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Peak Japaganda: Advisers Call For More QE (But Admit Failure Of QE); China's Yuan Hits 3-Week High

Tyler Durden's picture




 

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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Tue, 09/29/2015 - 21:28 | 6609186 arbwhore
arbwhore's picture

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.

Tue, 09/29/2015 - 21:44 | 6609249 Money Counterfeiter
Money Counterfeiter's picture

Fuck they need more Paul Krugman!

Tue, 09/29/2015 - 21:53 | 6609279 gammab0y
gammab0y's picture

Give them some credit.   They don't call him Poor Krugman just because they can't pronounce L's.

Tue, 09/29/2015 - 22:31 | 6609382 ThirteenthFloor
ThirteenthFloor's picture

Japaganda !

LOL. Great game show...how to devalue your winnings by hitting the printing button the fastest.

Tue, 09/29/2015 - 21:29 | 6609188 nmewn
nmewn's picture

Paging Nobel Laureate...Doctor Krugman!

Tue, 09/29/2015 - 21:33 | 6609206 Dr. Engali
Dr. Engali's picture

I just dropped him in the toilet bowl. Had to give two courtesy flushes.

Tue, 09/29/2015 - 21:38 | 6609226 nmewn
nmewn's picture

TWO IS NEVER ENOUGH for a Krugman.

Moar! ;-)

Tue, 09/29/2015 - 21:46 | 6609253 Money Counterfeiter
Money Counterfeiter's picture

And give it a good reach around and wipe.

Tue, 09/29/2015 - 21:46 | 6609189 Ham-bone
Ham-bone's picture

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.

 

Tue, 09/29/2015 - 21:47 | 6609258 Money Counterfeiter
Money Counterfeiter's picture

Yes and one day the young ones will figure it out.

Tue, 09/29/2015 - 22:05 | 6609313 38BWD22
38BWD22's picture

 

 

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.  

Wed, 09/30/2015 - 06:09 | 6609884 new game
new game's picture

some syrian refuges could solve this problem...

Tue, 09/29/2015 - 21:50 | 6609271 gammab0y
gammab0y's picture

By the same token, GDP should always be reported on a per capita basis.  

Tue, 09/29/2015 - 22:22 | 6609357 thesonandheir
thesonandheir's picture

Abe should helicopter some Syrians in to bump up the populace then.

Wed, 09/30/2015 - 04:26 | 6609830 Trips Trading
Trips Trading's picture

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/

Wed, 09/30/2015 - 06:11 | 6609881 overmedicatedun...
overmedicatedundersexed's picture

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 ..

Tue, 09/29/2015 - 21:31 | 6609199 Dr. Engali
Dr. Engali's picture

We must spend more to keep from going bankrupt.

~ Joe Biden

Tue, 09/29/2015 - 21:31 | 6609200 Mark Mywords
Mark Mywords's picture

So much bullish information in one post.

Oh, sorry. I meant bullshit. Stupid auto correct.

Tue, 09/29/2015 - 21:34 | 6609209 The Bell Rang
The Bell Rang's picture

Godzilla........

Tue, 09/29/2015 - 21:40 | 6609232 Baby Eating Dingo22
Baby Eating Dingo22's picture

Be careful

QE is contagious

Tue, 09/29/2015 - 21:40 | 6609234 DirkDiggler11
DirkDiggler11's picture

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.

Tue, 09/29/2015 - 21:40 | 6609235 Nothing Ever Happens
Nothing Ever Happens's picture

*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'.

Tue, 09/29/2015 - 21:42 | 6609241 DirkDiggler11
DirkDiggler11's picture

Good point. In Japan, everybody is getting tapped.

Tue, 09/29/2015 - 22:12 | 6609329 Joebloinvestor
Joebloinvestor's picture

Double tapped.

Tue, 09/29/2015 - 21:40 | 6609236 Mark Mywords
Mark Mywords's picture

Interbank lending trouble, eh? I have flashbacks to late nights in 2007 and 2008 reading about the same thing.

Oh, history. Always repeating yourself.

Tue, 09/29/2015 - 21:46 | 6609257 khakuda
khakuda's picture

Should we laugh or cry?  What an unmitgated disaster this ZIRP/QE garbage has become.  The more it fails, the more they do.

Tue, 09/29/2015 - 21:50 | 6609272 Mini-Me
Mini-Me's picture

*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.

Tue, 09/29/2015 - 21:55 | 6609290 ISEEIT
ISEEIT's picture

Wait...

"Japaganda"?

Can we actually say that?

Tue, 09/29/2015 - 22:32 | 6609387 Fukushima Fricassee
Fukushima Fricassee's picture

Only I can

Tue, 09/29/2015 - 23:25 | 6609518 ToSoft4Truth
ToSoft4Truth's picture

"Japaganja"

Tue, 09/29/2015 - 22:27 | 6609371 Dr. Bonzo
Dr. Bonzo's picture

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.

Wed, 09/30/2015 - 04:15 | 6609826 Iam_Silverman
Iam_Silverman's picture

"Does he know about the heal-clicking thing?"

Ahhh, always the doctor - thinking of healing.

Not that I'm trying to be a heel.

Tue, 09/29/2015 - 23:05 | 6609461 ToSoft4Truth
ToSoft4Truth's picture

Of course it’s over, I just figured out how to pronounce ‘Abenomics’. 

Wed, 09/30/2015 - 00:20 | 6609627 uhland62
uhland62's picture

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?

Wed, 09/30/2015 - 04:17 | 6609828 newbie vampire
newbie vampire's picture

"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 ?

Wed, 09/30/2015 - 00:40 | 6609632 RichardParker
RichardParker's picture

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

Wed, 09/30/2015 - 00:34 | 6609650 nnnnnn
nnnnnn's picture

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.

Wed, 09/30/2015 - 06:00 | 6609878 overmedicatedun...
overmedicatedundersexed's picture

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.

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