Archive for the ‘Japan’ Category
April 15, 2013
Last night’s BLOG attempted to make sense out of all the chatter around the gold action of the last few days, and, more importantly, during the last several months. The points I tried to make were:
- A reiteration of a theme I have stated over and over again, that the GOLD MARKET WAS/IS A TIRED BULL and that investors were leaving the moorings of great store of value or haven. The GOLD has been the repository of investor and traders confidence in a very unstable, insecure investment climate. The GOLD has risen for 11 straight years and as any market can correct as the financial landscape changes. As investors have gained comfort that the world central banks have for the moment been successful in generating some economic growth, money has left the precious metals in search of more risk-oriented assets with a yield attached. It is no mistake that it is the large-cap, strong dividend stocks that have led the way. A failure to understand that and react accordingly is just a case of myopia;
- I, IN NO WAY INTENDED TO INFER THAT I HAD INTERVIEWED JIM SINCLAIR AND THAT HE PROVIDED ME WITH A PRICE TARGET FOR THE CHINESE. HE DID NOT AND I CERTAINLY DID NOT INTERVIEW HIM. THE ONLY POINT I WAS TRYING TO MAKE WAS THAT I AGREED WITH JIM’S RECENT COMMENTS ABOUT THE NEED FOR CHINESE AND RUSSIAN GOLD PURCHASES TO PROVIDE THE NEEDED BUYING TO STEM THE AVALANCHE OF SELLING FROM FUTURES, OPTIONS and ETFS. When markets correct, be that housing or stocks, it is THEN YOU LEARN THE PAIN OF LEVERAGE. Gold has been a very popular, profitable investment, which means that in today’s world of financial engineering leverage is involved. I wholeheartedly agree with Jim’s analysis that the massive selling can only be absorbed by a massive buyer, be it a desirous procurer or somebody with a massive short wishing to cover.
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Tags:China, Gold, Gold-backed bonds, IMF, Jim Sinclair, Yen
Posted in China, Currency, Gold, Japan | 19 Comments »
April 11, 2013
Over and over, financial news airwaves are filled with noise about since the Bank of Japan–under the supervision of Governor Kuroda–has embarked on a massive dose of Quantitative Easing, there has been no real outflow of YEN around the world. The only problem with this bloviating is that its devoid of fact. The BOJ’s action, or rather, call to action has led to a drop in European bond yields as well as a new pillar of support for U.S. Treasuries. Further proof is last night’s employment data from Australia, which was much weaker than expected (a 36,000 job loss and a 0.2% jump in the unemployment rate to 5.6%), but the AUSSIE DOLLAR rallied after an initial selloff as Japanese investors are seeking higher returns. A favorite place for higher yields for Japanese seekers has been Australia and New Zealand. Many financial institutions offer what are known as Urudashi and Samurai bonds. These are bonds issued in Japan in foreign currency of usually kiwi and Aussie. Those who say that the Japanese don’t invest afar and remain in Japan–what is called HOME BIAS–are badly misinformed.
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Tags:Aussie Dollar, BMW, carry trade, Daimler, Eur/Yen, Governor Kuroda, Honda, Japan, Nissan, RBA, Shinzo Abe, Toyota, U.S. Dollar, Volkswagon, Yen
Posted in BoJ, Currency, Germany, Japan, RBA | 4 Comments »
April 8, 2013
Today we got follow-through in the global equity markets as the EUR/YEN cross rallied to three-year highs since the YEN was, again, the chief recipient of the Bank of Japan’s (BOJ) enhanced efforts to bring forth inflation from a long time deflation-plagued economy. The Japanese investors were busy sending forth YEN in search of yield but also buying NIKKEI stocks in a return for domestic yield. A positive outcome from the sudden desire of Japanese investors into equities may mean an increase in corporate democracy as the demand for dividends is going to increase. The corporate culture in Japan has always been anti-shareholder as the predominant thought is that management owns corporations and the shareholders should be quiet and not make waves. The status quo has been challenged by some foreign activist investors and always rebuffed in a very anti-democratic show of defiance. As the desire for an income stream for investors, look for the ABE government to be supportive of increased democratization of corporate Japan. The flow of corporate money to investors would aid domestic demand, especially as bond returns go negative.
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Tags:BOJ, capital controls, central banks, Christine Lagarde, Eur/Yen, global currency wars, IMF, Yen
Posted in BoJ, Currency, Debt Market, ECB, Japan | 5 Comments »
April 7, 2013
Yes, the U.S. and Canadian unemployment data were well below market expectations. Nonfarm payrolls in the U.S. were half of the consensus number and under the 110,000 NFP that we wanted to see so as to test the resolve of the recent equity market rally. Not only were the jobs created numbers weak–manufacturing actually lost jobs–but the important average hourly earnings were flat (0.2% increase expected) so there is no growth in consumer spending potential. As poor as the data release was, by day’s end the SPOO and DOW rallied well off the lows made early in the day. The impact from poor economic fundamentals was not strong enough to overcome the continued release of central bank liquidity into the global economy.
