Holy trick or treat!
There’s only one question. Will all this fake sweetener stuff end in a global heart attack?
Keep reading. Your heart is going to pound…
Back From the Grave
The Bank of Japan (BOJ) brought “Abenomics” back to life this morning by announcing it was amping up efforts to treat, treat and treat the economy to some more sugar-laced stimulus on steroids. (Abenomics is the tag hung on Prime Minister Shinzo Abe‘s and his central bank’s stimulus efforts.)
This was a three-way lick ’em and stick ’em bonanza.
First, the BOJ promised to triple the pace of its purchases of stocks and property funds. Second, the bank said it’s going to extend the maturities (buy longer-dated issues) of bonds it’s stockpiling by three years, to an average maturity of 10 years. And third, the bank is going to raise the ceiling of its annual government bond purchases by 30 trillion yen ($267.56 billion) to 80 trillion yen ($713.5 billion).
And if that triple threat wasn’t enough, Japan’s gigantic public pension fund – the largest in the world – said it is going to start buying more global stocks and exchange-traded funds (ETFs) to jolt its returns.
Holy sugar shack.
Equity markets are soaring higher on the news.
It’s simple math. If you want to make money on this news, you buy, buy and buy stocks and more stocks.
And you keep on dancing until the music stops.
That’s because central bank stimulus is sweet music to equities.
Of course, there’s just one little problem.
Eventually, all that sweet stuff will give global markets a heart attack or cause equities to vomit up their inflated gains when their heroin is withdrawn.
In the meantime, take this treat and shove it.
I’ll tell you when the party’s over and it’s time to slim down on stocks and short everything.