Japan

It's over the top.

This is just getting way too deja vu'ish. From Reuters: "White smoke or steam was rising from three reactors, Nos. 2, 3 and 4, at a quake-damaged nuclear plant in northeaster Japan, the nuclear safety agency said on Friday. It said it believed there was still water in the spent fuel pool at reactor No.3." But isn't the whole point of this exercise to get bloody water in the spent fuel pool? And then this: "Smoke or steam rising from the crippled No.2 reactor in northeastern Japan could be coming from the spent fuel pool or from an explosion in the suppression chamber, the nuclear safety agency said on Friday. It said it hoped to fix a power cable to two reactors on Friday and to two others by Sunday." Oh, it could be an explosion. Well, that's ok. It might not be... At least someone somewhere knows something. It sure as hell ain't the nuclear safety agency. But at least the Nikkei couldn't care less about its troubles as it wakes up with a St Paddy's day hangover: a few days of breathing room have been bought. As to how the can is kicked next week, that's a bridge Bernanke's glass house can worry about crossing on Monday.

And we are off. The JPYUSD is up nearly 200 pips as the Bank of Japan buys billions in dollars, using freshly printed Yen, following an agreement with the G7 which will likely see a new plaza accord to keep the Yen low despite ongoing repatriation. This follows earlier news that the BOJ will underwrite a ¥10 trillion in earthquake recovery bonds as Japan is now lurching from one monetization step to another. Keep an eye out for intervention aftershocks as the BOJ now can not allow the USDJPY to drop below 80 or it will be all over. This is what global reflation gone nuts looks like. On the other hand, if the BOJ fails to keep the USDJPY above 80 following this action, and the inflows of yen are far greater than anyone expected, most certainly the G7, then we have big problems. Next up: Armageddon 2: the Sequel, in which the Chairsatan, Trichet, Shirikawa, King, and Hildebrand dig a deep hole in Haley's commet, in order to save the earth, only something goes horribly wrong and everyone blows up in a nuclear fireball. The end.

As was perfectly expected by Zero Hedge, Japan is issuing its first batch of Earthquake relief debt to the tune of ¥10 Trillion. And with massive repatriation flows (as confirmed today when Steve Liesman denied the very concept), and little demand out of domestic purchasers, Japan is about to (re)discover the pleasures of massive quantitative easing.

An hour ago we said: "Watch for the reaction in crude following the vote passage, and especially following Bloomberg headlines that France has launched an all out attack." Well the attack is still pending, but the oil reaction is here (and nobody could have seen it coming). WTI just passed $103. Demand destruction or no demand destruction, here we come. And just imagine what happens when Japan is fully back on line again (in about a year at which point the US will be between QE 4 and 5).

With the world's attention diverted to Japan for the past week, WTI managed to drop substantially trading just above $96. Well, just as we predicted a few days ago observing the ongoing developments in Bahrain and Libya, and the imminent realization that Japan will need to boost its petrochemical imports due to drop in nuclear power output, crude spike by the most in over a week, in what was virtually a straight line touching $102/bbl and closing just below. Mocking the concept of a perfectly efficient market is Reuters with the following update: "Oil prices recovered for a second day from three-week lows, which had been sparked by prospects of lower oil demand from earthquake-stricken Japan, and was part of an advance across markets on worries about increasing geopolitical risks, analysts said. "The focus is back on continuing unrest in the Middle East and what will be a lot of disruption in Libya for a long time," said Christopher Bellew, an oil trader at Bache Commodities. "The risk is more to the upside -- there was a lot of long liquidation on that sharp sell off at the beginning of the week," he added." Then again in describing some of the "bullish" reading in the economy, Reuters itself seems to be a little confused: "Data showing that inflation remained contained despite rising prices also helped boost investor mood." Uh, come again? Anyway, following the French invasion of Tripoli some time after 7 pm Eastern, when Paris finally reveals the undisputed military beast it has always been, against an air force consisting of 20 or so Mig-21s with one million air hours of service each, look for oil to attempt recreating the JPY melt up from last night.

The glorious president who has taken some time off from his extremely busy schedule, is addressing the nation over the latest developments in Japan. He is not taking any questions for the obvious reason that answers are still "under survey." Watch the prepared remarks being delivered live here.

No seriously, it is all under control. And furthermore, the radiation detectors only go off on less than dangerous doses. And if that fails, GE can simply raise the sensitivity threshold on its scanners so no more vile, malicious false alarms such as this are set off in the future. "Mayor Richard Daley acknowledged today passengers on a flight from Tokyo had set off radiation detectors at O’Hare International Airport, but he offered no details and said federal officials will be handling the situation."

