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Traders Lose Faith In BoJ As Another Weak Japanese Auction Sparks JPY, JGB Turmoil
Yet another weak Japanese bond auction (this time 5Y maturity - lowest bid-to-cover and biggest tail since 2013), on the heels of last night revelations of a growing chorus of JPY-devaluation-fears has many wondering if the faith they placed in The BoJ's grandest experiment was wrong after all. With speculators now net short for Japanese stocks for the first time since Abenomics was unleashed, a series of weak bond auctions and a spike in JGB yields since the ECB unleashed QE, and now a surging JPY (tumbling USDJPY) as carry trader around the world pull back on leverage and exposure... perhaps - the idea that a nation can devalue itself into prosperity on the backs of the rest of the world was total idiocy after all and Kyle Bass' Potemkin Village is about to fall.
Specs Net Short Japanese stocks for the first time since Abenomics...
Even the BoJ's ability to transform priunted money into wealth creation via the stock market is fading...
Another weak bond auction (lowest bid-to-cover and biggest tail since 2013) spikes JGB yields (remember, Japan cannot afford higher yields or the entire ponzi explodes under the weight of the interet burden and so The BoJ soaks up as much as possible to manage it... it has clearly lost control)...
And since The SNB / QECB double-whammy was unleashed it's really ugly.... the blue lines are recent weak JGB auctions
and for some context of just how huge these moves are... here is the JGB yield curve shift!!
As the last 24 hours has seen the final nail of USDJPY carry traders losing faith...
Charts: Bloomberg
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Imodium alert!
They'll get what they deserve. Fukushima fucktards
when i wake in the morning futures will be higher no matter what.. i have a fucking problem
And since this post, the Yen has retraced the supposed 5yr auction move.
R.I.P. all you pensil heads.
Groundhog, and you would be correct. LOL
Can't fight the stupidity, you can only prepare yourself for the eventual outcome of said stupidity.
Shorts?.. is it summer in Japn already? Certainly we are not talking about stocks... the bears have all been dead a long time ago in this dreamy goldilocks great fucking teaparty alice in wonderland bullshit bulltard world.
I find this picture a bit interesting… Nikkei:
http://i.imgur.com/3LPvh5V.jpg
JGBs will first reflate, then inflate, then begin taking on hyper-inflationary styled risk premia. The BoJ and Japanese government will offer all manner, style, and type of excuse, but ultimately, investors will shun JGBs and the BoJ will have to hike rates wildly to defend the yen. The government has actually done a decent job of buying down the yield curve, so it won't cause an immediate crisis inside the government financing, but as it becomes apparent that the inflation/risk premium isn't going anywhere, the government will be thrown into a financing crisis. Before that, however, the Yen will crash. The holders of JGBs, primarily the large Japanese banks, insurance companies, and pensions, will have to write down their JGB holdings and the corresponding hit to their equity will render them insolvent. Its so freaking obvious and yet only a few seem to see it coming or will admit of it. Investors and regulators will beat themselves over the head because looking back in retrospect it will all have seemed so obvious. I think many CBs understand it and feel there is just nothing they can do other than try to isolate themselves from any contagion, but that will be impossible as the Japanese banks are inextricably intertwined with international banking system. Hell Mitsubishi owns 20% of Morgan Stanley.
Japan is a cliff-styled credit crisis waiting to happen. I actually think Japan could trigger up the next global financial crisis before Europe does.
"The holders of JGBs, primarily the large Japanese banks, insurance companies, and pensions, will have to write down their JGB holdings and the corresponding hit to their equity will render them insolvent."
No, they will change the write-down regulations. They will be allowed to pretend that the hit to their equity didn't happen. That is the pattern so far since 2008 in the U.S. for real estate; why not in Japan for JGBs.
You won't hear about this on CNBS.
Muslims demand arrests over Irish Charlie Hebdo sales:
http://tinyurl.com/o9rqhvg
Abenomics or Economics:
http://www.youtube.com/watch?v=GlJRMtMGg0k
Did I miss Something, I thought the BOJ went full retard already and were buying all their treasuries going forward? This is bullish for US equities for sure...
yeah. td is making it sound like they have a bond market. they don't, and he knows it.
