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Japan GDP Biggest Miss In 18 Months; Slowest Growth Since Before Second Coming Of Abe

Tyler Durden's picture




 

Get long 'Depends' may be the most befitting headline for tonight's massive macro miss in Japan. For the 3rd quarter in a row, Japanese GDP missed expectations with a meager +1.0% annualized growth (versus a +2.8% expectation), and a tiny 0.3% Q/Q change vs expectations of a 0.7% increase, this is the biggest miss and slowest growth since Abe retook the economic throne after his chronic-diarrhea-prone first attempt to save the nation. No matter how hard they try to spin this, there's no silver lining as consumer and business spending missed expectations notably and the only Tokyo snow fell just last week so long after the quarter was over... and this is before a tax hike that is aimed at showing how fiscally responsible the nation and not simply an insolvent ponzi scheme alive through the good graces of the greater fools of leveraged carry trades.

Japanese GDP... oops

 

Breakdown by component (source):

 

For a few brief hours there, Japanese stocks bullishly disconnected from USDJPY, then reality hit and it caved...

 

Think that Ito's earlier comments on the nation's pension fund allocations will save them:

  • GPIF SHOULD INCREASE ANNUAL RETURN TARGET TO 5%, ITO SAYS
  • JAPAN'S GPIF SHOULD PUT HALF ASSETS IN STOCKS, ITO SAYS
  • GPIF SHOULD CUT BOND HOLDINGS TO 40% WITHIN TWO YEARS: ITO

... Think again - for as obviously bulltarded as those statements are.. As The FT reported earlier:

The head of Japan’s Government Pension Investment Fund has hit out at pressure to rebalance its bond-heavy portfolio, arguing that his Y124tn ($1.2tn)-in-assets institution should not be used as a tool to push up stock prices.

 

... in an interview with the Financial Times, GPIF president Takahiro Mitani said such demands were unfair on an institution that has been functionally independent from government since 2006. The FSA “should be doing what they are supposed to be doing, without asking too much from us,” he said, adding that the calls for trillions of yen of bond sales from panel chairman Takatoshi Ito showed he “lacks understanding of the practical issues of this portfolio.”

 

...

 

Our sole objective is not to invest so that the Japanese economy will be better; our job is to invest the people’s money in a safe and efficient manner so we can protect and manage their funds.”

It seems that Mitani (who is advised to avoid hot tubs and certainly nail guns) as the last sane voice in Japan just explained the un-independence of everything that is occurring... and remember, as Kyle Bass once wrote,

"There is no way out" for Japan - it's a matter of when not if. And "if there is no way out for them, there is no way out for the rest of us - unless we change the way we operate."

For those who see this dismal number as in some way implying the BoJ will print more money and everything will be fine... this little anecdote should shut them up...

Recently, a Hayman Capital representative had dinner with a key member of the Bank of Japan and was afforded the opportunity to question him about the expansion of the BOJ’s balance sheet to purchase Japanese Government Bonds (“JGB”) (monetizing debt). The BOJ representative had just finished a statement where he denounced monetization of debts when we asked him how he defines monetization (we define it as central bank balance sheet expansion in order to purchase sovereign debt).

 

After a long pause, he said “It is only monetization when the market tells us it is monetization. When yields go up, not down, when we buy bonds, then the market says we are monetizing.”

 

When we pressed further, he acknowledged it was out of the hands of the BOJ and entirely up to market psychology. Wow, we wonder how that makes JGB investors feel.

In other words, be careful what you wish for...

and As Hayman's Kyle Bass previously added:

During my trip to Kyoto, I was introduced to a Japanese phrase that encapsulated the strangely fatalistic viewpoint that many local Japanese market participants have toward the twin threats of debt and deflation. This concept explains a resignation to the unfolding of events and a willingness to submit to this unfortunate reality rather than to fight a seemingly inevitable or impossible challenge.

 

It seems apposite to reprint it here as we watch the beginning of this endgame in the Japanese debt markets unfold:

 

“Shikata ga nai”

It cannot be helped...

 

And in the meantime, the Japanese stock market has given up all its outperformance over the Dow since the BoJ unveiled QQE to save the world...

 

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Sun, 02/16/2014 - 20:18 | 4443318 knukles
knukles's picture

See, this is where we're going.
Identical policies.
Massive QE, infinite printing...
Uncontrolled fiscal spending on crony shit to nowhere...
Higher taxes to pay for fuck all that don't work...
Cradle to grave gubamint...

Get long your high income portfolios while you still can, folks.

By now it should be obvious that we're in a Gloal Liquidity Trap.

Sun, 02/16/2014 - 20:20 | 4443339 DoChenRollingBearing
DoChenRollingBearing's picture

Or gold.  With enough gold, why work...  Higher taxes coming anyway.

