Nov 04

kuroda_0

- Japan’s Monetary Pearl Harbor  (Of  Two Minds, Nov 2, 2014):

Trying to “fix” a sclerotic, inefficient state-cartel economy by boosting inflation–the ultimate goal of Japan’s Monetary Pearl Harbor– is a self-liquidating path to destruction.

The Bank of Japan’s surprise expansion of financial stimulus strikes me as the monetary equivalent of Pearl Harbor –not in the sense of launching a pre-emptive war (though the move does raise the odds of a global currency war), but in the sense of a leadership pursuing a Grand Strategy to the point of self-destruction because they have no alternative within their intellectual and political framework.

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Nov 04

- Why Apple Is Preparing To Issue Even More Bonds (ZeroHedge, Nov 3, 2014):

As its recent 10-K confirmed, AAPL’s domestic cash – the amount of cash available for such corporate transactions as dividends and buybacks – had dropped to just $18.1 billion (and that is including the several billion in commercial paper issued in fiscal Q4), the lowest domestic cash hoard since March 2010, a time when AAPL’s offshore cash was a tiny $24 billion compared to the near record $137 billion last quarter!  So knowing full well that a buyback a day keep the Icahnator away, AAPL, urgently looking to refill its domestic cash since its offshore cash remains untouchable (absent being taxed on its repatriation), did the only thing it could do: prepare to issue more bonds, which is what we forecast would happen a few weeks ago, and what the WSJ overnight confirmed is already in progress.

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Nov 01

- The BoJ Jumps The Monetary Shark – Now The Machines, Madmen And Morons Are Raging (David Stockman’s Contra Corner, Oct 31, 2014):

This is just plain sick. Hardly a day after the greatest central bank fraudster of all time, Maestro Greenspan, confessed that QE has not helped the main street economy and jobs, the lunatics at the BOJ flat-out jumped the monetary shark. Even then, the madman Kuroda pulled off his incendiary maneuver by a bare 5-4 vote. Apparently the dissenters – Messrs. Morimoto, Ishida, Sato and Kiuchi – are only semi-mad.

Never mind that the BOJ will now escalate its bond purchase rate to $750 billion per year – a figure so astonishingly large that it would amount to nearly $3 trillion per year if applied to a US scale GDP. And that comes on top of a central bank balance sheet which had previously exploded to nearly 50% of Japan’s national income or more than double the already mind-boggling US ratio of 25%. Continue reading »

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Nov 01

kuroda_0

- The Halloween Yen Massacre Sends Market To All-Time Highs (ZeroHedge, Oct 31, 2014)

Related info:

- What The BOJ’s Shocking Announcement Really Means: FULL MONETIZATON

- Shocking Bank Of Japan Trick And QE Boosting Treat Sends Futures To Record High – Nikkei Futures Halted Limit Up (+1100) As USDJPY Tops 112

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Nov 01

- Charting Banzainomics: What The BOJ’s Shocking Announcement Really Means (ZeroHedge, Oct 31, 2014):

Still confused what the BOJ’s shocking move was about, aside from pushing the US stock market to a new record high of course? This should explains it all: as the chart below show, as a result of the BOJ’s stated intention to buy 8 trillion to 12 trillion yen ($108 billion) of Japanese government bonds per month it means the BOJ will now soak up all of the 10 trillion yen in new bonds that the Ministry of Finance sells in the market each month.

In other words. The Bank of Japan’s expansion of record stimulus today may see it buy every new bond the government issues.

This is what full monetization looks like.

BOJ expansion chart

More from Bloomberg: Continue reading »

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Nov 01

The Japan stock market celebrates quantitative easing, also being called the nuclear option.


- Shocking Bank Of Japan Trick And QE Boosting Treat Sends Futures To Record High (ZeroHedge, Oct 31, 2014):

Two days ago, when QE ended and knowing that the market is vastly overstimating the likelihood of a full-blown ECB public debt QE, we tweeted the following: “It’s all up to the BOJ now.” Little did we know how right we would be just 48 hours later. Because as previously reported, the reason why this morning futures are about to surpass record highs is because while the rest of the world was sleeping, the BOJ shocked the world with a decision to boost QE, announcing it would monetize JPY80 trillion in JGBs, up from the JPY60-70 trillion currently and expand the universe of eligible for monetization securities. A decision which will forever be known in FX folklore as the great Halloween Yen-long massacre.


