Post BoJ New World Quiz

Sorry to stick to a Japanese theme but the 2013 Japanese money tsunami is engulfing everything financial to the extent that many new questions are now being asked. Here are some of them.   

If you are a Japanese central banker do you -

a) Retire to the mountains having done your job.
b) Read the story of "Pandora's Box" that someone has just handed you.  
c) Wonder if leaving out the "capital controls" part of the Japanese 1932 Great Depression rescue plan policy you are trying to reuse, might be causing all your fresh money to fund other people's recoveries rather than your own.
d) Resume normal policy -  Do nothing and say nothing.   

If you are the FED do you -

a) Give praise that BoJ policy provides you with an exit route to QE via Japanese UST purchases. 
b) Suggest the BoJ also looks at buying US Munis. 
c) Wonder how long it will be before someone realises that Abe is a CIA asset orchestrating (a) and hopefully (b)
d) Write your CV and try and get out on a high to the private sector before you have to fire-hose real inflation and get engulfed in the flames.  

If you are US Congress do you -

a) Vigorously support Japanese actions by signing new trade and defence agreements (but ask not to be paid in Jpy).
b) Kick up a rumpus over Japanese currency manipulation and introduce trade sanctions.
c) Blame the other side and praise yourself ( business as usual).
d) Ask where Japan is and ask why they ain't speaking English.     

If you are a French politician do you -

a) Point to the rally in OATs and say it reflects confidence in French policy.
b) Point to the rally in OATs and say it reflects confidence in French policy and so raise taxes. 
c) Blame Gerard Depardieu for eur/usd's rally which is solely responsible for the demise of your oh so competitive export industries. 
d) Go back to lunch as it's the Germans running Europe not you so why bother. 

If you are a Swiss central banker do you -

a) Welcome continued large inflows of private money which you can use to fund local industry.
b) Worry like hell about why anyone in their right mind still wants to buy the Chf. 
c) Get ready to cut rates and protect the eur/chf floor
d) Wonder if you intervened by selling chf/jpy there would be some sort of financial logic loop explosion. 
e) Make all foreign deposits in Swiss institutions junior to locals.

If you are a Eurogroup member do you - 

a) Send a large hamper of Italian luxury goods to Abe with a bouquet and thank-you note.
b) Slap yourself on the back and issue press statements linking periphery rallies to confidence in your policies. 
c) Say the rally is a template to recovery, but Japan is not a template, neither is Cyprus (but bank reforms are) HOWEVER - you may use any of these as templates as mercilessly as hip hop artists use 70s funk bass lines.
d) Ask the Troika for a report on Japan and eye their haircuttable deposit base with envy.
e) Ask Germany. 

If you are the Bundeathstar do you -

a) Follow the master plan ignoring all other external influences. 
b) There is no plan b. 

If you are a European Utility with structural demand decline but with a sudden source of cheap Japanese funding do you -

a) Delever, take it like a mensch and show some regard for shareholder returns.
b) Go bananas building wind farms and other renewables on the cheap.
c) Help the Saudis build nuclear facilities. I mean, what possibly could go wrong?

If you are a Japanese REIT now valued at a 3.5% cap rate do you -

a) Build more condos and sell them to..err..... your declining population. 
b) Build more condos and lobby for immigration in order to have customers. 
c) Screw it, buy a bunch of assets in Brazil, Australia and anywhere else with vaguely positive carry.

If you are an Australian miner staring at what Japan has done to AUD/USD do you - 

a) Cry to the RBA and make a fuss. 
b) Lie on your back while your creditors have their way with you and think of England which long ago gave up inflation targeting.
c) Try not think about the topical debate about Thatcher and the history of the UK mining industry. 
d). Mortgage your jet skis and V8s.

If you were a struggling Greek Region facing all the grim reality of uber-austerity do you -

a) Knuckle down and get the olive presses going again, Japan and its effects are just too far away from the daily struggle.
b) Pray for a miracle involving finding a huge deposit of Gold under your feet which will transform your lives. 
c) Have all your prayers answered and find a huge deposit of Gold under your feet but then argue with your neighbours to the extent that no one ever digs it up and you lose all your friends. (for clue click here)

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Anonymous
admin
April 12, 2013 at 9:08 AM ×

Sheer genius as usual.

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abee crombie
admin
April 12, 2013 at 1:50 PM ×

lol Polemic. it certainly is interesting times. Though I guess it always is, as I've read about the 50's and 80's and many similar fears were present in the markets then.

Commodities in trouble today. US consumer also looking at a soft Q2 (payroll effects starting to kick in?)

Lets see if the dip monkeys in Spoos are in the office today

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Momo Monkey
admin
April 12, 2013 at 2:33 PM ×

Just let me get at the lever. Want banana!

