Bank Of Japan Goes Full Tilt, Buys Record Amount Of ETFs And REITs To Prevent Market Crash

Tyler Durden's picture


One can call the BOJ inefficient, slow and for the most part utterly worthless, but one can certainly not accuse them of lying, and beating around the bush. Because unlike all other central banks, with the BOJ at least it has been fully public knowledge that this particular central bank unlike all others (wink wink), is actively engaged in buying equity products, among them REITs and broad equity ETFs (which provide much explicit tail-wags-dog leverage and explains why the FRBNY's red phone hotline goes directly to Citadel's ETF trading desk). And buy stocks on full tilt and in record quantities is precisely what the BOJ just did, only as one can expect, with absolutely no impact on the broader stock market. Because once even the central bank is exposed as participating in the market, the element of surprise is gone, and the central bank becomes just one mark (if one with a largish balance sheet). As MarketWatch reports, "The Bank of Japan stepped back into the stock market Monday, making its largest single-day purchase of exchange-traded funds to date... The Japanese central bank said it spent 39.7 billion yen (about $500 million) buying up stock ETFs as part of its ongoing asset-purchase program, breaking a previous record of ¥28.5 billion, set on April 16. In addition to the ETF buys, the Bank of Japan also acquired ¥2.3 billion in real-estate investment trusts Monday." Too bad that this latest outright bull in a Japan store (sic) intervention had zero impact: "the move failed to prevent a sharp fall for the Tokyo equity market." But at least they are honest. Imagine the shock and horror (and complete lack of apologies to all those who have predicted just that) when the world finally gets a trade confirm-based proof that Brian Sack was indeed buying (never selling) SPYs and ES. Why everyone would be truly shocked, SHOCKED, that the Fed is nothing but another two-bit gambler in a rigged and broken casino.

For those who are unaware of Japan's explicit but at least forthright approach to asset price manipulation, read on:

Japan’s monetary authority is almost unique among its peers in the major developed economies, in its high-profile purchases of ETFs, which it began in December 2010 as part of aggressive easing measures.


Since then, the Bank of Japan has bought almost ¥1 trillion worth of ETFs — along with another ¥78.9 billion in REITs — and has an additional ¥642 billion to spend on the stock funds after raising the program’s size at it last policy meeting in April.


The central bank emphasizes that the program has only broad goals such as supporting interest rates and reducing risk premiums, rather than supporting financial markets.


Jefferies Japan’s head of Japanese strategy Naomi Fink says that while the ETF purchases are really part of the broad push to reflate asset prices in the deflation-plagued country, they do “provide a bit of a backstop, when they think they can curb the downside” for the market.


“Still, it’s a very small amount,” Fink said of the ETF purchases. “It’s more designed to bolster sentiment ... [and] it works best when sentiment is fragile.”

As a tangent here, do these "strategists" even listen to what they sound like? "Very small amount"... "designed to bolster sentiment." Oh ok. That makes everything so much better. It is just too bad that a Martingale strategy where one has an infinite balance sheet is not all that available to everyone in the world, except to 5 or 6 market participants of course, all of whom are incentivized to destroy their currencies and ramp their "inflation-sensitive" assets ever higher. Surely that according to Jefferies is perfectly acceptable.

Sentiment was certainly fragile Monday, as investors returned from a four-day holiday weekend to find the yen considerably stronger — a negative factor for Japan’s export-focused corporations — U.S. employment growth weaker than expected, and European election results raising more uncertainty for the euro zone.


And while investors don’t find out about the Bank of Japan’s market operations until after the close of trading, “there’s a market assumption that when the Topix falls more than 1%, that triggers ETFs,” according to Fink.


Still, Fink advised against trying to front-run the central bank by jumping into the market whenever the Topix — Japan’s key broad-market index — drops 1%.

And whatever you do kids, remember: frontrunning central banks is not to be tried at home...

“I wouldn’t exactly call that my favorite strategy,” she said, adding that since the ETF-buying program isn’t meant to be a “price-keeping operation,” it offers little in the way of trading opportunities.

... After all that's what Primary Dealers are for: and since they make sure that no bond auctions can ever fail (courtesy of the $30 trillion custodial asset cloud, which desperate economists have pegged fancy post-modernist theories to explain how infinite supply can generate infinite+1 demand without having the faintest clue of how the shadow banking system works) there naturally has to be some kickback in it for them. Because otherwise one of them might even speak up and tell the rest of the world just how much of a fraud the system truly is.

