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Japan's Nikkei Flash-Smashes 400 Points Higher In Milliseconds After Abenomics Gets Three-Year Extension

Tyler Durden's picture




 

Whether it is due to thin holiday liquidity, due to the BOJ intervening just ahead of its usual time, because Japan's "legendary" Twitter trader "CIS" just went bullish (again), because prime minister Abe just learned he would be reinstalled as head of his ruling LDP party because no challenger had emerged unleashing three more years of unchallenged Abenomics, because Japan's Q2 GDP was just revised modestly higher (to a less negative number) or just because this is how the New Normal rolls, moments ago the Nikkei flash smashed higher some 400 points higher, in a well-choreographed algorithmic frenzy, to take out Friday's high stops.

 

Perhaps this latest ridiculous move was predicated by the USDJPY momentum ignition which today came 30 minutes ahead of its usual time...

... or by some of the economic data is neither relevant nor worth digging into. In this "market" things just happen...

Speaking of the economic data, this is what Japan reported: instead of a -1.8% drop in Q2 GDP, Japan - like the US - revised the number higher to "only" -1.2% (versus the initial -1.6% report) with the real sequential decline of -0.3% fractionally better than -0.5%, even as nominal GDP posted the smallest possible sequential gain.

Additionally, Japan reported that its July Current Account balance was higher than the JPY1.732 trillion expected, and rose to JPY1.809 trillion, up from JPY 559 billion in June.

Perhaps the catalyst was the report that Prime Minister Shinzo Abe has returned as president of the ruling Liberal Democratic Party on Tuesday, as rival Seiko Noda failed to garner signatures of support from 20 LDP Diet members, a requirement to file a candidacy for the Sept. 20 election. According to the Japan Times  the deadline for filing the candidacy was set at 8:30 a.m. Tuesday, but Noda held a news conference to tell reporters that she gave up running prior to that the same day.

In other words, Abe’s new term as LDP president continues for another three years, which means his term as the prime minister will be extended for that period as well, assuming the increasingly jerky Nikkei - the only thing that has allowed Abe to keep his position as long he has - does not crash in the interim.

As a result, Abe is on course to become Japan’s longest-serving prime minister in more than four decades after standing unopposed in his party’s latest leadership election.

Abe’s re-selection Tuesday as president of the Liberal Democratic Party comes as protests flare over unpopular legislation to expand the role of the Japanese military; Abe isn’t required to hold a general election for another three years. If he stays in office until 2018, he would become the third-longest serving prime minister since World War II

There is no term limits for the prime minister, but a general election of the Lower House will be held at least once in every four years, and a new prime minister will be elected each time by members of the chamber.

“I tried to run for the presidential election, but I was unable to accomplish that,” Noda said. Noda continued her last-minute efforts to garner support from other LDP members but the LDP leadership led by Abe kept putting pressure on them not to support her.

Top LDP executives feared that if Noda succeeded to run, it could trigger internal strife within the party and give ammunition to opposition parties to further delay deliberations on contentious government-sponsored security bills, which are now being deliberated on in the Upper House.

And while Abe's reign is now literally supreme and unopposed, Japan Times cautions that Abe’s ruling camp is now set to bulldoze the bills through the chamber and have the legislation enacted next week. This is expected to cause a big public stir and will likely push down the Cabinet’s approval rating in media polls.

Whether that means more or less Abenomics, read printing of money to make the rich richer, remains to be seen. Recall on Friday the IMF joined the chorus of warnings that the BOJ's QQE will soon need to be tapered as Kuroda runs out of willing sellers.

Judging by today's early market kneejerk reaction, the algos have not gotten the memo.

 

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Mon, 09/07/2015 - 20:22 | 6520481 JustObserving
JustObserving's picture

Free and fair markets in action

Forward

Mon, 09/07/2015 - 20:36 | 6520544 back to basics
back to basics's picture

It's all bullshit, all of it. But unfortunately at this point, and contrary to the constant ZH "the market is about to crash" warnings of reality, this CAN and WILL go on as long as politicians and bankers continue to have this incestuous relationship. 

 

Eat cake bitches for the rest of us. 

Mon, 09/07/2015 - 21:56 | 6520880 38BWD22
38BWD22's picture

 

 

Well, now the Nikkei is not up but down (-97 (edited, weird error or sumpin), 9:53 PM, US ET) after the initial up-spike.

I just want bearings from Asia, not company stocks...

Tue, 09/08/2015 - 01:57 | 6521428 Nobody For President
Nobody For President's picture

And down more as of 1:55 ET: https://finance.yahoo.com/echarts?s=^N225#{"allowChartStacking":true}

And it crossed 17,500 and is now lower than when it started the year.

Mon, 09/07/2015 - 20:24 | 6520490 km4
km4's picture

Congrats @AbeShinzo will drag Japan to economic depression and DEUTSCHE BANK WARNS: Stocks, bonds, housing ... they're at 'peak valuation' http://read.bi/1OsZF0x via @themoneygame

Mon, 09/07/2015 - 20:25 | 6520494 km4
km4's picture

Reid, Burns and Baker find that:

Looking at three of the most important assets (bonds, equities and housing) across 15 DM countries, with data often stretching back two centuries, we are currently close to peak valuation levels relative to history. Indeed when aggregated, current levels are higher on average across the three asset classes than they were back in 2007/08 and certainly higher than in 2000. At the equity market peak back in the summer months of 2015 we were pretty much at the peak.