Sun, 02/16/2014 - 20:23 | 4443347 knukles
knukles's picture

Absolutely.
I view gold as "perfect"* tail risk protection to what's going on.

"With enough gold, why work?"
With enough shit; EBT cards, section 8, ObieCare, whatever, "Why work?" is right...

* best's I can tell....

Sun, 02/16/2014 - 20:38 | 4443399 kaiserhoff
kaiserhoff's picture

There you go again, Tyler, dissing the carry trade.

Without the carry trade, how is a hedgy supposed to earn his 2 and 20?  J C Penny and Radio Shack aren't on every street corner, you know...  Well, actually they were, and that was part of the problem.  Lemme get back atcha on this one;)

Sun, 02/16/2014 - 21:39 | 4443578 Obchelli
Obchelli's picture

And Nikkey is down what? 

0.00000000000001% soon to be up...

Sun, 02/16/2014 - 21:50 | 4443625 disabledvet
disabledvet's picture

we'll never know this of course but I bet dollars to donuts the Fed is huge buyer of yen relative to some type of "swaps" arrangement.

The same might be true for Germany as well.
"Park your assets here will they will produce dollars and be safe from confiscation"?

Just speculating of course.

Sun, 02/16/2014 - 21:59 | 4443658 MisterMousePotato
MisterMousePotato's picture

There was a time when information like this would have been important, right?

Mon, 02/17/2014 - 04:43 | 4444443 The Vineyard
The Vineyard's picture

Not really a big surprise.  Japan is caught in endless deflation.  Unfortunate bitches.

Sun, 02/16/2014 - 22:13 | 4443702 Not Too Important
Not Too Important's picture

Go long thyroid cancer and leukemia:

'Japan experts voice alarm over “surge in cancers among young in Fukushima” — Gov’t told to “implement measures now” and be prepared for surge to increase further'

http://enenews.com/japan-experts-voice-alarm-surge-cancers-among-young-f...

Mon, 02/17/2014 - 06:40 | 4444492 eurogold
eurogold's picture

+100  - Fukushima Extinction Level Event  remains....... ignored.

Sun, 02/16/2014 - 20:48 | 4443438 VD
VD's picture

Abe & co need to take page from China playbook and just make up all their numbers...

Sun, 02/16/2014 - 21:43 | 4443595 gatorengineer
gatorengineer's picture

They just need Krugman, and we would be happy to give him to them....

Sun, 02/16/2014 - 20:16 | 4443324 syntaxterror
syntaxterror's picture

Economic data is for losers. Just queue the buy orders already.

Sun, 02/16/2014 - 20:30 | 4443372 666
666's picture

If it's not because of the weather, then it must be because of Godzilla.

Sun, 02/16/2014 - 20:18 | 4443335 TheRideNeverEnds
TheRideNeverEnds's picture

Incredibly bullish news there, what do you think we will see this week?  I am thinking a good 50-100 points of upside on the S&P.

 

 

Sun, 02/16/2014 - 20:46 | 4443429 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

S&P loves bad news, the worse the better.

Sun, 02/16/2014 - 21:37 | 4443572 skwid vacuous
skwid vacuous's picture

even better news for PM's ... the print fest must escalate immediately

Sun, 02/16/2014 - 22:05 | 4443674 Wait What
Wait What's picture

dammit, Janet! where's my bazooka?! wee neeeed mooooaaarrrr QEEEEE!!!

Sun, 02/16/2014 - 20:19 | 4443336 stant
stant's picture

war is coming, falklands style

Sun, 02/16/2014 - 20:27 | 4443359 knukles
knukles's picture

So when the Argies surrender we all get a Christina de Kirchner inflatable sex doll?
BTW, Argentia loosely translated means "Land of Silver"
Don't wish for what you think you might want because you might get the unintended consequence, good and hard, or something like that.

See, socialism can fuck-up anything

Sun, 02/16/2014 - 20:34 | 4443387 stant
stant's picture

i am thinking like a bunch of them with diffrent players. and the us dosent come out unscathed

Mon, 02/17/2014 - 02:42 | 4444319 hobopants
hobopants's picture

Amen.

Freedom, not free shit please. It's no longer a question of teaching a man to fish or giving him a fish anymore, it's simply NO FISHING.

Sun, 02/16/2014 - 20:23 | 4443348 ebworthen
ebworthen's picture

You mean using the credit card doesn't increase your income?

Learn something new ever day.

Sun, 02/16/2014 - 20:25 | 4443354 Yen Cross
Yen Cross's picture

 I'm perplexed? Not for lack of understanding/

Sun, 02/16/2014 - 20:32 | 4443362 GeoffreyT
GeoffreyT's picture

LOL... does anybody think GDP stats even matter?

