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Blowout at the Bank of Japan

13 | By Shah Gilani

Holy trick or treat!

The Bank of Japan, Japan’s central bank, just tricked global markets by lavishing them with an awesomely sweet Halloween 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stuff will give global markets a heart attack or cause equities to vomit up their inflated gains when their heroin is withdrawn.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.

13 Responses to Blowout at the Bank of Japan

  1. David Dunnam says:

    This is some very revealing information. This type of information makes my investment product look better and better all the time. If your courious let me know and I can provide information.

  2. Glenn says:

    Sha, would you think a company like Ono Pharmaceutical (ONO) from Japan would benefit from this especially with their strong ties with BMY in US and the tripling of buying stocks presented by BOJ?
    Thanks in advance.
    Cheers,Glenn

  3. Rick says:

    OMG! What end is there to all the “schemes of failure”?

    Many of us are tied into global equities.
    So how do we find out which ones are on the block?
    Any of the informed readers may share if they know
    and I will check back later.
    This could make a big dent in our portfolios.

    Thanks Shah and thank you to your readers
    who are a cut above and always have additional insights.
    We won’t be hearing this on primetime news.

  4. Robert in Vancouver says:

    Shah is right, as he usually is.

    But when this bull market ends it will be with a sudden and sharp drop that will catch almost everyone by surprise except for the ones who initiate the drop (ie. Goldman Sachs and an assortment of Wall Street crooks).

  5. David says:

    This is just a last ditch effort to try and continue to prop up their economy much like the Fed did with QE3. We all have seen how poorly the U.S. economy continues to perform despite manipulated economic indicators and a stock market on Crack . As Shah mentions, take away the drugs and you have extreme withdrawal pains. Pretty soon the house of cards is going to come tumbling down for the global economy. It’s the perfect storm about to hit. Japan, Europe, China and the U.S.

    I think the first trigger will be Japan because they continue to be mired in a deep deflationary spiral despite record amounts of Q.E., and now they’re adding to that with a triple threat. Unbelievable how they don’t see that it can’t possibly achieve the outcome they want. Their demographics are over the cliff as far as GDP growth is concerned, and by continuing to add insurmountable debt will inevitably crush them and start a global depression.

  6. HYMN says:

    Jeez how long can this make believe economy go on. Seems every failing country has a rabbit to pull out of the hat. Will we ever get a “free market” Are there any big banks left that aren’t being investigated and paying fines. The banksters seem to have a new motto towards the middle class and it’s ” F— Thee and hooray for me” When all the moves blow up in their face, the IMF will come after the man in the streets money to bail ’em out. He won’t have any except his pension by then.

  7. ALAN STEINBRONN says:

    What’s to complain about?

    The Japanese currency hit the skids vs. King US Dollar.

    The Euro dropped like a rock too.

    The Yen started going underwater EXACTLY at 12:00am Friday morning – Euro too.

    The Euro TRIED coming up for some air, and grabbed a gulp, but then sank back down like a rock.

    So what if these guys want to sell their stuff to us dirt cheap?

    Truth be told – I WANT a STRONG US Dollar so I can buy as much of their goodies as I can.

    What full-blooded American is actually complaining about their early Christmas presents?

    REALLY???

  8. Ken says:

    All governments are playing fast and loose with the world economy. Japan isn’t the first and will not be the last. None of the politicians either know o32r care about real economics. They put the economic management in the hands of pseudo-economists like Larry Summers and Tim Geithner, and then are so ignorant that they do not have any idea that things are going downhill at an increasingly rapid rate.
    This is undoubtedly the most corrupt country in history. We all know that now. Everybody I talk to knows this, but they have no idea of what to do. They just hope that things will not get any worse, but
    that is inevitable. You cannot abuse an economy the way we have and still have a usable structure in the end. Alexios I Komnenos was by far the most intelligent head of state in history, although I doubt that even academic historians have ever heard of him. Around 1100, he saw the way the world was going. These huge governments were dropping like flies, so what does he do? He restored 100% gold coinage, and the Byzantine Empire returned to economic health until it was finally conquered by the Turks 350 years later. That is what we need to do. Even the U.S. has gone through this before. During the Uncivil War, the Union suspended the gold standard until after the war. The distortions that were produced during that war still caused the economic problems of the 1870’s, but at least the restoration of gold-backed currency prevented further deterioration.
    So what are we going to do? Stand back silently and let the stupid politicians completely destroy our whole society? That’s what it looks like to me. Instead of putting in new, smarter people, we are reelecting the same idiots time after time, because we are as stupid as they are.

  9. Ken says:

    So. You don’t like my comment. It certainly does not mean that I am mistaken. Never in history has any organization had the power to inflate the money supply into the far reaches of space like the Federal Reserve. And frequently, as I’ve seen in many other countries, people like the banksters would be summarily executed. The fact that we have a significant group of people who are above the law betrays the stupidity of our whole country. The fact that the general populace is so myopic, and willing to send the same people back to Congress time after time is more than regrettable.
    I have been studying history and economics for a half century plus, and I have put together facts and comparisons that no one else has seen before, because there is no one on the scene that I know of who has selected the acquisition of knowledge above the attainment of social position as I have.
    And I literally have a good-sized house full of books by respected historians and economic historians (I estimate 25,000) from the past century or so, such as Michael Grant and Niall Ferguson. There is no trash in this collection. I would compare my library in quality with any library in existence. With this knowledge I have put together a scary picture of the future, which is continuing to unfold as time passes. At first I was reluctant to believe the products of my research, but as the evidence accumulated, I could no longer disregard it. I’m not one of these people who believe that any god will protect us and take us up to heaven, or some such place of refuge, and the government is doing nothing but continuing to exacerbate the situation. I have earned 3 graduate degrees in history and research, but have avoided academia, because there would have been too many limitations imposed upon my research (such as a forced overspecialization.
    The whole process has accelerated since 1999, when Glass-Steagal was repealed, and Dodd-Frank is a band-aid on a gunshot wound.
    My goal has been to alert people to the dangers ahead of us and hope that they will decide to do the right thing. Right now, it’s as though the world is going full speed into a sharp turn on a mountainside wearing a blindfold.
    At the same time, I hope that I am mistaken, but I believe that one should prepare for the worst while, at the same time, hoping for better.
    If you choose to disregard this kind of warning you are siding with the government rather than doing what is right. Any time you want to know more of my research, I am available. Right now, it seems that humanity has not gained in intelligence during those 5,000 years of recorded history. When you get to our stage of the historical cycle, greed rules, and we must all give in to it without regard to the consequences. This is the third time this has happened, and it will continue to happen until we evolve a bit more intelligence. Otherwise, as a species, we continue to make the same mistakes over and over again.
    I am writing a book, which I hope will be better received than the comment which you rejected.

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