Japanese Stocks Up 1600 Points, USDJPY Up 5 Handles Since QE Ended; Kuroda Opposition Grows

Nikkei 225 futures are up over 1600 points since QE ended and topped 17,000 in a quiet Asian holiday session. USDJPY topped 113, up a stunning 5 big figures since QE ended. But it's not all hyperinflationary ponies and rainbows as The Wall Street Journal stuns its readership by admitting "although economic theory says a falling yen should make Japanese goods more competitive overseas and boost exports, that didn’t happen." Of course, that merely means moar is needed and therein lies the problem as opposition (internal and external) to Kuroda's policies are growing.

"Opposition within the BOJ looks likely to continue,” said a former board member who has close ties to some current members. Another person familiar with the board’s views said the gap between Mr. Kuroda and other members was growing and represented the “biggest problem” for the central-bank chief.

What a joke!! 1600 points and 5 big figures... NKY tops 17,000 and USDJPY tops 113

 

But as The Wall Street Journal notes, the vote for moar QQE was close (5-4) with, rather worringly obvious for the ivory tower academics, of the four dissenters, two are former private-sector economists and the other two are former business executives.

According to minutes of a BOJ board meeting in September, one member said “additional measures to stimulate demand carry the risk of growing financial imbalances or weakening the public’s recognition of the need for structural reform.”

 

Critics have said the BOJ’s dominant role buying government debt has distorted financial markets, pointing to negative interest rates on some short-term debt.

 

What came as a surprise were the no votes cast by the two members from the business community. Both Yoshihisa Morimoto, a former power-company executive, and former Sumitomo Bank executive Koji Ishida have generally voted with the majority, and BOJ officials have said Mr. Kuroda respects their hands-on experience. The two didn’t explain their votes, but Japan’s leading business lobby, Keidanren, has warned recently against an overly weak yen. Business leaders have said a weak currency may discourage consumption because people have to pay more for imported goods.

And finally, Kuroda and Abe face pressure politically...

On Saturday, the head of the opposition Democratic Party of Japan said the BOJ’s latest action would hurt average Japanese. “It should not do things that hurt the value of the yen,” Banri Kaieda told a gathering.

And it's only going to get tougher for him...

The road ahead for Mr. Kuroda could get rockier because one of his backers on the board, academic Ryuzo Miyao, finishes his term in March.

Which perhaps explains the massive size of this bazooka (and suggests its over for moar stimulus hopers)... Which is exactly what China did tonight:

  • CHINA STIMULUS HAS CREATED RISKS, HIGH LEVERAGE RATIO: DAILY
  • HIGH DEBT RATIO, HIGH LEVERAGE ENDANGERS CHINA’S GROWTH: DAILY

Which was swiftly followed by the PBOC's biggest weakening of the CNY fix since March 20th to its weakest in over a month(as the CNY trend chase drove the Yuan to its strongest against the fix since early Feb.

 

Get back to work Mr Draghi. (but EURUSD's eery plunge has already been met BTFD'ers)

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Normal markets... nothing to see here

Charts: Bloomberg