 

If so, why would USDJPY fall (i.e., Yen strengthen) following the news? It can't be UIP; it can't be expectations of an appreciation due to a trade surplus; it can't be due to differentials in inflationary expectations between the two countries.

 

Anyhow... just as I bought at 15000-odd looking for a 300-point bounce (which I got), I'm buying Nikkei again now - again, looking for 300-400 points of bounce over the next day or so. [Edit: should clarify prices: entry 14255, looking for a bounce to ~14600 before week's end]

 

Also bought a shitload of BTC (at MtGox prices - i.e., $350 and under) over the weekend. If MtGox is not dead, that will double in the next day or so.

Sun, 02/16/2014 - 20:39 | 4443407 satoshi411
satoshi411's picture

Bitcoin Craptocurrency has plunged to USD $230, down 81.6% from its USD $1250 high

*

BUY, BUY the bitch all the way to bit-zero.

Sun, 02/16/2014 - 20:44 | 4443420 ebworthen
ebworthen's picture

Satoshi!

Hurting Litecoin value too.

The cascade effect will be people pulling out of mining; as the value drops the cost of the hardware and electricity won't be covered.

Sun, 02/16/2014 - 20:53 | 4443448 tip e. canoe
tip e. canoe's picture

here come the banks baby...right on schedule

http://tradewithdave.com/?p=20308

In a surprisingly frank exposition on just how the Southpark Doctrine (“aaaaand it’s gone”)   goes down for all those independent Bitcoin exchanges out there, Jon Matonis comes clean on what truly forms the foundation of the Bitcoin Foundation – banks.

“If retail bitcoin exchanges cannot provide greater privacy and service than banks, then why are they needed to sit between you and your bank? The answer is that they probably are not needed – at least not in the same way. As more bitcoin exchanges request the opening of commercial bank accounts, the banks are gradually realizing that bitcoin services may be a direct opportunity for themselves.”

Sun, 02/16/2014 - 20:53 | 4443450 kaiserhoff
kaiserhoff's picture

Paging Reggie Middleton,

  who was last seen pimping his brilliant plan to stabilize bit coin by selling puts and calls.  Got any of them thar puts left in inventory Reggie?

Sun, 02/16/2014 - 21:26 | 4443534 Mad Mohel
Mad Mohel's picture

GET THAT SHIT OUTTA HERE! And take all the garbage peddlers who pump it along.

Waiting for some scumbag to come along and say it's only Mt. Gox. This shit has proven to be a scam as one "exchange" after another fold.

GET THIS FUCKIN TRASH OUTTA HERE!

Mon, 02/17/2014 - 06:26 | 4444486 Mr. I-N-The Sky
Mr. I-N-The Sky's picture

THANK YOU!

Sun, 02/16/2014 - 20:30 | 4443370 BandGap
BandGap's picture

USD/JPY is 101.425 and heading down as I type this.

 

Look out below.

Sun, 02/16/2014 - 21:17 | 4443508 NDXTrader
NDXTrader's picture

Could see it get as low as 96. It should start putting US equities under pressure this week

Sun, 02/16/2014 - 20:32 | 4443380 Frank -THE COIN -
Frank -THE COIN -'s picture

In one of Japans QE attempts years ago, they directly gave money to women with children. They promptly took the money, paid some debt,saved the rest and did not spend.

Sun, 02/16/2014 - 21:26 | 4443533 kaiserhoff
kaiserhoff's picture

Why can't I find chicks like that?

OK, maybe I should avoid Titty Bars at closing time, ya think?

Sun, 02/16/2014 - 20:38 | 4443401 Millivanilli
Millivanilli's picture

Ok, so will the market crashie crashie?

 

What could be worse than a plunging Gdp?

Sun, 02/16/2014 - 20:39 | 4443402 steveo77
steveo77's picture

MINI Carrington hits Australia today

From the Article linked below.   WHAT A JOKE.    We just had the most Earth direct CME in years, hit yesterday, with readings flying off the charts.     

And the bonehead scientists, feeding bullshit to the no gum shoe reporters, blame the fires on "light rain".    And the reporters don't question them on this?

Weeks of dry weather combined with dust and light rain sparked a series of power pole fires last night.

Up to 50,000 customers had been affected by the initial power outages.

Uh, had anyone been paying attention to lousy electrical grids being likely to be taken down by Carrington like events?      When small transformers blow out and start the poles on fire and disconnect the wires....that is actually a good thing.     Because the small (and easy to obtain) transformers are sacrificed instead of the very large transformers that control power to say 200,000 people.     The large transformers are not "in stock", and takes about 2 years to build after an order.

http://nukeprofessional.blogspot.com/2014/02/the-2014-mini-carrington-event-hits.html

Sun, 02/16/2014 - 20:40 | 4443412 earl swagger
earl swagger's picture

We're yr 7 in this 20 yr cycle US...Different demographics won't support the "everyone wins" theory. Failure must be option. Bad decisions = free market asswhippin where inventories clear the market efficiently. BK,First lien holders get paid. Move on/repeat. Fire somebody !!!!!

