Archive for the ‘ Japan ’ Category

Kuroda Stuns the market – Bank of Japan Boosts Bond Purchases

Bank of Japan (8301) Governor Haruhiko Kuroda 1 – 0 Deflation

Good Job Kuroda you promised the world and you delivered , this a Central Bank Governor that now has the confidence of the market and the world .

The central bank buy 7 trillion yen ($74.6 billion) of bonds a month!!! THAT BIGGER THAN Switzerland GDP PER YEAR !!!!!!!

Yen weakens against the $ – 94.122 AND THE NIKKEI turned A -1.5% LOSS to a 0.5% gain.

Watch this space Japan has declared war on deflation !!

BBC

Bloomberg

Yen Rises to Near Four-Week High on Safety Demand

The yen strengthened to a level not seen in four weeks against the dollar after U.S. manufacturing expanded less than forecast.The Federal Reserve looks less likely in reducing the bond buying program .

This is a great time for people with YEN to convert to other currencies as I can’t see this lasting.
I can see the yen wekening again based 2 events :

Bank of Japan Meeting

The new Bank of Japan Governor Haruhiko Kuroda will be holding his first meeting on April 3-4,
He is committed to the 2% and has said he will take all actions needed.

ECB Meeing

ECB President Mario Draghi and the committee will have the monthly meeting on April 4th,
With unemployment in the EU rising to record high. Something’s needs to be done here , and I think again it will be down to Super Mario to do something .

Lets watch the space and see what happens , all we know is volatility is a guaranteed , all you got to do is be on the right side of the trade !

Tony Evans

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New Rules on Money Transfer in Japan and overseas -1st April 2013

As of today April 1st 2013 , all individuals ( Japanese or Foreign ) in Japan sending money inside of outside Japan may be required to present additional documents :
-ID, passport / gaijin card
-why bank transfer?
-employment status ( proofs of status maybe )

This is a huge crackdown to the criminal proceeds & in connection to the “Act on Prevention of Transfer of Criminal Proceeds” .

Japan is getting tough on ” the yakuza ” mainly as the amount of money they make is staggering one part of the Yakuza business is pachinko parlours and they account for 3% of Japan GDP $ 163 billion (if it was a country it would be the 93rd largest country int world. , .

Lets hope this doesn’t effect normal people to much.

Please see announcement on

http://www.npa.go.jp/sosikihanzai/jafic/en/hourei_e/data/sekourei2504.pdf

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Japan’s Nikkei Posts Best Back-to-Back Quarter Since 1972

Could this be a start of another Japanese boom ?

Looking at the graph below you can see last time the Nikkei went up by a factor of 8!!
Garph link

Sentiment has changed here over the coming months in my 8 year time here I have never seen it so positive!

Abenomics is the key , lets make sure he keeps up the good work .

Tony Evans

Japan’s Nikkei 225 Stock Average (NKY) rose today, capping its best back-to-back quarterly performance since 1972, on optimism policy makers will stimulate the economy and as U.S. data boosted optimism about global growth.
The Nikkei 225 rose 0.5 percent to 12,397.91 at the close of trading in Tokyo. The measure closed 19 percent higher this quarter, extending the 17 percent increase in the previous quarter. That’s the best two-quarter performance since December 1972, when the measure rose 37 percent.

Japan’s Nikkei Posts Best Back-to-Back Quarter Since 1972

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There is no Currency War – Goldman Sachs

This did make me laugh ! There’s no currency war as Japan has already won !!

There is no Currency War – Goldman Sachs.

There is no Currency War – Goldman Sachs

Whilst prominent leaders of BRICS countries unite in South Africa to tackle currency volatility and discuss plans to set up institutions that re-establish the roles of the World Bank and International Monetary Fund, Goldman Sachs believes that there is no so-called Currency War going on.

Yesterday, Ford CEO Alan Mulally complained that the weakness in the Japanese yen is giving an advantage to competitors who can sell for less.

However, experts from the investment bank Goldman Sachs believe that instead, we are just seeing ‘prudent monetary easing’ and thus it was the decline of real rates in some countries that has resulted in weaker currencies.

The prime examples are Japan, which has seen its currency fall due to rising inflation expectations and a decline in real rates; and the UK, which has engaged in outright monetary easing from the Bank of England.
Therefore, Goldman believes that such moves are for the benefit of the global economy as a whole, rather than a Currency War. The bottom line is that what we are seeing is simply classical monetary policy to boost domestic demand.

Meanwhile, at the BRICS summit in Durban, Brazil policy makers warned again of a global currency dispute as nations take reciprocal action to weaken their currencies and protect export industries. Brazil’s real has gained 2% to the dollar since the beginning of the year, while the South African rand has dropped 8.8%.

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Re blogging “Mr Yen cautions on Japan’s ‘unsafe’ debt trajectory”

A great article in the Telegraph on the Yen , Abenomics and debt ,
Looking at Japan is self financing its debt bit for how long ? Abenomics makes JGB looks very interactive , negative yield 1%!

2008 financial crash made many people remember that borrowed money has to be paid ,

In my opinion they will tax , tax , tax ! Which history shows us it never never works , I believe increase the consumption TAX to 10% is a much better option , and then invest in projects to keep Japan in Competitive position .
Japan should stick to its strengths and invest in R&D and engineering .

As always the markets will decide .

Tony Evans

Mr Yen cautions on Japan’s ‘unsafe’ debt trajectory

By Ambrose Evans-Pritchard, in Tokyo4:04PM GMT 26 Mar 2013

“A debt ratio of 245pc of GDP is not really safe, and it is not happening because we are investing,” said Takehiko Nakao, Japan’s ‘Mr Yen’ or vice finance minister in charge of the exchange rate.
Mr Nakao said the scope for further fiscal stimulus is running out and the country must restore public finances to a sustainable path by the middle of the decade. “We can’t continue to expect people to lend money to us,” he told The Daily Telegraph.

