Originally posted at >>>/qrb/137579 (052355ZJUN22) Notable: Mkt Fag interviews Godzilla on how the Bank of Japan and The Federal Reserve are in the same predicament but the BOJ is in far worse condition-godzilla noes his stuff
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Mkt Fag interviews Godzilla on how the Bank of Japan and the Federal Reserve are in the same predicament
Mkt Fag:They are STILL trying to explain to everyone (or trying to) that the FRB sets rates with this latest crappage from Bloomberg and from the Nikkei (below) about Japan 'sticking to Kuroda's "plan"-and that 'plan' is to never raise rates and have the NYFRB buy up a ton on Yen (but they don't say that-it's really the only option they have left) so it strengthens-it's just a rehash of what they've been saying (with 6 of the the Fed Govs last week plus the Vice Chair and Jerry himself) however this will be repeated all week going into Friday
We'll hear from Mr. Godzilla in a few minutes
Team Transitory Is Back Warning Big Rate Hikes Are a Big Mistake
And for the 6th gorillionth time you do not set rates-the bond markets does-all (You) phaggits at the FOMC do is alter Primes Rates-THAT IS ALL
Team Transitory’ hasn’t given up hope of winning the great inflation debate
That was the tag given to everyone from Federal Reserve Chair Jerome Powell on down who expected pandemic price-spikes to be shortlived. With inflation still breaking records all over the world, they essentially lost that argument.
Godzilla: "Are we ready yet??..I've got something to say on this shit for sure"
Mkt Fag: "In a moment Mr G.-we're still trying to set the stage..there are a few small animals in the corner on ice for your dining pleasure-please help yourself"
But there remain plenty of economists who argue that the shock will soon fade, as supply blockages ease and energy costs stabilize. Some warn that central banks are in danger of making a big mistake by raising interest rates too aggressively even as price pressures show signs of peaking. With inflation now exceeding 8% in the euro area, and expected to stay above that level in the US when May data comes out on Friday, here’s a roundup of some of the main arguments laid out by Team Transitory 2.0.
Too Tight?
Godzilla: Are you fuggen kidding me?"
Central banks argue they can raise interest rates at a pace that allows their economies to achieve what’s known as a soft landing. Skeptics say they’ll tip their economies into recession by tightening too much, with inflation likely to undershoot targets again as a result.
History illustrates the risks: The European Central Bank in 2011 raised borrowing costs only to be forced to reverse them later that same year while the Bank of Japan in 2006 raised rates and had to unwind that move in 2008-and they have been at neg rates for over 10 years (factoring real inflation and rate of return).
Godzilla: "Big mistake THAT was-they could have just asked me to destroy a city or two and then hid the Yen printing under an aid package...you know like they did with Fukushima..oops have I said too much?..shit I'll probably never get invited back now"
Ongoing supply chain blockages prompted retailers to stock up on the goods they need to ensure they can meet demand. With signs that consumers are growing cautious as interest rates rise, that’s now leaving an overhang of goods that will add downward pressure on prices.
Inventories rose $44.8 billion, or 26%, for businesses on S&P consumer indexes with a market value of at least $1 billion, according to data compiled by Bloomberg of companies who reported earnings in late May. Economists at Morgan Stanley warn that the risk of an inventory glut is growing, especially in sectors such as consumer discretionary and technology goods.
THIS is why you see all the big box stores struggling because they have to keep all that unsold inventory on it's books-and unfortunate (for them) reality of policies that are forcing Weimar type inflation on everyone and everything. Inflation in things you NEED, deflation in all the shit you don't need.
This below is in the process of being 'fixed' with all the coming inventory
House prices soared in many countries during the pandemic thanks in part to central banks bringing interest rates to historic lows and pumping money into their economies by quantitative easing. While house prices aren’t always included in inflation baskets, rental costs are, and they often reflect the same dynamics. As inflation took off in 2021, borrowing costs started going up to tame it. There are now signs that house prices are cooling. Global growth in real house prices slowed to a 4.6% annual rate in the final quarter of 2021, down from 5.4% in the previous three months, according to the Bank for International Settlements. In real terms, they estimate that global house prices exceed their immediate post-global-financial-crisis average levels by 27%, suggesting plenty of scope for a correction. As interest rates rise, so will the repayment burden on consumers.
https://www.bnnbloomberg.ca/team-transitory-is-back-warning-big-rate-hikes-are-a-big-mistake-1.1774816
Godzilla:"Enough on that as you'll hear that all week!-we've heard it for years!"
