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The BoJ Just Promised To Buy $2.5 Billion In Make-Believe ETFs: What It Means For Japanese Corporates
When it comes to central bankers gone “full Krugman” (as it were) you’d be hard pressed to find someone more Keynesian crazy than BoJ governor Haruhiko Kuroda.
Kuroda - who earlier this year likened himself to Peter Pan on the way to explaining that it’s possible to conduct unconventional monetary policy in perpetuity as long as market participants continue to “believe” - has not only managed to suck up the entirety of gross JGB issuance, he’s also succeeded in cornering the market for Japanese ETFs.
In fact, the BoJ now owns 52% of the entire Japanese ETF market.
Given Kuroda's penchant for Einsteinian insanity (because all the QE in the world has thus far failed to rescue Japan from the much maligned "deflationary mindset"), the market was surprised when the BoJ failed to boost stimulus in late October. Of course as we noted at the time, the central bank is running out of monetizable bonds and thus each incremental purchase leads Japan one step closer to the end:
Thankfully there are still more ETFs to buy and even if there weren't, Kuroda would simply make some up. Last week, in what amounted to a kind of stealth tweak to QE, the BoJ announced it would buy ¥300 billion in additional ETFs comprising stocks of companies “proactively making investment in physical and human capital ".
As Goldman noted, "the BOJ is due to resume the sale of stocks it purchased over 2002-2007 to encourage financial institutions to reduce their shareholding risk. Since these annual sales will amount to roughly ¥300 bn a year, the establishment of a new ETF purchase program appears designed to absorb the impact of those sales."
The problem: no ETFs specifically tailored to capex spending yet exist for Kuroda to buy.
"Such ETFs have never been made in Japan, at least not yet," Bloomberg writes, adding that "even as fund providers start hundreds of so-called 'smart beta' products that choose stocks based on everything from dividends to volatility, ETFs that pick companies for how they deploy their cash are rare in global markets."
“These kinds of ETFs don’t exist now. Using capital spending as a factor in deciding what goes in an ETF is quite unusual,” said Koei Imai, who oversees $25 billion of ETFs at Nikko Asset Management Co. said. “I think the message from the BOJ is for us to go out and make them.”
Yes, that probably is the message, because when your economy has plunged into recession an unprecedented five times in five years (the rare "quintuple dip") you'll do just about anything to revive it, including privileging certain companies over others by effectively promising to push up the stocks of corporates that are stimulating the economy and investing in their workers (remember, Japan has a pervasive wage growth problem). “It’s the same as if the Bank of Japan were buying individual stocks, rather than pushing up the overall market,” Yoshihiro Ito, chief strategist Okasan Online Securities said.
Ultimately, this may also be an attempt to forestall the inevtiable. Remember, at the current clip (JPY3 trillion per year), Kuroda will own the entire Japanese ETF market by the end of 2017. The only way out of that is to expand the pool of purchasable funds. Effectively forcing the creation of new, capex-specific ETFs thus kills two birds with one stone: it gives the BoJ more purchasable assets and incentivizes companies to spend their cash in a way that's agreeable to Abe. Nevermind the fact that this represents the central bank dictating what companies do with their money.
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While they're at it, why not create the rsnoble-beerfund-etf.
lol, Peter Pantsless
The Bank of Japan = The Bank of Rothschild!
The agenda continues on unabated......
http://beforeitsnews.com/conspiracy-theories/2015/12/as-events-spiral-ou...
This could get interesting. Tsunami ahead. Easy as picking up fish from the mud.
I just want to know one thing. How many Muslim refugees is Japan taking in?
Not quite one more than saudi america?
Japan does not like Muslims; almost officially. Muslims have few , if any, rights in Japan. I suspect Japan thinks Muslims are subhuman.
"I just want to know one thing. How many Muslim refugees is Japan taking in?"
Same number as Israel I believe.
"Ultimately, this may also be an attempt to forestall the inevitable. Remember, at the current clip (JPY3 trillion per year), Kuroda will own the entire Japanese ETF market by the end of 2017."
It's the largest leverage buyout in history. The banks will own everything for empty paper promises.
In retrospect they'll find they still paid too much for it all.
LOOK MA, No cavities!
