"It won't be long before CPI is back above 1%", we promise, this time - we really mean it - is seemingly how the BoJ defends its decision to follow Einstein's definition of insanity by doing the same thing over and over again expecting a different outcome (Nov 2008 was the last time CPI was above 1% YoY). Admittedly, at some point the ever-increasing BoJ balance-sheet-to-GDP will become too much even for a nation hell-bent on printing its way out of chronic deflation only to be punched-and-kicked by a balance-sheet-recession so deep and full of deleveragers. The facts are that the BoJ will expand its LSAP-equivalent program by JPY10tn (USD123bn) - raising the 'stock' - but maintaining the same pace of JGB-buying at JPY1.8tn per month - leaving the 'flow' stable - hence extending the program by around six months. At the same time they have extended the maturity of JGB purchases from 2Y to 3Y (try and wring a little more duration out of an already starved yield curve). USDJPY was entirely confused out of the gate and rallied immediately only to about-face and sell-off up to 81.45 before already giving back half of its losses to pre-BoJ anouncement. The JPY sell-off implicit carry moves did nothing to move US equity futures (which limped up 1-2pts and then gave it back) and even the NKY has retraced 65% of its post-BoJ gains. Perhaps it is all about the flow and the need for that second derivative to be constantly rising after all? Whether it is repatriation flows or carry-unwinds, JPY devaluation (as we have discussed Andy Xie's perspective on) may just have to be done 'forcefully' as opposed to 'suggestively'.
http://www.zerohedge.com/news/boj-eases-einstein-rolls-over-grave
From Zero Hedge:
As we noted (here and here) earlier this week, the world increasingly looks like 'Japan' with little aggregate way out. The following chart perhaps confirms the repressive wave of ongoing intervention across the developed world. Extrapolating trends into the future implies that since the world's central banks will need to have a short-term rate of negative 2% by 2020, there is a lot of QE-equivalent easing still to come. As Simon Black noted, "The ironic triumph of the Keynesians means that, in trying to save the economy, our central banks may end up destroying it completely by means of the printing press; as a consequence, we now get to experience some of the full-on horror of the Japanese malaise."
http://www.zerohedge.com/news/project-end-japan-continues
No comments:
Post a Comment