Fucking die already damnit!!
If interest rates go up and the JOB is holding most of the float then it just takes the coupon and recycles it back to the Japanese Treasury.
-At least that is how it is purported to work IF they are running the same playbook as The FED.
Now, the Nikkei is another matter all together.
IF the BOJ is long the Nikkei ( it reportedly is, but how much of the index and what names I haven't seen divulged ) and the Nikkei crashes then the shorts will simply have cleaned out the BOJ on trades the BOJ was long...
One wonders if the jokers running the BOJ trade desk are crazy enough to be loaning their shares to the shorts thinking that they'll take a little chump change on the side and that they can simply overwhelm them with purchasing bid torrents and force position covering as they like....
THAT would be a very foolish tactic, especially if another CB -say the Swiss, or the Chinese- deciced to teach them a lesson for devaluing so deeply.
interest rate can't go up dot
Maybe. Maybe not.
Still doesn't solve the problem of short specs leaning on the Nikkei if the BOJ is long. We are talking a lotta yen, bro.
Sure: losses don't matter when you own a printing press. I understand the concept altough I don't think that being soaked by foreign speculators is exactly what the BOJ had in mind when it went long the Nikkei.
Hm. -Or is the BOJ loaning it's shares directly to political cronies and then manufaturing swoons by with-holding bid in order to pay out QE/counterfeited/printed yen to their homies without arousing suspicion?
With you on BOJ parking their shares with cronies to push out the printed trash. They are not stupid just as matter of self interest have to show that the policy works and know that they cannot control what China (in particular) and Others will do.
Carry trades are now trading for exits except for some die-hard contrarions.
Watch for share buy backs and their spins (some green shoots evidence) from the major trading houses (ex banks) eg Japan Oil Group.
"With you on BOJ parking their shares with cronies to push out the printed trash. They are not stupid just as matter of self interest have to show that the policy works "
IF a significant amount of the float is short then the shares are obviously being loaned short by the owners aren't they?
Woudn't paying the shorts push the counterfeits into the system as easily as any other 'helicoter drop' method?
Once their buddies that borrowed cover and take the money the BOJ goes back to buying.
What am I not getting? That the chimps at the BOJ are actually the most heroically honest and transparent CB jockeys on the planet?
This guy said it best! He reminds me of Peter Schiff. lol
https://www.youtube.com/watch?v=wk6QBqRWvEc
Rooks rike they'le sclewed!
The BOJ can continue to keep the rates low if they continue to purchase the bonds. There is no threat of a failed auction, the BOJ just buys.
What does not seem to be playing out is that the Yen is strengthening against the USD when the BOJ must be forced to print to buy those bonds to control the rates and also fund the spending programs. The slight increase in rates indicates that they need to print faster. Faster printing should not lead to stronger Yen. Anything can happen for a day or a week. The rising bond yields just tells them they have to and must print faster to self fund the purchases.
The scenario that could be playing out is that the BOJ is selling the UST securities to buy the Yen to then buy the bonds. That could also explain the jump in the US long bond rates over the last week or so.
+1 i think they are selling treasuries to buy the yen to buy the JGB"s, hence the rising Yen. Otherwise, it doesn't make any sense. Remember when Fukishima happened? Right away the Yen rallied and back then it was thought similarly that the JCB was selling treasuries to pay for reconstruction and damages as well as to curb rising JGB yields. there is no other way you can explain a rising Yen against rising JGB yields. They have to purchase those bonds to keep rates suppressed that under ordinary circumstances would crush the Yen. So, they have to be dumping UST's. Its the only thing that explains the falling US/Yen cross - in my opinion.
