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Goldman Previews Japan's QE Moar: "BOJ Could Purchases Outright Equities"
Two days ago, when we posted ""Frustrated" Liquidity Addicts Demand Moar From BOJ As Nikkei Rally Stalls", we suggested that more QE from the Bank of Japan is just around the corner (and likely to take place as early as April) as the only real "driver" behind Abenomics, the surge in the stock market had stalled for nearly 6 months. 48 hours later, and 700 points in the Nikkei higher, the realization that indeed more QE is coming has swept through the market like wildfire. So what will the Bank of Japan's expansion of quantitative easing look like, when supposedly only $75 billion per month amounting to a whopping 70% of all new issuance, is not enough? According to Goldman "the BoJ could take the lead in this reallocation process by notably increasing its purchases of risky assets, such as ETFs and RIETS, or even outright equities – say purchasing a wide range of Japanese equities by index weight." It may get even better: "the BoJ is likely to consider more unorthodox policy to push up inflation expectations" - like paradropping NGDP, better known as paradropping yen (a move Yellen herself is now contemplating as we previewed back in September).
The full Goldman note:
The first arrow –namely, bold monetary easing to dispel deflation - is likely to be loosed again in the April-June quarter 2014 (most likely April-end) for several reasons. First, to offset some of the negative impacts of the consumption tax hike to be implemented April 2014. Second, by next spring, inflationary pressures are likely to dissipate (due to base effects and more subdued commodity prices). Therefore, the BoJ is likely to feel compelled to act in order to reach the 2% inflation target that was adopted in January 2013. Judging by the survey of long-term inflation expectations for Japan as published by Consensus Economics, there is broad scepticism that the BoJ will hit its inflation target in 2015 as intended. Indeed, the survey does not envisage inflation anywhere near 2% even by 2023. Consequently, further easing is also likely to be required to lift inflation expectations and reinforce the BoJ’s commitment to reaching the target.
In our discussions with clients, many also expect the BoJ to ease next April, but there seems to be little agreement on what policies the BoJ will implement. The BoJ could buy more and longer dated JGBs, but given that the Bank already buys 70% of all new issuance, increasing such purchases may be met with scepticism and a concern that the BoJ is monetising government debt. However, such a move may stimulate quicker portfolio allocation into risky assets, which is only happening very slowly, as reported in the BoJ’s Financial System Report.
Alternatively, the BoJ could take the lead in this reallocation process by notably increasing its purchases of risky assets, such as ETFs and RIETS, or even outright equities – say purchasing a wide range of Japanese equities by index weight. We are also watching to see if the BoJ is likely to consider more unorthodox policy to push up inflation expectations. More conventionally, the Bank may confirm that QQE is to be open-ended.
And where the Japanese unprecedented monetary policy experiment boldly goes, the Fed is sure to follow.
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... it's fukushima economics in japan ...
This is the beta testing for Yellen's policies come next year. They have Fukushima reactors to 'accidently' detonate to fall back on when it doesn't work as cover to blame stopping policy.
Yellen and her 12 Fed stooges are watching and taking notes.
In a way the Fed is already purchasing equities through it's banks.
More reckless and speculative moves forward. An act of desperation in a failed system.
Weren't the collateral rules changed so that certain equities are now considered low risk paper like Treasuries for the banks? You see where this is going right. Backdoor nationalization of 'systematically important' companies via QE 5 or 6 buy equities outright because of 'national security' since the TBTF banks are considered systematically important and as such can do whatever the fuck they want with no real legal consequences now. You see how the noose tightens and parasite gets more control of vitals by doing this making it that much harder to remove it. There is a reason why white blood cells operate independently of vital organs.
The Greenspan wealth effect is a theory. A transmission mechanism. Make the rich richer and they will eventually spend on things made by poor people. Sounds pretty stupid doesn't it?
I feel like this headline has been circulating for 3 years.
its called "rinse & repeat"
And what the fuck would that achieve? Oops sorry, I forgot the rich would get richer, and fuck everyone else
I have some equities they can purchase. And as long as they promise to keep the prices going up, I could get some more equities for them to purchase! Please? Pretty please?
Pletty prease?
Isn't it great how one institution ends up owning everything?
I wonder if that was the plan all along.
Where would they get the money to do this? Ha Ha. Jokes on me.
