Oh my

Well, that was...surprising.  Perhaps the BOJ has realized that disinflation is a global phenomenon, and that there is little that marginal increases in policy can do to boost CPI very much.   Still, given the heavy hints of the past few weeks, the decision to stand pat was a bit like telling your kid that they'll get an Xbox for Christmas and then giving them this:

How big a tantrum you get depends on the nature of the child;  as the 36 vol price in overnight vol that Macro Man execrably thought might be a sale indicates, the yen (and Nikkei) are not the kind to take disappointment lying down.  Below the previous low of 107.55, there is plenty of fresh air to 105.  This is an example of why one of the most important skills in forecasting is knowing when you don't know.





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Anonymous
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April 28, 2016 at 11:22 AM ×

I see Ducrozet (@fwred) is a follower. He tends to nail ecb policy actions, even if I disagree with what ecb does.

Between him and ZH, you got some range of followers.

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Hotairmail
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April 28, 2016 at 12:01 PM ×

Perhaps this means a Fed rate hike is more likely in June. The Japanese et al have been told to hold their horses from doing anything 'silly', a relative weakening will come soon enough.

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Bruce in Tennessee
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April 28, 2016 at 1:29 PM ×

Nikkei drops 1000 points because of CB disappointment?

Pierre Paul could teach these bubbas a thing or two about risk.

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Corey
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April 28, 2016 at 1:57 PM ×

Forget about the Fed. If you need a narrative so you dont feel like a blind man in the desert look east young man.

The most important factor is the nearing end of growth for the worlds latest economic miracle. The Fed, the BOJ are throwing a lifeline to the Chinese in hopes that they can engineer one last flash from the pixie dust and either that they've been soaking the economy in.

Since the BOJ is now operating as a defacto hedge fund, why dont they just come in and buy the whole shebang in one fell swoop, nationalize everything and that way Japanese investors will be forced to deploy their capital in other global risk assets. You can globally sponsor the move with other CBs forgiving the remaining JGB debt.

I think its obvious by now that there was informal agreements made at the last G20 and will be v interested to see if post the next one we get a slight tilt back towards the old playbook.

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washedup
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April 28, 2016 at 2:02 PM ×

Quite the stag-flationary GDP report - if this is after the seasonal adjustment re-adjustment, what would this same report have said last Q2 - -1%?
We are looking at a 1%-1.5% trajectory for the US with rising inflation - the most interesting thing to me is the capex and GDP impact of the rig count reductions aren't even fully played out yet.

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Bruce in Tennessee
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April 28, 2016 at 2:13 PM ×

http://money.cnn.com/2016/04/28/news/economy/us-economy-gdp-first-quarter/index.html?iid=hp-stack-dom

America nearly ground to a halt at the start of 2016.
The U.S. economy only grew 0.5% in the first quarter of the year. Tepid consumer spending, global headwinds, a struggling manufacturing sector and weak business investment all weighed down growth.
Growth was even lower than economists' anemic expectations of 0.7%.
It follows the very slow pace of growth of 1.4% in the last three months of last
year.

...I don't see Janet bringing the anons milk and cookies at the close of markets next quarter either...and will the main driver of the equities market continue to be share repurchases? It is possible as the election season marches on that instead of the DOW following the Fed lead that it might go up or down depending on poll numbers...

...Now wouldn't that be fun?!

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Anonymous
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April 28, 2016 at 3:42 PM ×

remember what nat gas did during the 2000 La Nina...

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Anonymous
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April 28, 2016 at 4:08 PM ×

As a bullish anon, who loves to buy ES after every sell-off, can I just say how f*cking amusing it is watching the market prove the equity bears wrong, time and again... consider:
- Jan/Feb China worries; led to the biggest spoos rally in a long time
- Doha worries; followed by oil and equities up
- Earnings the evening of the 21st; again spooz shrugged it off
- APPL (bears loved that); again no fall in spooz
- BOJ (end of the world!); oh wait, spooz are up 20 handles as I speak

You'd think the bears would learn, I guess not...

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Anonymous
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April 28, 2016 at 4:54 PM ×

Corey, agree with you on the "Shanghai Accord". More and more evidence to prove it as each day passes.

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Anonymous
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April 28, 2016 at 5:10 PM ×

People were so hurt by 2008 that they basically made the decision to not let it happen to them again. In the process they missed out and are still missing out on an amazing secular bull. Tragic.

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Anonymous
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April 28, 2016 at 5:17 PM ×

Further to the above, Oil is very hated and is also rallying hard. I'm going to test a thesis of 'buying "most hated" risk assets'. Think this could be a winner.

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Skr
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April 28, 2016 at 5:51 PM ×

Anon

"Go placidly amid the noise and haste, and remember what peace there may be in silence."

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Anonymous
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April 28, 2016 at 5:54 PM ×

Oil is hated ? Last time I looked crude oil commitment of traders spec longs >> spec shorts.

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Corey
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April 28, 2016 at 6:16 PM ×

http://english.caixin.com/2016-03-08/100917582.html

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Anonymous
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April 28, 2016 at 7:10 PM ×

http://www.bloomberg.com/news/articles/2016-04-28/birinyi-says-engine-intact-as-s-p-500-reaches-old-age-milestone

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Anonymous
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April 28, 2016 at 7:53 PM ×

So what now? The equity index is now negative for the day. Should I buy now?

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Swiftie
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April 28, 2016 at 9:10 PM ×

Long May VIX, short June VIX.

This is the most attractive way to hedge / get short right now. You should put it on. (Side by side with your ES dip-buy, if you're into that kind of thing...)

Interesting times. Best of luck to everyone.

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Anonymous
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April 28, 2016 at 9:18 PM ×

Loving This Market !!! The Day Trading Gods are smiling on us.

I suggest you buy shares in large broker dealers tomorrow - judging by the number of trades I have performed today I expect their EPS to be significantly higher next qtr. Buahaha...

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Anonymous
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April 28, 2016 at 10:08 PM ×

Some anons realize the market should not drop 200 points because of the interview of one old man. It feels like a top.

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Anonymous
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April 29, 2016 at 2:44 AM ×

at the risk of sounding like a douche, usdjpy to 105 seems like free money, no?

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Anonymous
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April 29, 2016 at 2:48 AM ×

usdncy fix-oh my. eur ripping. both should be supportive equities right? hedge with long yen?

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