covering the freeways. Arrest Loyd Blankfein.

Tue, 06/11/2013 - 01:25 | Link to Comment walküre
walküre's picture

This is all so fucked up, I don't know whether to laugh or cry anymore. Maybe both simultaneously.

It's all falling apart folks. Right here and there and in front of your very eyes. Banksters will be tared and feathered before the end of this year. Mark my words. The world is inches away from complete and utter collapse and implosion of all financial systems is inevitably in the cards. For real. There's no retardent that can extinguish the fires they're setting all over.

Tue, 06/11/2013 - 04:07 | Link to Comment Non Passaran
Non Passaran's picture

Yeah, where did I hear this before?

This can go on for he years...

Tue, 06/11/2013 - 09:26 | Link to Comment Hulk
Hulk's picture

or be gone tomorrow !!!

Tue, 06/11/2013 - 07:05 | Link to Comment skipjack
skipjack's picture

What's the trigger ?

Tue, 06/11/2013 - 03:25 | Link to Comment Mentaliusanything
Mentaliusanything's picture

The World is bound by certain immutable Laws. If Moneterists think for one moment that Newtons 3 Laws of motion do not apply when you foolishly expand artificial money, then they are about to find out all 3 can and will act exactly as stated. Call it blow back, call it unintended consequences or call it a miscalculation.

Forces have been put in play and the reaction will be equally powerful. This is no butterfly flapping its wings in a far away jungle, this is mutually assured destruction.

Gravity, also has not been repealled, it has the need more and more energy to keep this balloon afloat 

Tue, 06/11/2013 - 03:51 | Link to Comment JuliaS
JuliaS's picture

Japan is fucked - stuck between a rock and a hard place. If their currency rises, bonds will rise even more. If NIKKEI soars, the Yen will drop. The net result will always be a negative.

Theoretically, deflation in places such as Japan should not be a bad thing. The island has been deprived of energy resources since WW1. That's the whole reason they've entered WW2 on the side of Germany - another equally industriallized nation with no access to oil or gas colonies. They had 2 options - to capture oil and keep scaling up, or to scale down. Having lost the war they were destined to gradually exhaust the supplies and start contracting, but instead of embracing the trend, the government chose to fight it through monetray policies desiged by expansionists such as the US. Japan tried to grow out of an ever shrinking box, sort of speak. No wonder the strategy failed.

Now the clock is ticking. Every day Japan's closer to its doom and the Nikkei's looking more and more like a seismograph needle.

Tue, 06/11/2013 - 06:23 | Link to Comment EclecticParrot
EclecticParrot's picture

What goes up

must come down

Spinning wheel got to go 'round

Talkin' down your currency's a crying sin

Ride a broken market, let the spinning wheel spin

Tue, 06/11/2013 - 06:27 | Link to Comment writingsonthewall
writingsonthewall's picture

Wonderful - I can hear the screams of those being crushed under the collapsing yen carry trade.

nearly a 2% fall in USD/JPY - surely that must be hammering anyone who is trying to profit from a spread of 0.0000005% to make a profit, by using 10000x leverage!

It's like watching rats scramble for the spilled grain...with each managing to get a smaller and smaller amount for their efforts.

Tue, 06/11/2013 - 06:49 | Link to Comment Yen Cross
Yen Cross's picture

   Freakin bond yields are blowing out and the euro rallies.

 
    Spain 10-Year    4.738    4.564    4.750    4.644   [ 0.174    3.81% ]   10:44:20
     Italy 10-Year    4.445    4.300    4.457    4.329   [ 0.145    3.37%]    10:44:35

  Even the 10 year gilt auction was bad.

 

GBP     10-Year Treasury Gilt Auction 2.365%   1.730%
Tue, 06/11/2013 - 08:31 | Link to Comment GMadScientist
GMadScientist's picture

And now we watch the tsunami "carry" them out to sea.

Tue, 06/11/2013 - 09:28 | Link to Comment thereisonlyonelaw
thereisonlyonelaw's picture

The Nikkei is probably not the best way to play Japan. The current policies cannot generate growth; the few good things are too timid to do anything. All that is on the line for Japan right now is a currency devaluation. It might happen through low interest rates + inflation over a long time frame or it might happen all at once but it will happen. Once this restructuring does happen, there is a possibility that Japan will prosper but not before. If they back away from it and hope the need for restructuring goes away, the Nikkei will not benefit short term and if they go full throttle ahead, the Nikkei will not benefit short term. There isn't much point holding the Nikkei because actual business conditions will not change significantly. The whole "let's hope japanese citizens spend more" idea is nonsense, it's like betting an economic recovery on the prospects on eating all your seeds. Sure, in the short term you have more to eat but then FUCK! Where is the next crop going to come from!?

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