Of course, stock markets have fallen recently but the authors say that this is “still one of the more expensive points in history to be an owner of the asset class at the index level at least”.

Read more: http://www.businessinsider.com/deutsche-bank-stocks-bonds-housing-near-peak-valuation-2015-9#ixzz3l6Oiwdmu

Mon, 09/07/2015 - 20:37 | 6520551 booboo
booboo's picture

Yea, we had a tyrant named Abe too, that ended real well for him.

Mon, 09/07/2015 - 20:50 | 6520595 OpTwoMistic
OpTwoMistic's picture

Question?  Who buys US futures at night and gets their ass kicked nearly every morning?   This cannot continue unless you are using someone elses money.

Tue, 09/08/2015 - 02:16 | 6521450 GotGalt
GotGalt's picture

OpTwoMistic - It is Kevin Henry who keeps buying US futures in the dark of night, and yes, the entity backing him has unlimited wealth and is not afriad to use it up as needed

Mon, 09/07/2015 - 20:24 | 6520491 Ban KKiller
Ban KKiller's picture

Fearless!

Fantasy!

Mon, 09/07/2015 - 20:48 | 6520573 weburke
weburke's picture

netanyahoo

Mon, 09/07/2015 - 20:25 | 6520495 BurningFuld
BurningFuld's picture

Are you trying to say faster than any human can respond?

Mon, 09/07/2015 - 20:26 | 6520505 buzzsaw99
buzzsaw99's picture

awesome

Mon, 09/07/2015 - 20:34 | 6520540 ozziindaus
ozziindaus's picture

Never mind, gap filled

Mon, 09/07/2015 - 20:38 | 6520554 NotApplicable
NotApplicable's picture

30 minutes earlier on the USDJPY ramp? Why you crafty bastards, you!

noted

Mon, 09/07/2015 - 20:41 | 6520562 adr
adr's picture

The gator teeth algo strikes again.

Remember that pattern that kept appearing everywhere.

 

Mon, 09/07/2015 - 20:42 | 6520567 general ambivalent
general ambivalent's picture

This bull has wings.

Mon, 09/07/2015 - 20:47 | 6520582 Jason T
Jason T's picture

It "WTF'd it!"

Mon, 09/07/2015 - 20:56 | 6520587 Chad_the_short_...
Chad_the_short_seller's picture

I see the nik500 up 4 whole points. 

EDIT: Now the nik500 is red. 

Mon, 09/07/2015 - 20:58 | 6520639 Oxbo Rene
Oxbo Rene's picture

And with that, our opening monday morning has nothing to worry about .....

Mon, 09/07/2015 - 21:05 | 6520672 yogibear
yogibear's picture

It's always more QE.

China dumps US treasuries and the Federal Reserve buys them all back with printed money.

Countries can dump trillions and Yellen sucks them all into off balance sheet stuff.

A financial fantasy land as long as it last.

Mon, 09/07/2015 - 21:08 | 6520686 VW Nerd
VW Nerd's picture

I've been having transmission errors posting on Zero site only.  Anyway, funny how these events occur at the end of each weekend, prior to the Europe/New York weekly open.  Just coincidence I'm sure....

Mon, 09/07/2015 - 22:20 | 6520985 OzFan
OzFan's picture

These article proves that Central Bankers can keep the fiat-system charade going for quite some time, but we all know, it won’t last.    What happens when things like Japan's ageing & declining population smash tax revenues some more (and as if they're not already)?  A. More money printing.   What happens when the Nikkie looks like its about to collapse (taking everyone down with it).  A. More money printing.   More, More, More, MORE, MOOAAARRRRRRR. lol.    Michael Pento has some awesome analysis over the years regarding of the utter doom awaiting the Japs (worth a listen).    The collapse is going to be utterly EPIC for Japan.

Tue, 09/08/2015 - 05:14 | 6521586 HolyfieldsOtherEar
HolyfieldsOtherEar's picture

I knew Kakuei Tanaka, sir, and you are no Kakuei Tanaka.

Tue, 09/08/2015 - 07:02 | 6521658 Crocodile
Crocodile's picture

The US markets are set for the same "knee-jerk" upward swing.  This will hurt many shorts only to end flat to slightly upward.  The magic 1940 on the S&P will be obtained and is likely to settle in that area.  However, by the end of the week all this will probably change.  If we see a serious spike upward over the next week or so, then prepare for new lows afterward.

 

Volatility will also magically disappear; wait till around 1pm and go long on the VXX...not financial advise..just an observation and guess.

Tue, 09/08/2015 - 08:07 | 6521827 lucky and good
lucky and good's picture

Bears tend to use tight stops on trades and this makes them easier to hit than a sitting duck. Much of the markets rise has been from these stops being targeted and hit.  May I suggest the market has become so distorted it no longer reflects reality and that those with short positions rushing to the exits coupled with the record amount of "stock buybacks" are responsible for most of the price action now taking place.

The lack of short positions will bode poorly for the market if it falls rapidly because in such a situation as shorts take profit and buy back their positions they act as a floor under the market giving it support. In this distorted market we may find the floor is very weak or only an illusion. The article below delves deeper into this subject.

http://brucewilds.blogspot.com/2015/08/bears-using-tight-stops-easier-to-hit.html

Tue, 09/08/2015 - 08:17 | 6521843 Crocodile
Crocodile's picture

Thanks for the reference; looks like a good website for more information as though the brain can handle anymore.

Tue, 09/08/2015 - 09:38 | 6522167 moneybots
moneybots's picture

Three more years of what isn't working.  That will help.

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