And again, my favorite related quote:
BOJ officials used to be cautious about purchasing ETFs, worried that it could distort market activities and put the central bank’s own financial health at risk. But under pressure from politicians following the global financial crisis, the bank changed its stance in late 2010.
“We led the cows to water, but they didn’t drink it, even though we told them it tasted good,” Miyako Suda, who was a board member then, wrote in a 2014 book discussing monetary easing at that time. “So we thought we should drink it ourselves, showing them it was tasty.”
http://www.cbsnews.com/news/radiation-levels-spike-in-tokyo-tap-water/
Drink deep...
And, of course, lettuce is mostly water:
'Japan TV star suffering acute leukemia after eating Fukushima produce (VIDEO)'http://enenews.com/german-tv-japan-tv-star-suffering-acute-leukemia-afte...
Next March, 5 years and counting, for another billion years.
Print baby print!
"Full retard" best defined
Full retard in overdrive.....
a glimpse of the fed in the future
Another visualization of going full-retard https://finviz.com/futures_charts.ashx?t=NG&p=m5
Ponzi's to the left, Ponzi's to the right, nothing to worry about, in the center it's just a pyramid scheme.
I'm going long on Japanese beer, they can base their currency on it.
If you build it, they will come.
What is America waiting for? THought USSA was number 1
Brilliance at the Super Nova level.
Neocon's puppet Abe and Kroda were ordered to save USD at the expense of Japanese economy.
Things have been going well for them. Japanese economic indicators go down and their credibility goes up amoung Japan handlers.
“the BoJ… would buy ¥300 billion in additional ETFs comprising stocks of companies “proactively making investment in physical and human capital”.”
Did someone say, “insane”?
Presumably the plan here is to encourage production of capital.
And, therein lies the “insane” quality of this announcement.
Sorry, but “investment in physical and human capital” is actually a consumption – or destruction – of capital. And, by “investments”, I mean, money put in “plant, machinery or software”. This, in other words, is a component of the so-called Gross Domestic Product (GDP), regardless of territory.
The money and resources expended on such investments are no longer available to anyone else. They are entered on accounting ledgers as delayed expenses, with the anticipation that they will be “expensed” (or recovered) annually over the next 5-30 years.
In other words, the money and resources represented by such investments are lost forever – unless the business in question can recover such money and resources over those 5-30 years.
If ineptitude or lack of foresight intervene, we are looking at a massive write-off of capital.
Then there is the GDP component of government spending, which represents money spent on toilet seats, munitions and attendant bribery that will never be seen again – except what is stashed in off-shore banks… and that as a minus.
These two components mean that, fully, 35% of the US GDP index is pure fluff.
This is the conclusion I reached by examining data, assumptions and formulas provided by the US Treasury, Federal Reserve and other sources. There is more: street gangs and drug cartels, the federal government’s – and China’s – role in arming, protecting and forming alliances with such gangs and cartels… and a dozen or so other items. They all point to a conclusion that a vast operation is being perpetrated… I began this Part 2 (of my examination) with the question, ‘What financial shock do Judeo-Bolsheviks plan?’ (Part one and Part two) Do they plan to inflate the dollar to zero… push stocks to a PE ratio 300, then slam them to a ratio of single digits or even minus numbers… repudiate the federal debt… replace Federal Reserve bank notes with Treasury bank notes…?’ And, how do China’s ghost cities fit into this unprecedented operation?
And, why are Endocrine Disruptors present almost everywhere in the American environment… do they evince a kind of chemical warfare… and for who’s benefit?
Consider all these government-provided facts and you see that throwing resources at “investments” (thru EFTs) is a kind of “insanity” that will inexorably usher in the next Dark Age – with a duration five times longer than the previous one, owing to the “monetization” of such “investments” beyond counting.
Just a matter of time before Japan is done.
Coming to the US. Ponzi is not infinite.
Essentially? Helicopter moneys for corporates.
Not doing any good tough. Same like US/JA/EU. You want to compete with china? Go down to china standard. That is thw main reasons for all those "job exporting" of yours.
And that is why i'm happy. My GDP per capita is 760$. Most DM area are >15,000$.
During global economic collapsed? Which one would having to adjust to new reality? The higher income? Or the lower??