Some tough new out of Japan here this evening for those fans of “money printing” and “easy money” policy. News flash – It’s not working.
With the current QE program in Japan currently 3X LARGER than that of the U.S Federal Reserve, the first 6 months “pump job” has most certainly stalled out ( ironically in May – as I suggested markets topped then ) then traded flat across the summer, and now into the fall.
If you can believe it:
“The BOJ is likely to step up stimulus in the April-June quarter to support the economy after the levy rise, according to 20 of the economists surveyed.”
“The BOJ will need to fire another arrow aimed at devaluing the yen if the Abe administration is unwilling to risk a sharp economic slowdown,” Credit Suisse Group AG economists Hiromichi Shirakawa and Takashi Shiono wrote in a report.
Expect lower stock prices in Nikkei, then further easing come April.
Now do some of you have a better idea as to why I expect the Fed to also INCREASE QE moving forward?? The numbers are just too large for any of us to clearly understand. A couple more “zero’s” on the Fed’s balance sheet aren’t going to make a single bit of difference as financial markets continue “hanging by a life line/thread”.
They will print, print, print until they can’t print anymore – and continue kicking the can hoping for a miracle.
Japan’s program is 3X larger than the U.S and it’s already “a given” they will increase QE with continued attempt to prop up the economy. This, in the face of “global growth projections” now being lowered by the IMF and anyone else with half a brain in their head.
I’ll say it again – keep your eyes peeled friends…..a bumpy road ahead.
I just had to cut and paste the following graphic ( my apologies if proper credit is not given) as it best illustrates the significance and implications of the Fed’s QE money printing bonanza. Please take a good look at this – a real good look. Then consider the arguement of ”inflation vs deflation” moving forward. I would be hard pressed to entertain idea of the dollar doing anything other than “going down” over the first half of of 2013 – minimum.
Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy. (thanks wikipedia) Trading it however – will most certainly not be as cut and dry.
There will be no discussion of the “potencial outcomes and implications” of the U.S elections results here….short of this. Obama wins hands down, and the entire planet breathes a huge sigh of relief that the U.S didn’t revert back to the previous policies/leadership that put them in this position in the first place. Trust me, political views aside (myself being Canadian and now living in Mexico – go figure) global financial markets are not interested in ” upsetting the apple cart” of continued money printing and easing – now being adopted worldwide.
Nothing will change regardless of the outcome – as the wheels are now set in motion for the endless printing of dollars ( and Euro…and Yen etc..) as the global “race for the bottom” – begins to pick up speed.
At risk of sounding like a broken record – as the value of the U.S dollar continues to fall – gold/silver ( and the commodity related currencies ) stand to be the largest benefactors – as money gets cheaper……..and “things” become more expensive.
Last I looked – I believe its called inflation.
Watch for real time trading here – via the twitter feed on the right hand column. I expect the week to be “profitable”….. to say the least.
As suggested over the last two days – it appears that the dollar has finally completed its last push higher – and is looking to roll over. There may be a day left, or perhaps a quick spike in this evenings trading – but I expect any further upside to be “limited” at best.
All trades entered as of last night are sitting in profit – and the plan moving forward is shaping up – right on track.
I am currently short both the U.S Dollar and the Japanese Yen against the Commods – as well as long EUR/JPY.
Depending on overnight action, I will be adding to these positions rather aggressively here at the turn – as to maximize profits and catch this next leg “up in risk” – staying short the safe haven’s – and getting long the commods.
This is a rather significant turn here, as the dollar is unlikely to gather much support (thanks to Ben’s QE to the moon!). One would have to expect that “inverse” to the dollar moving lower – gold, silver and related stocks are set to fly.
I would not suggest missing this entry in gold and related stocks – as the gold bull is incredibly difficult to ride. The pullbacks are deep – so deep in fact that most traders dump at the bottom – and then get beat up trying to chase it.
There are only a few times a year ( if that ) when buying gold is a no brainer – this is one of those times.