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Peak Japaganda: Advisers Call For More QE (But Admit Failure Of QE); China's Yuan Hits 3-Week High
Asian markets are bouncing modestly off a weak US session, buoyed by more unbelievable propaganda from Japan. Abe's proclamations that "deflationary mindset" has been shrugged off was met with calls for more stimulus, more debt monetization, and an admission by Etsuro Honda (Abe's closest adviser) that Japan "is not growing positively" and more QE is required despite trillions of Yen in money-printing having failed miserably, warning that raising taxes to pay for extra budget "would be suicidal." Japanese data was a disaster with factory output unexpectedly dropping 0.5% and retail trade missing. Markets are relatively stable at the open as China margin debt drop sto a 9-month low. PBOC strengthened the Yuan fix for the 3rd day in a row to its strongest in 3 weeks.
We begin the evening in Asia with some exceptional double-talk from who else but the Japanese leadership.
First Abe:
- *ABE: WILL RESHUFFLE CABINET ON OCT. 7 (should fix everything)
- *ABE: WOMEN AND ELDERLY SHOULD BE TAPPED BEFORE IMMIGRANTS (not quite sure what he means there)
- *ABE: CLOSE TO ESCAPING DEFLATION (nope!)
- *JAPAN HAS SHRUGGED OFF `DEFLATIONARY MINDSET,' ABE SAYS (nope!)
- *JAPAN'S CPI HAS `MADE A TURNAROUND,' PRIME MINISTER ABE SAYS (nope!)
Japan just dipped back into deflation...
Then came Former Economy Minister Takenaka:
- *TAKENAKA: JAPAN SHOULD COMPILE 5T YEN EXTRA BUDGET IN AUTUMN (fiscal stimulus, ok)
- *TAKENAKA: FOLLOWED BY MORE BOJ EASING (well who else is going to monetize that debt?)
- *TAKENAKA: YEN IN 'COMFORTABLE RANGE' OF 115-120 VS DOLLAR
Then one of Abe's closest advisers accidentally spilled some truthiness (as The FT reports):
Japan needs more economic stimulus to stave off a serious shock from China, according to one of Prime Minister Shinzo Abe’s closest advisers.
Etsuro Honda, an architect of Abenomics in his role as special adviser to Mr Abe, said passing a supplementary budget to boost the stagnant economy was an “urgent task”.
“I don’t think we should call it a technical recession yet, but generally speaking, the Japanese economy is in a static situation,” Mr Honda said in an interview with the Financial Times. “It is not growing positively.”
And he is right - as Japan heads for Quintuple Dip recession...
and it appears, despite China's reassurance, all is not well...
“I’m sure that something serious is happening in China,” he said, arguing that a shift towards the service industry in China could not explain how far its imports have fallen, or other measures such as electricity consumption.
And do not even think about raising taxes to cover this additional budget...
Mr Honda said: “Definitely if something serious happens outside of Japan, like the Lehman shock, we cannot raise consumption tax. It would be suicidal.
“At this moment, all that I can say is ‘I don’t know’.”
And then Japanese data hit - and it was a disaster...
- Japan Aug. Industrial Production Falls 0.5% M/m; Est. +1% (oops!)
- *JAPAN AUG. RETAIL SALES UNCHANGED M/M (Exp. +0.5%)
* * *
Following Daiichi Chuo's bankruptcy:
- *DAIICHI CHUO SAYS FILED FOR BANKRUPTCY AFTER OVER INVESTING
- *DAIICHI CHUO TRADES IN TOKYO, FALLS TO AS LOW AS 1 YEN
Other shipbuilders are under pressure:
- *DAEWOO SHIPBUILDING FALLS 8% IN SEOUL TRADING
And today's bounce in Glencore has the rest of the commodity/miner sector in confidence-boostingh mode...
- *FORTESCUE CEO SAYS CO. CAN WEATHER VOLATILITY IN MARKETS
- *FORTESCUE IN 'FANTASTIC POSITION' AFTER CUTTING COSTS: CEO
- *FORTESCUE COULD BRING IN INVESTOR TO SPEED DEBT PAYMENT: CEO
And Aussie miners are bouncing modestly (apart from South32)
* * *
China opened with more de-dollarization...
- *PBOC TO PROMOTE CURRENCY SWAP COOPRATION W/ KYRGYZSTAN C. BANK
- Central banks of two countries agree to promote cooperation in currency swap and local currency settlement, according to a statement posted on People’s Bank of China website.
And some good news on deleveraging...
- *SHANGHAI MARGIN DEBT BALANCE FALLS TO NINE-MONTH LOW
- Outstanding balance of Shanghai margin lending dropped for fifth day, falling 0.8%, or 4.7b yuan, to 573.4b yuan on Tuesday, lowest level since Dec. 4.
The PBOC fixed The Yuan stronger for the 3rd day in a row (under pressure from offshore Yuan) to its strongest in 3 weeks
- *CHINA SETS YUAN REFERENCE RATE AT 6.3613 AGAINST U.S. DOLLAR
But offshore Yuan remains notably stronger than onshore still...
Chinese stocks are modestly higher pre-market...
- *FTSE CHINA A50 OCTOBER FUTURES RISE 0.6% IN SINGAPORE
- *CHINA'S CSI 300 STOCK-INDEX FUTURES RISE 0.8% TO 3,103.4
And Interbank lending markets remain entirely suppressed...
Here's why you may want to care about that...
Simply put - as the mainland squeeze bleeds out to Hong Kong, it creates a liquidity suck out from the rest of the world, reducing carry trade 'power' and thus derisking any and every leveraged portfolio's exposure to US equities. When (or if) SHIBOR finally snaps then we will see the real impact (just as we saw shockwaves after CNY devalued unexpectedly).