I'm not a financial guy but it seems the whole world is rotten with debt and as such, for anything to happen requires money to move from one place to another. This is not gold that can be stacked and horded. This is fiat that is trapped within the realms of of international banking and sovereigns. As Martin Armstrong explains, it is about flows, money moving from one play to the next, which begs the question, where would you put your money? We understand that this movement is likely responsible for America's market strength (if you can call it strength) but it is obviously only strength relative to the rest of the rot, even if it is ultimately the source of that rot.
My point is that while there is some truly horrible shit out there,can it really collapse if there is no place to run? Maybe these are just obvious and painful illnesses that eventually kill us, more like cancer than a heart attack. The cancer may kill us but ultimately we just die from a slow progression of bouts of the shits with really bad headaches in between.
If there is no place for the money to go, maybe it just slowly rots, like the financial system it represents.
Amazon.Com's shares are up a hundred bucks in less than a month.
This is not some "newbie business" either. Stocks go down an elevator but up the stairs? Yeah, right.
Equities go up like a rocket "and then Detroit blows up."
I have thought the same thing.
When the call comes someone has to pay. If there is only so much collateral for the amount on the table it will be there for te first to grab.
To reset the game it will require a top dog. After the fight to grab will be the struggle to be the big dog who sets the rules for the next game.
My interpretation.
It requires a stable, non inflatable global reserve currency not tied to a single nations fiscal or monetary policy.... Each nation (or currency bloc) can float or peg their local currency to the rock stable standard... Sounds like a return to the gold standard and possibly an added silver standard at a set ratio (50 to 1?).
The big dog paradigm simply doesn't work as empires decay.
The Japanese economy was always heavily reliant on imports of all raw materials and nearly all energy.
QE and currency devaluation makes these more expensive.
Inflation when wages don't rise just reduces consumer spending power.
Just producing low inflation figures that don't take into account real rising prices gives a false impression that doesn't let you see the further reduction in consumer spending power.
As ZeroHedge has highlighted QE wasn't actually working based on the hard stats.
Kyle Bass was right, Japan is in big trouble.
Like most Governments Japan has borrowed from the future to spend today.
The money is spent and the future is here.
But WTF is happening in NQ's and ES? I've never seen a short squeeze like it. 01:24 am NY and once more we have liftoff!!
Seriously WT effing F!
Yahoo spin off is on sale apparently.
Did read the Chinese Army will have a military parade in downtown Beijing for the first time in a while too.
Not until September apparently.
Or is it October?
It is a resounding strong fundamental market that makes highs in the dead of the night after an exceptionally low volume melt up day. Nd what's funny is some asshats talk about the strength of the market predicated on a recovering economy. Any person that has a job knows this is bullshit
More like anyone who *doesn't* have a job.
Another thought however: that yield curve steepening is going to be quite good for the banks.
If banks and others are bailing on the JGB then they are receiving yen when they sell the bonds. This increases demand for yen and that is probably why the yen is rising. Best guess is the yen rise will be short term until they find a place to park the yen. The cash will likely find it's way into US Treasuries and US equities, but there is a lot of Japanese debt to sell, so who knows how high the yen can go. The flood out of those bonds could move rapidly and really spike the rates. Jump risk is high. Should be interesting.
"Pushing on a string" fits so well with central banks.
And puppet strings from the banks tugging every appendage of the central banks.
Their debt to GDP is what, 320%? At some point, their currency is worthless. How they have lasted this long shows how corrupt the system is.
.....so what if debt to GDP was, say, 2000%?
not rhetorical.
Take note because you can see the future of the US. Their following our Federal Reserve's financially engineered plan.
"the idea that a nation can devalue itself into prosperity on the backs of the rest of the world was total idiocy after all"
That sounds like a country with initials "US"
Yellenomics = Abenomics = Bernankenomics
Japan's plan was the US economic game plan.
We'll see the future of the US only more grand.
I don't know guys.. you put such a negative spin on the truth and most people I know have never been better of than now? I am starting to think that the central banks are correct in their actions.
so, does truth need to be spun?
Sound oxymoronic to me.
Yakuza visits Krugman and takes his middle finger and both thumbs and puts where where the Sun don't shine.
"He help Abe and BOJ give us the finger, we take in compensation."