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Markets Explode Higher As Bank Of Japan Goes All-In-er; Increases QE To JPY 80 Trillion
UPDATE: *NIKKEI 225 EXTENDS ADVANCE TO 5%
NKY is up 1000 points from FOMC
and what do u expect to happen to JGBs when Stocks rip 1000 points... yep they're rallying!
- Yield on 10-yr govt bond declines 3.5 bps to 0.435%, while 20-yr yield also slides 3.5bps to 1.285%, both lowest since April 2013.
- 5-yr yield falls 1 bp to 0.110%, level unseen since March 2013
- Lead 10-yr bond futures climb to record 146.78
In a surprise move given all the recent congratulatory bullshit from Abe and Kuroda on breaking the back of Japan's deflation and bring about recovery (forgetting to mention record high misery index, surging bankruptcies and a crushed consumer), the Bank of Japan (by a 5-4 vote) raised its bond-buying program from JPY 70 trillion to 80 trillion... and triple its ETF buying to JPY 3 trillion. This move, on the heels of more confirmation of broader foreign asset purchases in Japan's GPIF sent USDJPY instantly gapping 1 big figure higher to 110.30 and Nikkei futures instantly rose 400 points. S&P futures are also surging. Gold and silver are tanking and TSY bonds are selling off.
- *BOJ UNEXPECTEDLY TARGETS BIGGER EXPANSION OF MONETARY BASE
- *BOJ TARGETS 80T YEN ANNUAL EXPANSION IN MONETARY BASE
- *BOJ SEES RISKS IN CHANGING DEFLATIONARY MINDSET
- *BOJ AIMS FOR ANNUAL INCREASE OF 80T YEN IN JGB HOLDINGS
- *BOJ EXPANDS PURCHASES OF ETFS TO 3T YEN
- *BOJ: ETFS TRACKING JPX-NIKKEI INDEX 400 ELIGIBLE FOR PURCHASE
- *BOJ: WILL CHECK RISKS, ADJUST POLICY AS APPROPRIATE
BoJ Statement
This was a double whammy though as Japan also announced it was shifting GPIF asset allocations...
From this...
To this...
- GPIF’s current portfolio targets are 60% for Japanese bonds, 12% each for local and overseas stocks, 11% for foreign bonds, 5% for short-term assets
- GPIF will today boost allocation targets for Japanese and foreign stocks to 25% each, while reducing its domestic debt allocation to 35%
And the result...
- *YEN DROPS TO 6-YR LOW AT 110.12 PER DOLLAR AFTER BOJ
- *NIKKEI 225 SURGES MOST SINCE JUNE 2013 AFTER BOJ ADDS TO EASING
Nikkei 225 is up 700 points from this afternoon's 2-week old headline and broken markets!!
S&P futures are surging...
Gold was pushed lower...
Ironically Gold is up in JPY terms...
Treasuries are being sold heavily...
* * *
It seems money does grow on trees...
* * *
A gentle reminder - Blackstone's Larry Fink met Shinzo Abe two days ago... (the same Blackstone that warned of carnage if selling ever begins in corporate bond land)... clearly the Japanese panicked!
Welcome to your fundamental-driven markets!! The farce is almost complete. The day after The Fed stops QE, The BoJ raises its bond AND STOCK buying program!!!!
* * *
Coming soon...
Even though Kuroda said Japan could control hyperinflation through monetray policy...
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WOW! Went to my Nomura page before coming here. My MAXIS 225 ETF shot up +777. I was flaberghasted! Never seen that before. Thanks Koroda and Abe! Your toes must really hurt after kicking that can so much.
I won't shred a tear when SHTF. They voted for Abe, that's what they get. Think like herd, act like turd.
The Western banking system remains in full on apocalypse mode. Print or banks and the government go under. This is how hyperinflation always comes. I am still amazed that there are any deflationists still alive out there. A bad econonomy is not deflation.
YYYYYYYYYEEEEEEAAAAHHHHHH!!!!!!!!!!!!
Looks like Japan will be the first big nation to go BK.
time to start buying gold and taking it home. no paper gold.
There you go again...thinking technical analysis predicts the price of gold.
Lest you have a line to the Fed, you would have no clue....except that we all know they need to keep it down whilst in their masturbation phase.
The TPTB could make it $400 if they were so determined.....so long as they can and need to sell no existant paper gold at increasing leverage....they can do pretty much what they want.....predicting $1000 or whatever is also an exercise in public masturbation. It will be what the TPTB need it to be, so much as they are able to control it......until they cant
*They* cannot drive the price down to whatever level they want, because the physical market would diverge much too sharply and obviously. In other words, it's not simply a matter of timing, they actually are constrained in spite of their ability to print and leverage in the paper market.
It's a tightrope act, and even setting aside the likelihood of an exogenous shock, they won't be able to stay aloft.
Qe is dead...Long live Qe!
Game up! Long toilet paper.
I owe you fuck all!
$i L\/€2 ¥00 £iTcHeZ!!
clearly they were told to do it, just as the fed ends, to keep markets afloat. this is all such a joke. Its going to end in a war (eventually)
This is beyond ridiculous, we have entered the twilight zone of complete market madness!
Just shorted the nikkei at levels of 16750
This is insane...