The comments touch on an acutely sensitive topic. A number of global hedge funds and banks have begun “shorting” Japan’s debt, the world’s biggest at $23 trillion.
They are mostly taking positions through the credit default swap (CDS) market, betting that Japan will be the next big crisis theme after the US subprime crash and the eurozone debt debacle. The radical new government of premier Shinzo Premier is determined to prove them wrong.

Mr Nakao brushed aside criticism that Japan is engaged in currency war or trying to push down the yen, but acknowledged that there are limits to what the Bank of Japan (BoJ) can do under the rules of global finance.

“We didn’t blame other countries after the Lehman crisis when they had large falls in their currencies. We are using monetary policy to tackle persistent deflation in Japan, and avoid a deflationary spiral,” he said.

Mr Nakao said there is a “shared view” among the developed countries that central banks can legitimately buy any form of domestic asset – as the Bank of England and the US Federal Reserve have been doing – but overseas bonds are another matter.
“We cannot buy foreign assets at our leisure. That would be the equivalent of currency intervention by the Bank of Japan,” he said.

The world turned a blind eye to Japan’s purchases of US Treasuries in 2011 after the Fukushima disaster, when the yen surged to a record Y76 against the dollar. But those were unique circumstances.
The yen has since weakened dramatically to around Y95 under Mr Abe, whose “Abenomics” stimulus policies include a shake-up at the BoJ and a new team of governors committed to reflation.

Veteran Japan-watchers say there is a graveyard full of foreign funds that bet against Japanese debt over the last two decades, only to learn the hard way that the country is sui generis, with vast overseas assets and a captive pool of domestic savings.

The great unknown is whether this is now changing as Japan’s trade surplus evaporates. The International Monetary Fund says gross public debt will reach 245pc of GDP this year. Net debt – stripping out the BoJ’s liquid assets – is much lower but it too is now rising fast.

The IMF says net debt will reach 145pc in 2013, well above the usual safety threshold. Figure has jumped by 50 percentage points since 2008, roughly the same as the jump in Spain and Portugal over the same period.
Japan is the only major nation that has not begun to tighten fiscal policy. The IMF says the primary budget deficit was 9pc of GDP last year, yet the Abe government is launching a fresh $200bn blast of stimulus worth 2pc of GDP to kick-start recovery.

Mr Nakao plan is to withdraw the stimulus gradually once recovery gains traction, with a rise in VAT from 5pc to 8pc next year, and then to 15pc. Mr Abe has vowed to cut the primary deficit to 3pc by 2015. “We think that is unrealistic,” said Junko Nishioka from RBS.
Chisato Haguma, chief equity strategist at Mitsubishi UFJ, said the government must curb “exploding social security outlays” as Japan’s ageing crisis hits.
However, he said the high debt level is overstated since the vast assets of the state – including land – dwarf liabilities, and could be sold off if needed. “They have more options than assumed. There is not going to be a fiscal crisis in the next two to three years, but there could be one later,” he said.

Foreign hedge funds have made much of recent moves by the state pension fund GPIF to start selling off part of its vast holding of government bonds (JGBs).
Mr Nakao said the selling is a temporary blip caused by bulge of retiring baby-boomers. The GPIF will soon be a net buyer again and will continue to accumulate for another thirty years.
The IMF has warned repeatedly that Japan is pushing its luck. The Fund has advised fiscal tightening of 10pc of GDP by 2020 just to stabilise the debt level.

It said there is plenty of “low-hanging fruit”, advising Tokyo to raise the retirement age from 65 to 67, and remove the tax subsidy for dependent spouses to make it worthwhile for women to continue working.
Yet the Fund said Japan is uncomfortably close to a debt compound trap, and could face trouble if borrowing costs ratchet up. “Even a moderate rise in yields would leave the fiscal position extremely vulnerable,” it said, warning that this would have implications for the entire world.
“Even a relatively small increase in the sovereign risk premium would make fiscal consolidation more difficult, pose challenges to financial institutions, harm growth prospects in Japan, and could spill over to global risk premia and growth. In this regard, Europe’s recent experience offers a cautionary tale. Once market confidence is lost, regaining it becomes very difficult.”

Global stocks remain flat on euro zone crisis

Global stocks remain flat on euro zone crisis.

Today European shares and the euro remained flat, losing early gains as investors fretted that Cyprus’s raid on bank deposits could become the template for future euro zone bailouts.

Banks in Cyprus remain closed following the country’s bailout agreement at the weekend, but comments from Jeroen Dijsselbloem, the new head of the Eurogroup of euro zone finance ministers, have stripped investors of the appetite for the kind of rebound that has followed other rescue deals.

The FTSE All-World is up 0.2% at 236.0, not far from the four-and-a-half-year high of 238.6 hit a couple of weeks ago.

Wall Street’s S&P 500 index is up 7 points to 1,559 at the opening bell, supported by data showing US house prices in January saw their biggest annual increase in six-and-a-half years.

On Monday the S&P traded just 1 point shy of the 1,565 level that was the previous closing high in 2007, before Jeroen Dijsselbloem triggered widespread “risk asset” selling by saying that the Cypriot rescue marked a watershed in how the region deals with failing banks.

But markets have now stabilised as traders absorb Mr Dijsselbloem’s attempts to clarify his initial comments, saying Cyprus was indeed a “specific case”, with “exceptional challenges”.

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