* * *
Crude has faded as Asia opens after the bigger than expected API inventory build...
Charts: Bloomberg
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I am sure Japaganda can get even peakier in the next few months. Just wait until the rest of the world tries to outprint Japan.
Fuck they need more Paul Krugman!
Give them some credit. They don't call him Poor Krugman just because they can't pronounce L's.
Japaganda !
LOL. Great game show...how to devalue your winnings by hitting the printing button the fastest.
Paging Nobel Laureate...Doctor Krugman!
I just dropped him in the toilet bowl. Had to give two courtesy flushes.
TWO IS NEVER ENOUGH for a Krugman.
Moar! ;-)
And give it a good reach around and wipe.
Amazing that people don't seem to understand Japan's population is collapsing. Japan's population of young (0-14yrs/old) has already fallen by nearly 50% from it's peak young population...and this massive lack of reproduction is working it's way through the core population. Talk of deflation should be replaced by what is actually happening, massive depopulation in a nation with net emigration. More credit, debt, or negative interest rates can't make up for fewer and fewer consumers...and China is following right down the same track. The implications in a highly indebted nation(s) upon assets including especially real estate but also equities, bonds, and pretty much everything. Perpetually fewer buyers and more sellers does not a bull market make.
http://seekingalpha.com/article/3526426-the-story-of-china-is-the-story-of-japan-just-10x-bigger
Holy shit...not sure how a coming 50% guaranteed collapse of Japan's core 15-64yr/old population can't be seen for what it is...an economy killer...and no different for China. The system is entirely done and that's why CB's have taken over everything to avoid markets finding true valuations between willing and able buyers / sellers. All that's left is helicopter money, NIRP, and who knows what but these just dull the pain for a month or a quarter before the pain returns worse than ever.
Yes and one day the young ones will figure it out.
No young in Japan means no workers at our small supplier's factory. His stuff has been very good to us. But, the long term outlook for his company is NOT GOOD.
some syrian refuges could solve this problem...
By the same token, GDP should always be reported on a per capita basis.
Abe should helicopter some Syrians in to bump up the populace then.
It's all smoke and mirrors, orchestrated markets, but I'm happy to play them.
S&P500 retest of 1910-20 area?
Still believe we should set a Lower Low.
http://tripstrading.com/2015/09/26/sp500-2015-vs-2011-vs-1987/
http://tripstrading.com/2015/09/19/sp500-weekly-chart-2-or-5/
trips the obvious play is short gold and miners ..the cb's of the world cannot have gold looking like a safe haven..remember 2008? no matter how bad the economies this suppression of gold is one tool they all agree on as owning gold reduces velocity of money and undermines their fiat ..
We must spend more to keep from going bankrupt.
~ Joe Biden
So much bullish information in one post.
Oh, sorry. I meant bullshit. Stupid auto correct.
Godzilla........
Be careful
QE is contagious
Japan is proof that our "full retard" financial markets can stay a dumpster fire for a long freaking time ... This is one reason I continue to purchase my PM's in chunks each month instead of all at once. We won't know the day the system is going to crash until the crash is already happening or happened.
*ABE: WOMEN AND ELDERLY SHOULD BE TAPPED BEFORE IMMIGRANTS
Look, I can get behind tapping the women, sure, but I wanna at least see the immigrants before I gotta think about tapping the elderly. Just sayin'.
Good point. In Japan, everybody is getting tapped.
Double tapped.
Interbank lending trouble, eh? I have flashbacks to late nights in 2007 and 2008 reading about the same thing.
Oh, history. Always repeating yourself.
Should we laugh or cry? What an unmitgated disaster this ZIRP/QE garbage has become. The more it fails, the more they do.
*ABE: WILL RESHUFFLE CABINET ON OCT. 7 (should fix everything)
If I were in his cabinet, getting my walking papers would be like getting paroled. Get out while you can, because this ship is going to the bottom.
Wait...
"Japaganda"?
Can we actually say that?
Only I can
"Japaganja"
Did he click his heals when he said it? Does he know about the heal-clicking thing? Maybe that's where they were coming up short. Click your heals and say it again Abe.
"Does he know about the heal-clicking thing?"
Ahhh, always the doctor - thinking of healing.
Not that I'm trying to be a heel.
Of course it’s over, I just figured out how to pronounce ‘Abenomics’.
I never believed that Abesan's stuff would be working. You cannot put people on casual and unpredictable incomes and then expect they spend their money freely to create growth. Their favourite "reforms' only ever provide a sugar hit. And when you create more difficult conditions for people you expect them to have more children?
"I never believed that Abesan's stuff would be working."
Not true. Of course, it might have worked. Except Abe only had delusions of being a Shogun.
What he ought to have done, was......... pay the Japanese people to have SEX more often. I mean, like a few months down the road, Japan would have many buns in the oven. And all of them are going to be future consumers.
Yo, Shogun Abe, try using your pecker to think for a change. And if your countrymen can't get their peckers up, some of us here might volunteer to fill in and get the job done. Wadda you say ?
Japan... Isn't this the same country that has had 10 different finance ministers from 2008-2012?
https://en.wikipedia.org/wiki/Minister_of_Finance_%28Japan%29
im sure they can fix all of their problems with some more amphetamine! it like this junkies on heroin, the bigger the dosage the greater they are.
there are no solutions that both keep the elite wealthy and powerful and also create consumption and employment. that is a riddle japan can't solve and funny neither can yellen.