It is going to end in a crash
However these markets can easily meltup 10% more
Nucular, bitchez.
Even the biggest Bulls on Wall Street must be tempted to short the fuck out of this artificial bazooka move and take the money and run??? can't see a lot of people wanting to chase this after all the jitters the other week..the BOJ have just smashed their EOY targets so why not sell and sit back?..and buy some Puts and Gold for the obvious falls that are coming.
If, in front of a 4-month-old, one places 3 items: pureed spinach, pomegranate edamame over quinoa, or a 12-in. diameter cookie – which will they choose?
Central bankers view us thusly, not mature enough to demand political/fiscal change, rather than monetary milkshakes, so real lives go nowhere, but the Dow to 29,000.
Will this be a more salient political topic in the next major elections? Used to be the "my cab driver asked me about the stock market" test. Now, the cab driver's annoyed, saying "WTF is up with stocks, my business sucks."
We're about to see a country committed to QE forever. They believe that if they print enough, Fukishima will go away. This is their mentality. This is going to be fun to watch.
No they dont believe that. Thats what they are making you believe.
They are milking the cow for the last drops of value.
Prices up, purchasing power down.
QQE ... quantitative and qualitative easing ... where qualitative = perceptions management (or flat out misperceptions mismanagement)
It's a great business model. ...print money, buy stocks.
Rinse, repeat.
What could go wrong?
These markets starting to take on Zimbabwe-esque characteristics.
They have always been in the process of becoming more and more detached from the reality of economies.....but now they are entering the world of total insanity.
Share prices reflecting amount of currency printed......nothing else....doesn't that ring some familiar alarm bells. On this basis...share prices could reach to any height...and increasingly less meaningful values...
PS. The problem TPTB have with trashing price of gold with paper...is it doesn't shake much free, but gets a whole lot more sucked out of the market. Making it more scarce and into stronger hands.
If the PM price slide continues, lots of Au/Ag mines may eventually go bankrupt and TPTB will be able to take them over for next to nothing.
looks to me that GPIF is left holding the bag as everyone dumps all their toxic European Bonds into its lap, if the ECB has any sense it will use this opportunity to get rid of all the shit they have been holding to GPIF as well.
Remember those yen/yuan currency swap deals and trade agreements you used to hear about? Don't hear much about those anymore, ever since that nuke, err quake went off near the coast of Fukishima. Strange that.
"All In er" ?
Got a twitch out of me this morn.
let me be the first and only one to say this. This pop get sold..... this is the blow off top. I have been wrong every other time, so eventually I have to get one right.
According to Natixis FICC Research:
http://personal.crocodoc.com/SU8Hy8u
In reality, central banks control only the prices of the assets they buy directly
When a central bank buys an asset directly (often government bonds), it drives up the price of this asset, the demand for which increases.
But the prices of the other asset classes increase only if the economic agents that have sold the first assets to the central bank use the money received to buy these other asset classes.
This transmission of increases in asset prices to all asset classes is therefore unstable, since it depends on the behaviour of investors and savers. Since 2012, we have seen that central banks’ purchases first led asset sellers to buy risky assets (equities, corporate bonds), whose prices rose. But in the recent period, the rise in risk aversion has turned them away from risky assets, whose prices have fallen, and they have invested the money received from the central bank in risk-free assets.
There is therefore no stable monetary policy "risk channel"; the only asset prices that are controlled by central banks in the longer run are those of the assets that central banks buy directly. This could in the future push central banks to buy riskier assets if they want to change their prices in a stable manner.
Central banks’ asset purchases have a direct impact on the prices of these assets
When a central bank buys financial assets, it increases demand for these assets, which directly drives up their prices.
This occurred with purchases of Treasuries and ABS in the United States (Charts 1A and B) and with government bonds in the United Kingdom and Japan (Charts 2A and B), and with the announcement of covered bond purchases in the euro zone (Chart 3).
But the impact of the central bank’s asset purchases on other asset classes is uncertain
- The central bank buys assets (especially government bonds, Charts 1A, 2A and B above).
- It pays by creating money (Chart 4).
- The economic agents that sell assets to the central bank use this money to buy other assets. But they have a free choice: a quantitative easing policy will drive up the prices of the assets that economic agents choose to buy, not the prices of the others.
- We also saw from 2011-2012 until the spring of 2014:
• A tightening of credit spreads (Charts 5A and B, 6A and B);
• A rise in the stock market (Charts 7A and B, 8A and B).
- But investors’ risk aversion has risen since the spring of 2014, (Charts 9A and B): they no longer buy risky assets and the prices of these assets have corrected downwards, whereas long-term interest rates on risk-free government bonds have fallen sharply (Chart 3 above, Charts 10A and B).
Conclusion: The risk channel is not robust
The transmission of the rise in the prices of the assets the central bank buys directly to a rise in the prices of other assets is therefore unstable, since it depends on investors’ attitude and their risk aversion.
The "risk channel" is the mechanism through which the central bank’s monetary creation drives down risk premia.
We have seen that this mechanism is unstable: it functions only if economic agents use the money created by the central bank, in exchange for purchases of risk-free assets, to buy risky assets.
If their risk aversion rises, this mechanism disappears - and so does the risk channel. In that case, the only remaining possibility for the central bank is to buy risky assets directly if it wants to drive down their prices.