Perhaps we could incorporate this play into a modern version of Monopoly. When everyone starts going broke, the bank pays off the mortgages of the player with the most properties.
and I just thought TEKKEN was a bad movie...
Hey it was better than Street Fighter.
Don't be hatin' on Raul Julia's Bison.
But yeah, the rest was utter shite.
Yes, that has been the plan all along. And we have the same plan here.
We have a good example of that in North Korea.
The 'must do more' argument is now getting pathetic, so much so that I wouldn't be surprised if they start to buy people's credit card debt at some stage in the future.
If they want inflation print money and then give it to everyone on proviso they spend it in the shops straight away. Give the money to the 99% instead of the 1%
how can 99% of people be so stupid as to let 1% yank them around by their short-hairs ?
and "we humans" think we are sooo advanced and intelligent
cave men/women were smarter
It's good to see that the squid is so far ahead of the curve. Cough...cough. The muppets probably think this is something new.
Yeah, no conflict of interest there. Helicopter drops would be much more efficient at getting that inflation.
"Could."
LOL. As if they aren't already.
Winner!
Don Pardo.....tell him what he's won!
FUCK!!! THAT IS GOING TO CREATE EVEN MORE DEFLATION!!!!
The greatest fools left holding the bag at the time of the next market crash are going to be the central banks. These clueless idiots are governing over the biggest wealth transfer to the rich from the poor ever!
ehe....
and our pension funds
and our checking accounts
and our houses
and our zeppelins
....
But there's something else that needs a bit more attention.
Tyler, this one's for you!!!
WHAT IF all central banks sold their gold to the common people.
Does it have any value left if it's impossible to monetize it than?
Yes but the member banks of the Federal Reserve are getting very nervous about this mess and will try to save their own ass first.
Which could mean the member banks stop playing along with the Fed's game soon which would cause Treasury yield to spike up and kill equities.
Pretty soon they're going to have an economy based solely on the manufacture of sex toys, squid porn, and radioactive teens dressed up like small woodland creatures.
Well, Japanese women probably prefer screwing squids. The squid isn't looking for commitment.
B0J: 'We don't buy Japanese equities'
FED: 'We don't buy US equities'
BOJ Buys US equtieis and FED Buys Japanese Equiities.
Etc. Rinse and Repeat.
They need Maduro as their fed chairman. He'll get them some inflation.
So how does this make Japanese citizens who hold no stake in equities wealthier?
How does this make Japanese women want to have sex so they can still have Japanese citizens 50 years from now?
By destroying purchasing power you make it so people can not afford to purchase anything.
Jesus fucking Christ it isn't a hard concept to grasp.
Yes, let the government buy up all the equities so that they own the means of production. Amazing how the socialists were able to take over step by step without a gunshot or protest.
Same will happen in the U.S,, but everyone will be too busy staring into their iphone to notice.
Just nationalise everything and have done with it.
And Obamacare it.
Please, is this NEWS? WTF, are we supposed to believe that this hasn't gone on for years. Next you're going to tell me that the FED isn't buying S&P's. End game own everything, this is why I think we get a few more crashes before they truly own it all. Fuck the 1% over so that the .001% own it all.
Look.....if you could just try and act surprised....we'd really appreciate it.
Just give everyone - EVERYONE!!! - $1 Billion - 99.9% of problems solved
and when the problems come back - rinse & repeat
Don't let Mrs. Debtfire see this...
This is the ultimate path all central banks will take.
Bank of Israel has been doing it for years. That's why shorting this market has been a bad idea since day one: the other side of the trade might be Governments buying. This advice to Japan doesn't surprise me at all. Could be a reason to buy Sony Corp here (I think Dan Loeb has a huge stake in that business) but right now I wouldn't touch that company. Microsoft, Intel, Oracle...the list is long as far as who the competition is.
Enjoy: http://www.youtube.com/watch?v=0qTqm42bCW4 ;-)
This is the monetary equivalent of the Jackass guys trying to one-up each other.
It's the end result of QE to infinity. Those JY bonds will get flushed soon.
And now that we’re long all those things, feel free to get started any time.
Cheers,
Lloyd.
Hey why not? FED has already been purchasing 'outright equities' for years.
The next news we need to hear is that the Federal Reserve print money and buy real gold from everyone.
It might be a good idea.
LOL