Here is the BOJ's take on what they have done (and will continue to do)-and they are important to the US economy for several reasons but the biggest one is that the Yen-carry trade is what basically kept this side going after the 2008 Mkt event-that is unraveling now with it devaluing.
but first...and something else is that the BOJ owns just about 80% of the ENTIRE equity mkt in Japan because if you think we've been printing money-they make us look like amateurs-this all relative and based on scale of economy and if all things were equal they are the TOPS in managing markets and buying equity without a doubt-only China is worse but they are fully State dependent (and are not shy about it either-they tell you and how everything there is structured) but Japan still tries to keep the illusion that there is a separation of the two-that is the big difference
Godzilla: "Preach!!!
Japan stock buybacks double to $32bn, highest in 16 years
Godzilla: Where do yo think they got the Yen from....?
Mkt Fag: Good point Mr. Godzilla..let us continue
Japanese companies plan to repurchase 4.2 trillion yen ($32.4 billion) of their own shares this fiscal year, nearly double the amount from a year earlier as businesses reroute cash stockpiled during the pandemic toward investor rewards. Hitachi will repurchase 200 billion yen of its own shares, marking the first buyback in eight years and a record for a single tranche. Phone carrier NTT will buy back 400 billion yen and Apple supplier Murata Manufacturing will repurchase up to 80 billion yen in the first buyback executed in roughly a decade. This comes as the Japanese economy and corporate earnings head toward recovery. Funds on hand among listed companies that closed their books in March stood at 99 trillion yen on Dec. 31, up 16% from the end of 2019. Nikkei reviewed stock buyback plans for the current financial year released by listed companies in April and May and found the total has soared by 94% from the same period last year, touching a high not seen since fiscal 2006.
https://asia.nikkei.com/Business/Business-trends/Japan-stock-buybacks-double-to-32bn-highest-in-16-years
Godzilla: "Once they reversed the rate hikes in 2008 the die (below) was cast and attacking them just wasn't fun anymore-I felt sorry for them"
Japan’s Kishida Set to Stay on Kuroda Path, Party Official Says
Prime Minister Fumio Kishida is likely to want the Bank of Japan to stick with its current policy direction even after a change of governor, according to a senior ruling party member.
Godzilla: "OF COURSE you're going to tow the party line..the LDP still needs to be re-elected that sorry waste Kuroda went over to your country a month ago begging Janet to buy up moar Yen..she said no in public but Jerry said yes:
Mkt Fag: I agree with you Godzilla they are doing exactly what we have done and been doing for decades-there is no difference between us and them-just the pieces of paper we have to support it
Shouji Nishida, head of a pro-spending group in the party with ties to former premier Shinzo Abe, pointed to the fiscal policy plan published last week as proof that Kishida is more committed than previously thought to the BOJ’s inflation target.
Godzilla: "JFC another Keynesian-based asshoe-just what we need!!"
Mkt Fag: "Mr. Godzilla please...this is a family show but I understand your frustration."
The policy draft released by the finance ministry reiterated the goal of achieving 2% inflation, as pursued by the central bank under Governor Haruhiko Kuroda. But this time it added the words “sustainably and stably” in reference to how the goal established in 2013 by Abe’s government should be met.
Godzilla: "See how well that worked all they do is print money and then the money-laundering shit...me and Rodan have some stories on THAT shit?!"
“What that means is the policy cooperation with the BOJ established under Abenomics must be continued,” Nishida said in an interview last week. “It means the next BOJ governor must stay on Kuroda’s path.”
Godzilla: Blah,blah, blah.. How about I take out Imperial Palace...would you listen then?..bet you wouldn't"
Nishida’s comments come amid strong interest over who will succeed Kuroda when he steps down next spring. Economists and investors want to know whether Kishida will look to reposition the BOJ away from the ultra-low interest rate stance that has helped push the yen down to two-decade lows as other central banks hike rates to curb inflation.
Mkt fag: "So you see why Mr. Godzilla is very emotional about this because they can't stop this policy once they started it and any rhetoric to say otherwise is just that pure talk
Godzilla:How about N-E-V-E-R....not gonna habben by choice-they are already naked in the swimming pool and if they don't tighten up that shit we will always be stuck in this destroy everything mode (not that I disagree with that because that is what I'm around for) but enough is enough-at some point the citizens are gonna get pissed and do something about this....YEAH right...hahahahahaha!! they are all so cucked they won't do anything but it's kinda not their fault as WW2 and those agreements made after theWar put them all in a difficult place..enough of this BS...hey Mkt Fag you wanna go get some Sake and Tempura?
Mkt Fag: I'd love to Mr Godzilla..thank you for sharing your thoughts..this one is on me
https://www.bnnbloomberg.ca/japan-s-kishida-set-to-stay-on-kuroda-path-party-official-says-1.1774812