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Anonymous
admin
April 12, 2013 at 2:34 PM ×

Are UST purchases the result of spillover from Japanese savers, or CB intervention?
Corey

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Leftback
admin
April 12, 2013 at 2:36 PM ×

Look at JPM and WFC. Both made highs in March, then yesterday both made lower highs into earnings. Both banks beat expectations but today it's Sell The News.

"Start Spreading The News
I'm Leaving Today...."

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Saul Bollox
admin
April 12, 2013 at 2:37 PM ×

Corey,

Yes. Yes and Yes.
Innit.

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momo Monkey
admin
April 12, 2013 at 2:59 PM ×

Good data. Bad data.
Earnings shmearnings.
Macro Shmacro.

Just press the lever.
Monkey want banana!

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Anonymous
admin
April 12, 2013 at 4:13 PM ×

JPM missed on most segments; mortgage -26% versus -13% estimates.

But remember, housing IS recovering...

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abee crombie
admin
April 12, 2013 at 5:14 PM ×

GDX and gold stocks...wow! 2008 lows here we come. You'd think a company like newmount or barrick which have been in business for years would get a little more respect. Getting ready with the kevlar SOON, but not yet

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Leftback
admin
April 12, 2013 at 5:47 PM ×

BUGS ON THE WINDSHIELD !!!

Poor bugs are so demoralized they don't even bother hating on us any more. Which is surely a sign of total apathy and capitulation approaching.

Yes, its good to know where the Kevlar is. But with BUCKY potentially making another run, it's really probably unwise to deploy the gloves for anything yellow or grey. Not just yet.

Eventually the miners will actually get so cheap as to be a good dividend play for Falling Knife artists with strong gloves. Unbelievable, eh?

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Anonymous
admin
April 12, 2013 at 5:51 PM ×

"Hellooooo?"
(ring ring)
"Is this Mr Paulson?"
(ring ring)
"Can I speak to redemptions, please?"
(ring ring)
"Helloooo?"

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Leftback
admin
April 12, 2013 at 7:28 PM ×

Some interesting stuff here from Jeff Gundlach, via Josh Brown's blog:

Notes From Doubleline

One of the points made here by Gundlach that we have repeated here often is that the punters and brainless TV pundits calling for a spike in higher US rates that will bring about some cataclysm are completely out of their minds. Most of the Fed's balance sheet will be held to maturity and then just roll off. So the idea that the balance sheet will contract sharply is bonkers. The reason, as Gundlach points out, is the weak employment situation. No point obsessing about when the exit is because there may not be a f*cking exit at all.

Another point he makes is that the FED put isn't under the stock market at all, it is under the bond market BECAUSE that's what they are buying. Ben Bernanke is buying Treasuries and MBS. This is why shorting USTs is the new widow maker. On the other hand, he isn't buying bitcoins, gold, shares of Facebook, scuzzy rental properties in Phoenix or homebuilder stocks, and he doesn't care if most of that shit crashes while you are on margin and you lose your shirt. Really. Treasuries are liquid, in the end, and some of that stuff one day will not be. That's how crashes happen. No bid.

Finally, Gundlach makes the point that Cyprus isn't the template for the US, to put it mildly, although it might be a template for small defenseless and slightly naughty offshore banking countries. No, the template for the US, demographically and in the bond market, is JAPAN. We are following Japan, some 20 years behind. Think you'll never see a 1% 10y Treasury? I'd review the history of Japan and think again.....

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abee crombie
admin
April 12, 2013 at 8:51 PM ×

thanks LB. I do disagree slightly that the Fed doesnt care all. But they clearly dont think asset markets are materially overpriced yet. But should asset markets keep marching upwards (Dow 18,000) with still 0% rates then something will be wrong. The way we are going, it may be a problem in 2014

momo Monkey, i guess you got your banana today, cant nobody hold me down, oh no!

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amplitudeinthehouse
admin
April 13, 2013 at 2:29 AM ×

Just my two bob

Watching the market with an element of detachment hasn't changed my opinion from the beginning of the year...extrapolate or contrast from previous QE induced markets

One note we'll go back to is the Yennish Fatigue top at the end of 2015 that is playing out just as the master shit sandwich eater depicted in his cycle charts.

This market is comparable to the 'Symbolism" variable that a leading stable has in the betting ring...The Architect has established a symbolism within the trading landscape through the transmission of quantitative easing ( globally ) and any data slumps or shocks in the debt markets are analogous to a leading stable having a dozen straight favorites get beaten only for more money to go on the next one due to the variable embedded in a leading stable " Laws of Frequency "...

There is always a transition period when the symbolism fades out . It never stops on a dime , back in the day if a team that had the embedded symbolism variable began to fade I wouldn't take any notice of that particular team ratings , I'd go straight to the data and find the quality of the performances of opposing teams through quantitative analysis, but not on the actual games against the "symbolism" team but their performances leading into it...With that stated , the "Symbolism" has faded yet..