- Nikkei Futures Halted Limit Up (+1100) As USDJPY Tops 112 (ZeroHedge, Oct 31, 2014):

 Bwuahahahaha… Nikkei futures halted limit up – over 1100 points post-BoJ (+1400 post-FOMC) as USDJPY tops 112 (up 4 handles post-FOMC) to its highest since Jan 2008.

- Bank of Japan Reaction Context: Nikkei 225 Is Up 1000 Points In 7 Hours (ZeroHedge, Oct 31, 2014):

ou know the world’s financial markets have become farce when the broad Nikkei 225 stock market of Japan rises 1000 points in 7 hours… The meme that stock ‘markets’ move on fundamentals not central bank liquidity is officially dead. Let that sink in for a moment…

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Oct 24

Debt-Chain-Slavery

- It Will Take 398,879,561 Years To Pay Off The US Government’s Debt (Sovereign Man, Oct 22, 2014):

The US government’s debt is getting close to reaching another round number—$18 trillion. It currently stands at more than $17.9 trillion.

But what does that really mean? It’s such an abstract number that it’s hard to imagine it. Can you genuinely understand it beyond just being a ridiculously large number?

Just like humans find it really hard to comprehend the vastness of the universe. We know it’s huge, but what does that mean? It’s so many times greater than anything we know or have experienced. Continue reading »

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Oct 23

 – Equity Levitation Stumbles After Second ECB Denial Of Corporate Bond Buying, Report Of 11 Stress Test Failures (ZeroHedge, Oct 22, 2014):

A day after a Reuters headline blast proclaimed that, in a stunning turn of events, the ECB which has barely started buying covered bond (of countries like Germany today for example, because the record low yielding Bunds clearly need help from the ECB) will also buy corporate bonds, sending the stock market soaring the most in 2014, it has now backtracked for the second time, and following a report from the FT yesterday which denied the report, the second denial came straight from Reuters itself which hours ago said that the ECB “has no concrete plans to buy corporate bonds, but this could be a way to prevent the bank from paying too much for just covered bonds and asset backed securities, ECB governing council member Luc Coene told Belgian media.” Continue reading »

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Oct 23

- Someone Didn’t Do The Math On The ECB’s Corporate Bond Purchasing “Trial Balloon” (ZeroHedge, Oct 22, 2014):

In other words, the “mega-leak” from the ECB will hardly scratch the surface in terms of the required liquidity injections, and certainly will be insufficient if at some point in the coming year, the BOJ finds it too has run out of collateral and is forced to wind down its own QE.

So after actually doing the math we wonder: how long before the market realizes Draghi’s latest bazooka was another water pistol, and how long until Reuters is forced to go with the nuclear leak – that the ECB is now considering monetizing ETFs and, gasp, stocks.

Because that, ladies and gentlemen, is the endgame here.

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Oct 21

- Dan Amerman: Will Our Private Savings Be Sacrificed To Pay Down The Public Debt? (Peak Prosperity, Oct 19, 2014):

Recently, an article by Daniel Amerman caught our attention. Titled Is There A “Back Door” Method For The Government To Pay Down The Federal Debt Using Private Savings?, it details the process known as financial repression, where sovereign debts are slowly paid off by syphoning private savings from an unaware populace.

In this week’s podcast, Chris discusses the mechanics of the process, as well as its probability, with Dan:

To understand financial repression, we have to understand that we’ve been there before. Many nations have gone through periods in the past where they’ve had very high levels of government debt. And there are four traditional ways of dealing with that. Continue reading »

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Oct 21

- The Real Bubble Isn’t Stocks… and It Will Make 2008 Look Like a Picnic (ZeroHedge, Oct 2, 2014):

The 2008 crisis was just a warm-up.

The 2008 crisis was a banking and equities crisis. In the simplest terms, investment banks, leveraged to the hilt with garbage mortgage derivatives, became insolvent and began to collapse.