And yes, the BOJ IS completely open about what they buy and how much:

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Mon, 05/07/2012 - 22:46 | 2405404 ACP
ACP's picture

Wow, they're actually TELLING people they're buying ETFs??

Mon, 05/07/2012 - 22:58 | 2405424 vast-dom
vast-dom's picture

fuckushima flavored cesium hopium!

Mon, 05/07/2012 - 23:11 | 2405446 Paul Atreides
Paul Atreides's picture

Annndd it's gone.

Mon, 05/07/2012 - 23:45 | 2405496 The Big Ching-aso
The Big Ching-aso's picture



New Monopoly game.  U can never run out of cash & the game never ends.  Ages 2 to 124.

Mon, 05/07/2012 - 23:57 | 2405511 JPM Hater001
JPM Hater001's picture

Best I can tell we pinged over and under 13000 14 times.  Anyone have a better number?

Tue, 05/08/2012 - 00:25 | 2405542 The Big Ching-aso
The Big Ching-aso's picture



If bank corporations were people their FICO score would average 240.

Tue, 05/08/2012 - 04:15 | 2405700 Harlequin001
Harlequin001's picture

'In addition to the ETF buys, the Bank of Japan also acquired ¥2.3 billion in real-estate investment trusts Monday." Too bad that this latest outright bull in a Japan store (sic) intervention had zero impact: "the move failed to prevent a sharp fall for the Tokyo equity market." But at least they are honest.' -

No Tyler, they're not honest. Open yes, blatant yes, but honest, no. They didn't buy it, they claimed it, simply by saying that they had created more money they laid claim to these 'assets' and claimed them from other investors many of whom will have paid for them with real money and savings.

That's stealing, any way you look at it but legal... and it needs to be treated as such.

Tue, 05/08/2012 - 00:51 | 2405569 Oh regional Indian
Oh regional Indian's picture

Keywords are always highlighted, so that we get them, even in case we miss them.

For me, in this peice.... 

“Still, it’s a very small amount,” Fink said of the ETF purchases. “It’s more designed to bolster sentiment ... [and] it works best when sentiment is fragile.”

It's what it's all about. Just like in western medicine with a long term patient, like a cancer patient. They know just how to keep the Dead Man Walking...

By the way, did folks know that the Emperor of Japan was made a member of the Order of the Garter in the 19th Century?

No wonder his family has sold the entire nation up white-man's (first Brits and them American) shit creek. Attack Russia, we are with you. Attack CHina, we are with you, go ahead, attack america after we have the good ship's out of the way.......

Same story, over and over.

The Yen is a sub-currency of the petro-dollar/dollar complex and ETF's are sub-stocks/bonds/commods.

The people of Japan obviously do not matter.

And when the carry trade un-wind begins in earnest....



Tue, 05/08/2012 - 01:12 | 2405580 wisefool
wisefool's picture
  • x2. Find->"Japan". Replace-> "Saddam Hussien."
  • .....or for the kids too young to remember that fiasco ....
  • x3 Find->"Japan." Replace-> Al Queda/Muslim Brotherhood
  • .... or for the real oldsters like me ...
  • x4 Find -> "West". Replace ->"Order of the Garter" Find -> "Japan" Replace-> "13 colonies"
  • ... starting with the war of 1812. upto, and including Vietnam w/Nixon Shock.
Tue, 05/08/2012 - 01:33 | 2405595 Oh regional Indian
Oh regional Indian's picture

Wash, rinse, repeat.....predictable, obvious....... in-evitable?


Tue, 05/08/2012 - 01:43 | 2405600 wisefool
wisefool's picture

Naw. Internets are fixing it. Think about that Kony 2012 scandal. That was an agent provacatuer that burnt out on video, posted to the internet, before his handlers could pull his NGO-501c3. Much less his Yankee white/CIA clearance.

Poor innocent people avoided drone strikes 'cause of Now back to Pippa and her driver with a fake gun and the papparizzi.

Tue, 05/08/2012 - 02:10 | 2405609 Manthong
Manthong's picture

"works best when sentiment is fragile.”

So HAL is sensitive?

Tue, 05/08/2012 - 02:20 | 2405614 Oh regional Indian
Oh regional Indian's picture

Sen-tient, not Sen-sitive...

Humanity At Loss...


Tue, 05/08/2012 - 02:28 | 2405623 wisefool
wisefool's picture

The Kony 2012 thing reminded me more of Planet of the Apes than 2001/Terminator.