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Tags:Abe, BOJ, Canada employment, ECB, Equities, G-7, Kuroda, U.S. nonfarm payrolls
Posted in BoJ, Debt Market, ECB, Japan, unemployment | 7 Comments »
March 11, 2013
Today was a very slow news day and thus little news to slow the steady rise of equities and the sell off in other asset classes. There was a story in the Financial Times about the Brazilian government cutting the tax on ethanol producers. The government is going to cut the tax on sugar-based ethanol producers by 80%–from 120 REALS per cubic meter to 25 REALS. It is an effort “… to support ethanol producers, many of whom are facing bankruptcy because of heavy debts and DIFFICULTIES COMPETING WITH SUBSIDISED PETROL PRICES IN BRAZIL.” There has been a global sugar surplus, which has kept pressure on sugar prices, but this move may help lift sugar prices and allow Brazilian growers to grab some of the agricultural profits that have supported the Brazilian economy. The U.S. economy is a corn-based ethanol producer and this has helped put upward pressure on global grain prices which has benefited Brazil’s farmers.
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Tags:BOJ, Brazil, Carlos Slim, Enrique Nieto, ethanol, Japan, Kuroda, Mexico, U.S. 2/10 Yield Curve
Posted in BoJ, Brazil, Debt Market, Ethanol, Japan, Mexico, Sugar | 5 Comments »
March 5, 2013
It seems that Mario Draghi has taken the stance that he can hold off doing any further QUANTITATIVE EASING (QE) as he waits for the policies of the British, Japanese and the U.S. to generate enough growth to allow Europe to muddle through its problems for the next few years. President Draghi seems to believe that if the global economy can achieve a growth rate of 4% or more it will buy time for Europe to begin to correct some of its problems and at least put a halt to its economic downturn. The ECB has accepted the slide in the YEN in the hope that stimulating Japanese growth will alleviate some of the stress of the global economy. The Japanese economy has been a laggard for the last two decades, give or take a year here or there, and it was able to muddle though based on the growth of the rest of the world.
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Tags:BOC, BOJ, ECB, Euro, Mario Draghi, OMT, quantitative easing, Yen
Posted in BOC, BoJ, Currency, ECB, Japan, Uncategorized | 4 Comments »
February 11, 2013
This week brings the Moscow circus to the world stage. The world’s major economies meet in Moscow as the Russians are presently in the leadership position of the G-20′s rotating presidency. It used to be the G-7 nations that crafted an economic blueprint for the World Bank and IMF to somewhat adhere, but as much of the global economic growth is now in the BRICS and the other emerging economies, the world’s former colonial powers have had to make room for the rising economic nations. Most of the time the G-7 and G-20 meetings have been photo-ops for world leaders, but every once in a great while something constructive actually makes its way into global policy. The immediate global consensus after the Lehman debacle helped stem the global credit markets from total collapse. This G-20 meeting will not be one of the constructive outcomes as the G-20 members are nowhere near any type of consensus.
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Tags:BRICS, Bundesbank, currency war, EU, EUR/CHF, Fed, G-20, G-7, IMF, Jens Weidmann, Lael Braindard, Philipp Hildebrand, SNB, Yen
Posted in Currency, Europe, Japan, Russia, Switzerland | 12 Comments »
January 7, 2013
The Fed’s policy has painted itself into a proverbial corner. A ZEROHEDGE piece shows that in the age group of 16-55 there has been a loss of 2.7 million jobs during the previous few years, while in the 55-69 age group there has been a gain of 4 million jobs. This has been a recurrent theme of Notes From Underground during the last two years. The FED‘s policy of financial repression has resulted in an outcome that its beloved models failed to predict. The baby boomers haven’t been able to retire because their saving plans have been undermined by the zero interest rate policy. Zerohedge shows that debt-ladened college graduates are unable to find jobs and thus are struggling to repay education loans. Recent college grads are forced to live at home and are not creating new households.
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Tags:Abe, Canadian unemployment, financial repression, FOMC minutes, Gold, Japan nuclear energy sector, oil, QE, u.s. unemployment
Posted in Canada, Fed, Gold, Japan, Oil, unemployment, United States | 6 Comments »
December 23, 2012
Over the weekend Mario Monti decided not to run for the Prime Minister position through joining any party’s list for the election to be held in February. Mr. Monti was never elected to his present position but was parachuted into the job by the Eurocrats in Brussels. It seems that PM Monti fears facing the electorate as so many Italians are angered by the slash-and-burn techniques of the supreme technocrat–both left and right have criticized the present Monti government. Monti resigned after Silvio Berlusconi pulled his support from the Monti regime, but now it appears that Berlusconi would renew his support for a Monti-led coalition. The dramatic fall in bond and stock prices following Monti’s resignation caught the attention of the monied groups in Italy.
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Tags:balance sheet recession, BOJ, deflation, Hong Kong Monetary Authority, Italy, Japan, Mario Monti, Norman Chan, QE, Shinzo Abe, Shirakawa
Posted in Italy, Japan | 11 Comments »
December 16, 2012
The Japanese LDP and its partner the New Komeito Party have seemingly captured more than the 320 seats needed to override the upper-house on most legislation. The two-thirds majority garnered by the ABE COALITION will give the LDP enough power to put pressure on the BOJ to attempt an effort to end the deflation that has encumbered the Japanese economy. The campaign issues promoted by the victorious coalition should lead to further weakening of the YEN although we may see a bout of profit taking as the rumor has become fact. Mr. Abe had promoted the ending of BOJ independence but it is doubtful that promise will be realized. The overall response to the end of central bank independence may unleash a response bigger than the LDP will want to confront. The global financial world have become very supportive of central banks being independent of government control and it seems more likely that PM Abe can influence policy in other ways.
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Tags:banking supervision, BOJ, ECB, Euro, Euro/Yen, Fed, FOMC, German exports, Japan, Jeffery Lacker, LDP, Shinzo Abe, Yen
Posted in Central Banks, Europe, Germany, Japan | 1 Comment »