This collapse triggered a selling panic throughout the financial system as every financial entity questioned the quality of the assets backstopping its derivatives trades. The derivative market was over $700 trillion at the time. So just about every major global bank had broad exposure to this market. Continue reading »

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Oct 20

euro-collapse

- Europe’s Fatal Flaw Laid Bare For All To See. Again. (The Automatic Earth, Oct , Oct 17, 2014):

markets, at the end of last week, sort of refound their – shaky – feet, oil up a dollar, EU exchanges up 3% or so, Greece even up over 7%, while interestingly gold didn’t move much at all during the wild week (no safe haven), and most movement was perhaps, through all the see-saw, in bonds. To sum up the week: panic followed by plunge protection teams. And now the ‘leaders’ hope plunge protection will save another day too.

And they may. Germany sinks a bit, but Germany is strong. US housing is at least not falling further, but US consumer spending stalls and drops. The deep dark weakness has not yet hit the big economies. But the nerves are back. Volatility is back with a vengeance. As it should. And that will paint the picture going forward, plunge protection or not. Da markets will come again and again and dare central banks to plunge protect. Continue reading »

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Oct 19

- Forget about Ebola – here’s why US banks (and your savings) are now EXTREMELY vulnerable (Sovereign Man, Oct 16, 2014):

For a casual observer of the US economy (most “experts”), you could say that things look pretty good. Unemployment is at its lowest rate in six years. Earnings of S&P 500 companies are higher than ever, while their debt is lower than it’s been in the last 24 years.

Nonetheless, rather than getting excited for good economic times, the big commercial banks are all battening down the hatches. They’re preparing for bad times ahead. Continue reading »

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Oct 19

- Kudos To Herr Weidmann For Uttering Three Truths In One Speech (David Stockman’s Contra Corner, Oct 17, 2014):

Once in a blue moon officials commit truth in public, but the intrepid leader of Germany’s central bank has delivered a speech which let’s loose of three of them in a single go. Speaking at a conference in Riga, Latvia, Jens Weidmann put the kibosh on QE, low-flation and central bank interference in pricing of risky assets.

These days the Keynesian chorus in favor of policy activism is so boisterous that a succinct statement to the contrary rarely gets through – especially at Rupert Murdoch’s Wall Street yarn factory. But here’s what penetrated even Brian Blackstone’s filters:

“The biggest bottleneck for growth in the euro area is not monetary policy, nor is it the lack of fiscal stimulus: it is the structural barriers that impede competition, innovation and productivity,” he said.

Continue reading »

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Oct 18

- Japanese Stocks Tumble After BoJ Bond-Buying Operation Fails For First Time Since Abenomics (ZeroHedge, Oct 17, 2014):

Having rotated their attention to the T-bill market in Japan (after demand for the Bank of Japan’s cheap loans disappointed policymakers) in an effort to ensure enough freshly printed money was flushed into Japanese markets, the BoJ now has a major problem. For the first time since QQE began, Bloomberg reports the BoJ failed to buy all the bonds they desired. Whether this is investors unwilling to sell (preferring the safe haven than stocks or eu bonds) or that BoJ has soaked up too much of the market (that dealers now call “dead”) is unclear. Japanese stocks – led by banks – are sliding as bond-demand sends 5Y yields (13bps) to 18-month lows.

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Oct 16

- 12 Charts That Show The Permanent Damage That Has Been Done To The U.S. Economy (Economic Collapse, Oct 13, 2014):

Most people that discuss the “economic collapse” focus on what is coming in the future.  And without a doubt, we are on the verge of some incredibly hard times.  But what often gets neglected is the immense permanent damage that has been done to the U.S. economy by the long-term economic collapse that we are already experiencing.  In this article I am going to share with you 12 economic charts that show that we are in much, much worse shape than we were five or ten years ago.  The long-term problems that are eating away at the foundations of our economy like cancer have not been fixed.  In fact, many of them continue to get even worse year after year.  But because unprecedented levels of government debt and reckless money printing by the Federal Reserve have bought us a very short window of relative stability, most Americans don’t seem too concerned about our long-term problems.  They seem to have faith that our “leaders” will be able to find a way to muddle through whatever challenges are ahead.  Hopefully this article will be a wake up call.  The last major wave of the economic collapse did a colossal amount of damage to our economic foundations, and now the next major wave of the economic collapse is rapidly approaching. Continue reading »

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Oct 13

- Why Tomorrow It Could Get Even Worse (ZeroHedge, Oct 13, 2014):

While today’s market dump was certainly dramatic, it was a function of the scant liquidity in the market (as we warned would be the case first thing) and outsized moves following last week’s mauling, not the result of any fundamental (or not so fundamental) news.