Tue, 05/08/2012 - 06:30 | 2405763 Psyman
Psyman's picture

The Anglosphere and its colonies.  Colonies include Japan and Germany.  Now Iraq.


Look for Iraq to become the Germany of the Middle East by 2050.

Tue, 05/08/2012 - 02:20 | 2405615 Seize Mars
Seize Mars's picture

" U can never run out of cash & the game never ends"

The cash runs out when every single piece of property has been securitised and or repo'ed a few times over. The printer gets all the real assets.

Tue, 05/08/2012 - 04:15 | 2405702 Harlequin001
Harlequin001's picture

and there is no place in it for small investors.

How many years are you going to work to be able to buy a house from these 'funds'? This ends badly, in revolt.

There is no other way...

Tue, 05/08/2012 - 06:14 | 2405755 old naughty
old naughty's picture

and you can always pass go / go to jail...
Ah, is it for non-bankers only?

Mon, 05/07/2012 - 23:12 | 2405451 NotApplicable
NotApplicable's picture

But, they owe it to themselves!

If it isn't obvious that CBs plan on owning everything...

Mon, 05/07/2012 - 23:37 | 2405490 Matt
Matt's picture

They only owe it to themselves after they buy it.

When the government needs money, it has to sell bonds.

When a central bank needs money, it creates it out of thin air. It owes NOTHING to anyone.

When a government runs a deficit, the money supply is increased by the amount they borrow.

With Quantitive Easing, the amount of money created is double the amount needed to fund the government, since money was created twice, once with the bond and once when the central bank CTRL+P to buy the bonds from the primary dealers.

I guess the BoJ still doesn't know it is about FLOW, not STOCK. They have to buy slightly more each day in order to create a sustained thrust to reach escape velocity; otherwise, they will be swirling around the toilet bowl forever. You'd think after 20 years of doing the same thing, they'd try to mix it up a little.


Tue, 05/08/2012 - 01:27 | 2405589 Oracle of Kypseli
Oracle of Kypseli's picture

Hong Kong during the Asian crisis, announced that they will be buying equities, they bought, they held for a while and they sold for a profit later. Yes they got lucky then.

But now, the world markets are at a point of no return.

If you shorting or buying puts and hold overnight, not sure you gonna get paid during the collapse.

Tue, 05/08/2012 - 03:22 | 2405662 Max Fischer
Max Fischer's picture




.....announced that they will be buying equities, they bought, they held for a while and they sold for a profit later. Yes they got lucky then.  But now, the world markets are at a point of no return....


This is simply not true.  Why does everyone have to dramatize everything so much?  This is NOT the end, nor is it the point of no return. Some of you folks need to stop hiding under the mattress, and start making some supposed "worthless fiat" along with all the cronies that you're subconsciously jealous of.

The Fed is still buying/selling equities and making huge profits.  The Fed just sold ~$4B worth of MAX CDO's to Barclay's and DB in April for a well-deserved profit. Their $19.5B Maiden Lane II portfolio earned $2.5B in February, and this week the Fed is selling $5B worth of AIG equity for a nice profit, too. 

Your post implies that the Fed isn't able to buy equities like the Asian central banks did during the 90's crisis and turn it for a profit when, in fact, the exact opposite is true - the Fed is profiting HUGE..... today!





Tue, 05/08/2012 - 06:43 | 2405771 Oh regional Indian
Oh regional Indian's picture

Dude, that is the FED. Are you saying it's a level playing field? People should go and start making money like the FED? 

Too funny. You are deluded. Look at the difference in scale. Like sayign an ant and an elephant, just because they are ont he same "feild" have equal opportunities.

Totally stupid response from you MF, CM, D!


Wed, 05/09/2012 - 05:44 | 2409355 Gatts
Gatts's picture


Tue, 05/08/2012 - 00:07 | 2405527 Yen Cross
Yen Cross's picture

 What Planet are you from?

Tue, 05/08/2012 - 00:44 | 2405544 The Big Ching-aso
The Big Ching-aso's picture



The same alien planet Krugman is from.    Earth.

Tue, 05/08/2012 - 00:52 | 2405570 Yen Cross
Yen Cross's picture

That was Sweet! Good Laugh.

Mon, 05/07/2012 - 23:45 | 2405497 chump666
chump666's picture


legend comment

Tue, 05/08/2012 - 00:56 | 2405553 The Big Ching-aso
The Big Ching-aso's picture



Central Bank of Japan will start dropping yen from Zeros & add zeros to its yen till its reached perfect nothingness like Nirvana.