Sun, 02/16/2014 - 20:46 | 4443424 i_call_you_my_base
i_call_you_my_base's picture

+5 for 'bulltarded"

Sun, 02/16/2014 - 20:51 | 4443445 BudFox2012
BudFox2012's picture

This bad Japanese GDP print was caused by the US polar Vortex I & II.  Nothing to see here, move along.

Sun, 02/16/2014 - 20:55 | 4443453 kaiserhoff
kaiserhoff's picture

Ah so, but no no BudFoxsan.

  I brame boosh!  Papasan of awe evoh!

Sun, 02/16/2014 - 21:15 | 4443498 Iam_Silverman
Iam_Silverman's picture

"I brame boosh!  Papasan of awe evoh!"

Me too!  Anytime your president vomits in the lap of a Japanese Prime Minister, isn't that the equivalent of some type of prolonged curse?  Voodoo?

Sun, 02/16/2014 - 21:13 | 4443494 youngman
youngman's picture

And I can hear the Chinese laughing.....

Sun, 02/16/2014 - 21:15 | 4443500 Yen Cross
Yen Cross's picture

  Can we play with this url?  http://www.forexlive.com/

  Japan/ EGOs' ect.

Sun, 02/16/2014 - 22:08 | 4443688 FiatFapper
FiatFapper's picture

Do you envisage any big green candles on xxxJPY pairs in the next few days?

Sun, 02/16/2014 - 22:13 | 4443699 29.5 hours
29.5 hours's picture

 

Huge GDP fail and the Nikkei shrugs. That spice just keeps flowing...

 

 

Sun, 02/16/2014 - 22:20 | 4443727 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

The negative days seem to be over until the dollar crashes.

Sun, 02/16/2014 - 22:48 | 4443837 USofAzzDownWeGo
USofAzzDownWeGo's picture

Call me crazy but I think the fed is lying to us and instead of tapering, they have already upped QE. How else can you explain this recent surge when everything seems to be collapsing??? Tapering with all this bad news?? Yea, o mother fucking k!!! The fed doens't have to answer to anyone, for they are above the law and governments. Who the fuck is gonna do something to them if they are lying to us?? They never told us about QE in the first place when the market was skyrocketing from the lows, leaving us bears perplexed as fuck..... and broke as fuck.....

Sun, 02/16/2014 - 23:55 | 4444070 slightlyskeptical
slightlyskeptical's picture

Hardly anyone is taking out a new mortgage, so even if they are spending only $65 Billion there probably aren't enough MBS. lLaves them open to buy securites of other flavors without exceeding the stated QE..

Mon, 02/17/2014 - 17:14 | 4445664 El Hosel
El Hosel's picture

.... Its the Trillion ( s ) of Dollar question, how big is the gap between "what they say they buy" and what they actually do. Certainly that rally straight back to the highs the last few days was not part of the official Easing program. How much are they "Easing" around the world when needed to keep things so "Orderly"? We don't know 20% of what they are doing/rigging, 4 Trillion could be 16 trillion.

Sun, 02/16/2014 - 22:56 | 4443873 AdvancingTime
AdvancingTime's picture

If investors in Japan's government bonds begin to believe that Abenomics will be successful in dropping the value of the yen and in bringing back inflation it would be logical for owners of  JGBs to move out of the securities and buy foreign bonds or equities. That would place upward pressure on Japanese bond yields and raise the cost of government to service its massive debt.

With the BOJ  set to absorb half of the government bonds planned for sale this fiscal year, domestic investors have started to move money overseas. If this turns in to a tsunami of  money fleeing Japan it will constitute the end of the line for those holding both JGBs and the yen. More on this subject below,

http://brucewilds.blogspot.com/2013/08/japans-economy-going-forward.html

Sun, 02/16/2014 - 23:36 | 4444013 q99x2
q99x2's picture

The banksters will mix and match fiat supply from China and Japan like they have done with the US and Europe.

Not to worry if you are terminally ill.

Mon, 02/17/2014 - 00:03 | 4444089 McRocket
McRocket's picture

That Abenomics will eventually (and horribly) fail should have been ridiculously obvious the minute after it was announced.

Mon, 02/17/2014 - 11:07 | 4444799 Chuck Knoblauch
Chuck Knoblauch's picture

It's only going to get better, right? TPP will save all the institutions. The supply-side doctor is on his way!

Do NOT follow this link or you will be banned from the site!