That could change tomorrow, and change for the worse, because as Barclays reminds us, tomorrow is when the European Court of Justice (ECJ) is scheduled to hear testimony on the ECB’s non-existent Outright Monetary Transactions program (OMT). Recall that the OMT is the imaginary (again: non-existent) byproduct of Draghi’s “whatever it takes” speech: a byproduct that was supposed to exist purely in the imaginary realm (as it was merely a verbal bluff, one which was never meant to be actually activated), and never actually take practical shape (hence, why the OMT’s legal term sheet still does not exist, over two years later).

Sadly for Draghi, and the entire Deus Ex theater that managed to send European peripheral bonds from record wides yields to record low, tomorrow it will attain some much dreaded shape.

And while a ruling on the legal questions forwarded by Germany’s Constitutional Court is not expected this year, the hearing and questions posed by EU judges may give some early insights into their views and to what extent they might share the view of the German court that, unless several restrictions are imposed, the OMT should be considered illegal under European law. Continue reading »

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Oct 13

Why Everyone Should Be Watching PIMCO (In 2 Worrying Charts) (ZeroHedge, Oct 12, 2014):

By now it is clear to everyone that the force-feeding of free-money into financial markets by The Fed et al. has led to a scale of financial repression never before witnessed as bond yields for even the riskiest of risky names collapse to record lows and cheap-financed share buybacks raise leverage to record highs and support an ever more fragile equity wealth creation machine. As Blackrock (and many others) have recently proclaimed, the corporate bond market is “broken” and the risk posed by investors trying to dump bonds is”percolating right under” the noses of regulators; so it is with grave concern we suggest the following two charts – showing the massive out-sized holdings of PIMCO’s funds in the high-yield and emerging market debt markets leave a bond marketplace in fear that forced sales via redemptions are the straw that breaks the ‘central bank omnipotence’ narrative’s back…

PIMCO – simply put – dominates the market for high-yield and emerging market debt… Continue reading »

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Oct 11

- “De-Dollarizing” Russia Pays Down Near-Record $53 Billion In Debt In Third Quarter (ZeroHedge, Oct 10, 2014):

Despite the reassuring narrative from The West that Russia faces “costs” and is increasingly “isolated” due to sanctions for its actions in Ukraine, the most recent data suggests reality is quite different. First, capital outflows slowed dramatically in Q3 (from $23.7 billion in Q2 to $13 billion in Q3) with September seeing capital inflows for the first time since Sept 2013. Second, Russia’s current account surplus was significantly stronger than expected ($11.4 billion vs $8.8 billion expected) driven by increased trade. Third, and perhaps most crucially, Russia paid down a massive $52.8 billion in foreign debt as Putin “de-dollarizes” at near record pace, reducing external debt to the lowest since 2012.

As Goldman explains, Trade and income improved notably… Continue reading »

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Oct 04

greece-athens
Athens, Greece, Nov. 2012

- Here We Go Again: Greece Will Be In Default Within 15 Months, S&P Warns (ZeroHedge, Oct 4, 2014):

Remember Greece: the country that in 2010 launched Europe’s sovereign solvency crisis and the ECB’s own helpless attempts at intervention, which later was “saved”, only to default shortly thereafter (but without triggering CDS as that would end the Eurozone’s amusing monetary experiment and collapse the Deutsche Bank $100 trillion house of derivative cards), which later was again “saved” when every single global central bank made sure Greek bonds became the only yield-generating securities in the world? Well, the country which at last count was doing ok, is about to not be ok. Because according to none other than S&P, at some point over the next 15 months, Greek debt is about to be in default when the country is no longer able to cover its financing needs. In other words, back to square one. Continue reading »

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