The US is now being run by an oligarchy, with lip service being paid to the electorate in allowing the people to vote for the candidates that the parties and the powers will put forward. There will be no recovery for the middle class until they assert themselves. I know I have stated this often in my tag phrase, “The banks must be restrained…”

Minutes after the United Nations announced it would vote on imposing the No Fly Zone over Libya, which is probably merely a formality at this point with virtually no hold outs on the Security Council, Libya has immediately retaliated by saying that it such a decision would open counterstrikes by Libya against any "air and maritime traffic in the Mediterranean Sea" as well as "civilian and military facilities in the country." Whether this means that Gaddafi will promptly attack his oil infrastructure as Zero Hedge first suggested 3 weeks ago is unclear, but the Crude market is not taking any chances: Brent is now up almost $4 on the day having snapped its several day losing streak.

Ben Bernanke has surrounded all of earth’s inhabitants within a Ring of Fire that will create a monetary earthquake that will very soon ravage the livelihoods of billions (the tremors have already started in MENA). While the headlines are now focused on Japan, the dominos continue to fall in the Middle East and Saudi Arabia and Iran seem to be fighting a proxy war in Bahrain. All of the themes I have discussed in earlier emails are only exacerbated by the Japanese quake as the response has been and will be to print infinite amounts of confetti money and try to secure resources to rebuild with it. The problem is that EVERY nation is doing the same thing. So worthless fiat is being expanded exponentially and will compete for real things and why should the holders of the necessities of life, gold and silver (real money and true financial security) as well as food and energy sell their goods for colored confetti or even worse digital entries in a bank account. If you don’t think the governments of all countries that posses massive resources will not export less and in order to keep more internally to quiet their restless populations you aren’t paying attention. This liquidation selloff in commodities since the Japanese earthquake is probably already over and I expect a HARD reversal to the upside to new highs in food and especially oil. The Asia Tapis benchmark is closed at just under $117/b last night and it a whopping 3% off of the high. Wholesale gasoline prices traded here in the U.S. are down about 4% from the high but are a terrifying 15% higher than a month ago. I expect another major surge in the price of oil imminently. Remember last week I wrote that I thought the Dow and gold would ultimately meet at around 5,000. Can’t imagine how this can happen? Watch the next few months. - Mike Krieger

Ironically, hot on the heels of the earlier report by the Union of Concerned Scientists that the NRC had been lax in its oversight of various US nuclear facilities, noting the Indian Point NPP where the UCS alleged there had been a potentially dangerous seal leak since 1993, two democratic senators have asked the NRC to review the safety of all US Nuclear Plants.

Earlier today we received an email from one of our readers aboard the aircraft carrier group off Japan performing evacuation efforts for US citizens in Japan, that it had turned around and is now going back. While we are trying to validate this, we have just noticed breaking news from Sky News that US and UK search teams are pulling out of Japan tomorrow. We were wondering what may have brought about this (so far unconfirmed) evacuation of the evacuators until we saw the next breaking news from Sky News: "Japan Admits Nuclear Problem Is 'Severe'" - "This is a severe incident that is occurring right now," the spokesman said at a news conference. "We have vented and used seawater as cooling, followed the accident management plan but this is a very severe operation." The admission comes as plant operator Tokyo Electric Power Co (Tepco) continues attempts to stop the six-reactor Fukushima 1 complex from going into nuclear meltdown. "We have to keep cooling the fuel so it doesn't reach criticality," the Tepco spokesman said, adding that radiation levels have barely fallen at the site." Translation: if operation "Irrigation" fails, TEPCO itself confirms the chance of a critical reaction in the nuclear fuel is very high. Which of course would explain why everyone who knows more than the average peasant who just watches manipulated media, is getting the hell out of dodge.

During QE 1 (2009-2010) the Fed was pumping, on average, $50 billion or so into the markets per month. Today’s it’s north of $100 billion. And the stock market is nearly 100% higher than it was when QE 1 was announced.So stocks have doubled, but instead of lowering the liquidity infusions, the Fed has DOUBLED them. This alone should tell you that the Fed is losing its grip on the market. The fact it’s taking more and more money pumps just to keep the markets afloat should be a MASSIVE red flag for all investors.

According to sources, a Japanese Ministry of Finance official has said that it is now ready for a "Bettle on the Yen." Just headlines for now. Much more will be revealed later when the G-7 meets to discuss how to further weaken the currency in a coordinated effort. An immediate pop in the USDJPY above 79 follow this statement. The fact that we are getting nothing but posturing from the BOJ instead of actual intervention, such as we saw last when the USDJPY hit 80.30 in late October continues to be quite troubling. In the meantime, the NZDUSD, another funding pair has been taking on some water in early trading.