Where would one go to find a variable to implement in place of tackle percentages etc?

We'll run with TMM, that on the bigger plays the currency market has the deciding factor in what we would plunge on.

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Corey
admin
April 13, 2013 at 2:55 PM ×

http://www.youtube.com/watch?v=MgTSfJEf_jM&feature=youtube_gdata_player

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Anonymous
admin
April 15, 2013 at 1:06 PM ×

Even by our (tourist/bystander) expectations from a few weeks back, the PM debacle is reaching astounding proportions.

Now, will AUD oblige or what? "yieldy triple-A" only gets you so far amirite?

On a sidenote, lost in the shiny metal coverage is the broad U/P of commodities in general, and oil specifically. Open-ended QE without the energy vigilantes and the oil spikes that have moderated rallies in previous year? Is anyone ready for a melt-up in stocks? Thinking outloud here.

DD

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Anonymous
admin
April 15, 2013 at 2:00 PM ×

C says
Actually DD I have long thought that the next 'real' bull market as opposed to one founded on central bank artificiality is to be found AFTER energy and comms have been absolutely crushed killing any further notion of a 'peak' anything that invoked stimulus and the comm/energy kneejerk response. Kill that and then we have a potential market not driven by input costs,but one with a chance of labour cost price pass through. The one where earnings increases have a fighting chance of being real rather than creamed off by anyone who juts happens to be sat on what they think is a scarce resource.
I for one thnik that the resource world has had a jolly good innings since the late 90's.Time we got to play a different tune.
When I say crushed I mean a lot lot more than we have had at this point.

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Anonymous
admin
April 15, 2013 at 2:43 PM ×

Total agreement there, C.

On a sidenote, talking of jolly good innings, how is London going to reinvent itself once supercharged finance and commodity outburst are on the back foot.

Where is the Short Candy Bros ETF when you need it? j/k

DD

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Anonymous
admin
April 15, 2013 at 2:59 PM ×

C says
London should major on tourism. I see hordes of Chinese following me with my raised umbrella as I show them around Canary Wharf regaling them with the story of how young "innits" rose to that level of incompetence that they actually thought they knew something whereas those of us with the experience of years know we know nothing ;)

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Leftback
admin
April 15, 2013 at 2:59 PM ×

Agree 3000% with C.

Next bull market lies ahead of us, but only after a brutal and total beat down of commodities, emerging markets, commodity FX and many reflation trades of different stripes. But in order to get through that phase there will be a lot of sharp unwinds in carry trades, and that will bring pain to equities everywhere.

The precious metal plunge is truly remarkable. One of those days when you see an avalanche out there and say, I'm so happy not to be under that lot. But you know someone has to be.... obviously, we are glad that the Kevlar Gloves™ stayed in the drawer.

We have a few strong dollar trades on still, but not that one today. We suspected China data would show some deceleration, but who in their right minds can make a trade based on their data?

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Leftback
admin
April 15, 2013 at 3:06 PM ×

Home builder sentiment down. Bobby the Builder is back in a bad mood again on account of no punters ready to ante up for that over-sized mini-mansion built on spec with shoddy Chinese materials.

Shame about that, you know, especially if you are long the xhb and have a bit of margin. Housing Starts data out tomorrow. So you can either panic sell today or do it in the morning at lower prices. :-)

Speaking of Panic, wonder what it's like over at Paulson Advantage this morning?

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Anonymous
admin
April 15, 2013 at 3:19 PM ×

Again, as a spectator, will be interesting to see if it plays out like JPY rout in Q4/Q1, and the sentiment faders in PM get taken out wave after wave.

Macroman commenters pool on time to first XAU 1000 target from turncoat sellsiders?

-DD

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Anonymous
admin
April 15, 2013 at 3:31 PM ×

XAU 1000 ? You probably mean XAU 100. Pretty much at the time when spot gold hits 1300 and Jimbo Rogers starts buying.

Eddie

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Anonymous
admin
April 15, 2013 at 3:36 PM ×

Meant XAU/USD

As LB, really glad not to be involved, either way. As much as we like to make fun of the Schiffers, cashing in optimally is not going to be an easy process for the winners either.

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abee crombie
admin
April 15, 2013 at 7:30 PM ×

took out the kevlar today to start a position. maybe I'm early but this is getting close to capitulation. So stocks are gonna ride to all time highs on reflation and gold is gonna go under $1000 USD. I just dont buy it. Gold is such a small market and sentiment is everything but real money will come in at some point.

more interesting to me is the carnage in oil/copper.

Re: NAHB vs XHB. Listen to a conference call of one of builders, they are all confident. NAHB has a lot of smaller builders who cant access capital at low rates, hence the divergence and opportunity. You need a real shock to turn housing around at this point.

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