Japan goes Nuclear

The Bank of Japan has agreed an aggressive fresh programme of quantitative easing (QE) measures to give more momentum to its gradual recovery.

Overnight the bank’s new governor, Haruhiko Kuroda, announced that the bank would buy roughly ¥50trn (£347.6bn) worth of government bonds a year as well as putting another ¥70-80trn into the financial system through “money market operations”.

http://www.ftadviser.com/2013/04/04/investments/japan/japan-launches-aggressive-qe-programme-ODAfVvEZxQzKrx1YC8qt3H/article.html


Fiat currency is on the decline - this is what Japan is doing, this is what must be done OR the debt burden collapses on itself.

The debts must default or be inflated away! 5 years after the GFC...QE continues

Mr Gundlach says re QE: "there is no exit”

 Worth a watch

http://www.cnbc.com/id/49086734

“I think it will be more likely that the Federal Reserve buys all the Treasury bonds that exist than starts selling them,” he said.

“I have no concept what the Fed exit will look like!”

 

All looks great UNTIL it doesn't

The 3 years before the GFC and the two years after. The market participants missed the extent of the carnage that was to come. Complacency? Blindsided? Blackswanned?

What is not priced in now? And by how much?

IF the "solution" to a debt bubble is "inflation" why would you be holding government bonds now? Timing though can be a killer - You can be right and very early.

I suspect few see "runaway inflation". Yet inflation has been the standard since the creation of the Federal reserve...except for some deflation in the 1930s (under the gold standard)

As Kyle Bass said recently (in his letter to investors)

The fallacy of the belief that countries that print their own currency are immune to sovereign crisis will be disproven in the coming months and years. Those that treat this belief as axiomatic will most likely be the biggest losers. A handful of investors and asset managers have recently discussed an emerging school of thought, which postulates that countries, as the sole manufacturer of their currency, can never become insolvent, and in this sense, governments are not dependent on credit markets to remain fiscally operational. It is precisely this line of thinking which will ultimately lead the sheep to slaughter.



 

 

 

this will get a few more interested...the tsunami is getting closer to shore...

http://www.bloomberg.com/video/gross-gold-a-better-investment-than-bonds-stocks-67gICY2RTwy3MytiYpX8jg.html

I just think it will be higher than it is today and certainly a better investment than a bond or stock, which will probably return only 3% to 4% over the next 5 to 10 years....B Gross the largest Bond Manager in the world

 

I don’t want to direct...you need to analyse and arrive at it yourself...so you believe it...you need to look at what is occurring and think it through, without reading the Financial Review or WSJ.

Consider the questions:

3.5 yrs after the GFC we have another round of QE – why?

China to stimulate – why?

US Fed to announce another easing in Sept?...Why?

Is history any guide to the repayment of massive debt build up?

Is their a message in the Gold market?

If something dramatic is happening or about to happen – will the many see it or the few?

QE3??

The debate has started amongst the Fed Reserve members as to whether they will or won't QE3? It's interesting to see this debate take place in public. Are they just telegraphing their votes to the markets so that there is no surprise? I suspect they are.

Bill Gross of PIMCO, correctly points out that without the aid of the Fed rates should be at least 1.5% higher. Then he tells the world he has sold all his holdings of government treasuries. Long terms rates are going up - it's just a question of time.

http://www.pimco.com/Pages/Two-Bits-Four-Bits-Six-Bits-a-Dollar.aspx

Bill says:
"As a counter, one would argue (and I would partially agree) that the U.S. and indeed developed global economies must keep yields artificially low for some time if post Lehman healing is to take place. But that of course is the point. By eliminating QE II, the Fed would be ripping a Band-Aid off a partially healed scab. Ouch!  25 basis point policy rates for an “extended period of time” may not be enough to entice arbitrage Treasury buyers, nor bond fund asset allocators to reenter a Treasury market at today’s artificially low yields. Yields may have to go higher, maybe even much higher to attract buying interest."

Meanwhile in Europe the talk is getting tough by the ECB that they will begin raising rates later this year.

I'm speculating, but QE3 in some form is highly likely. Markets are not sure and volatility is starting to increase. The next couple of months are going to get interesting.

one more rally while the USD heads south...on the way to a long bear market