Tue, 05/08/2012 - 01:14 | 2405582 Yen Cross
Yen Cross's picture

 Bank of Japan / Kampo?  The head of the Ministry of Finance is your guy.

   I like the crosses.

Tue, 05/08/2012 - 02:45 | 2405636 Dr Bob
Dr Bob's picture

which will take them out first: fuckushima or financial meltdown??

Mon, 05/07/2012 - 23:13 | 2405452 candyman
candyman's picture

I want some of that OBAMA money!

Mon, 05/07/2012 - 23:45 | 2405495 Id fight Gandhi
Id fight Gandhi's picture

WHY are they buying ETFs?????

Tue, 05/08/2012 - 00:37 | 2405560 xela2200
xela2200's picture

Because ETF is the most efficient way to buy a basket of stocks in a sector or a broad index like the S&P 500.

Bank buys SPY then SPY buys more stocks in underlying securities.

Tue, 05/08/2012 - 06:52 | 2405783 CPL
CPL's picture

What the other guy said.  But here's the problem with ETF's.


They are made of nothing.


My theory is they are created in a lab by certain methods involving unicorn kisses and virgin's tears (harvested at Comic conventions), for there a wish is made upon a star.  The final touch is jamming as many shitty option packages from an industry side into that pig and hoping for the best.



Mon, 05/07/2012 - 23:49 | 2405502 Sam Clemons
Sam Clemons's picture

Prosperity is just around the corner.  Just keep waiting.

Tue, 05/08/2012 - 01:16 | 2405583 RafterManFMJ
RafterManFMJ's picture

Look, I'm not a trader nor a certified financial planner; but am I to understand the BOJ is actually buying ETFs with money they are just making up? Is that correct? Because if that is what they are doing, that is ****** ******* insane!!

Tue, 05/08/2012 - 01:28 | 2405592 Oracle of Kypseli
Oracle of Kypseli's picture

No it's not insane. It's another way of printing money.

Tue, 05/08/2012 - 05:56 | 2405746 machineh
machineh's picture

Logical endpoint: use stock certificates as currency.

Eliminate the central bank midddleman.

Everybody happy. (Lots of IPOs, too -- PRINT YOUR OWN MONEY!)

Tue, 05/08/2012 - 07:17 | 2405811 TooBearish
TooBearish's picture

O the Niaevete!  The fukking FED, Presidents working group on markets,etc have been intervening for decades in stock markets, bond markets, FX, gold - thats what ZH is all about - wake the FUK up!

Tue, 05/08/2012 - 09:19 | 2406103 jus_lite_reading
jus_lite_reading's picture

This corruption brings a whole new meaning to HOLY SHIT!! If THAT is not a PONZI then I don't know what is!!!

Mon, 05/07/2012 - 22:48 | 2405406 DonutBoy
DonutBoy's picture

Central banks publicly state they buy stocks with the people's money to bolster sentiment.  God help us.   Fiat money is so over.  The global developed world synchronous asset market collapse will be biblical.

Mon, 05/07/2012 - 23:06 | 2405435 Joe The Plumber
Joe The Plumber's picture

So strange

When i studied macro economics the textbooks always stated that government monetization of bonds would lead to higher interest rates and monetizing stocks would lead to a lower stockmarket as everyone attempted to sell out of those markets and protect themselves with other types of asset purchases.

Tue, 05/08/2012 - 00:44 | 2405564 wisefool
wisefool's picture

What did they tell you about when they monetize both stocks and bonds at the same time, or am I missing something?

Tue, 05/08/2012 - 00:35 | 2405555 Dr. Engali
Dr. Engali's picture

I just wish it would get it over with. I'm tired of paying my mortgage.

Tue, 05/08/2012 - 00:43 | 2405563 The Big Ching-aso
The Big Ching-aso's picture



Many are way ahead of you & are already acting like it's over when it comes to paying mortgages.

Tue, 05/08/2012 - 02:07 | 2405604 q99x2
q99x2's picture

Great way to take all the chips off the table at once and then move in with the heavy artillary. Shock and awe. No escape. ATMs go down at the same time.

Inspiration time.

Tue, 05/08/2012 - 09:19 | 2406108 jus_lite_reading
jus_lite_reading's picture

>>"The global developed world synchronous asset market collapse will be biblical"<<


There seems to be that possibility... and its all planned!!!

Mon, 05/07/2012 - 22:49 | 2405409 Pete15
Pete15's picture

Why isnt Gold going apeshit again, oh yeah the other side of this trade. 

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