Wednesday, March 16, 2011

Crawling From The Wreckage

Japan market bounces back, lifts world shares- AP

Bank of Japan emergency funding hits nearly $700B- AP

I wonder if the two headlines are related?

There is nothing like a $700 BILLION shot in the dark to levetate a sinking equity market.  The Japanese Central Bank has raised the financial bailout bar to new heights.  In the end though, this fiat transfusion will likely prove to be the equivalent of a butterfly bandaid on a sucking chest wound.  How much of this funny money will actually find it's way into relief efforts, or will it all go to prop up it's crumbling Nikkei Index.

Foreign bankers flee Tokyo as crisis deepens- Reuters

I guess even banksters have a price...their life!  When the rats are leaving the ship, it must be sinking pretty fast no matter how much money is being thrown at it.

Stocks hit by Japan fears despite Nikkei rally

LONDON (AP) -- Shares around the world failed to capitalize on a bounceback in Japanese stocks Wednesday amid concerns about an escalating nuclear crisis in the wake of the country's devastating earthquake and tsunami.

Japan's benchmark Nikkei 225 stock average closed up 5.7 percent at 9,093.72 as investors snapped up bargains after panic selling sent the index spiraling down nearly 11 percent the day before.

Another massive monetary injection from the Bank of Japan -- to a total of almost $700 billion in short-term loans -- and an indication from the government that it could buy into the stock market also helped shore up the Nikkei. On Tuesday, the index closed at its lowest level in almost two years after shedding 16 percent over two days, its biggest two-day retreat in forty years.

Free cheese coming to an equity market near you soon.  This "black swan event" that has occurred in Japan is not something that can be easily dismissed by printing money and happy talk by the talking heads on financial TV.   With the unexpected comes a mountain of uncertainty.  Climb the mountain with caution.

Oil prices rebounded sharply overnight as the unrest in the Middle-East and North Africa regained some of the global headlines.  It's old news and supports Oil prices on their dip here.  Unless the crisis in the Middle-East escalates dramatically, Oil should remain a bit range bound near-term.

Silver and Gold have caught a small bid this morning on the back of Oil's rise as would be expected.  It will be interesting to see if our cornered CRIMEX rats can press the Precious Metals further here and take advantage of this global crisis situation.  By all rights the Precious Metal should've been soaring out of the gate this week, but the ring masters want none of that.  This is their opportunity to swing their Ugly Stick with impunity.

The real news behind the news this week is the US Dollar's reaction, or lack of, to this catastrophe in the World's third largest economy.  The Dollar has basically stood by the side of the road like a deer in the headlights.  It's reaction to the crisis muted uncharacteristically.  Is this a sign that the Dollar's days as a safe haven are waning?

The Dollar as a Safe Haven?
Dan Norcini
Given all the turmoil and market uncertainty associated with the tragedy in Japan, not to mention continued unrest across the MENA, it is again very telling that the US Dollar cannot seem to maintain any sort of strong safe haven bid.

Instead it is the Swiss Franc that is the main beneficiary of such flows.

We keep seeing this type of pattern during periods in which risk aversion is the order of the day. The Dollar initially gets the knee jerk safe haven bid and then runs out of steam as sellers look to take advantage of the rally. I am hesistant to be too dogmatic with all this insane volatility but I am wondering if we are already beginning to see the global investment community voting with their feet against the Dollar remaining as the sole reserve currency.

Fed Signals Further Stimulus Unlikely as Recovery Strengthens
By Joshua Zumbrun
Federal Reserve officials signaled they’re unlikely to expand a $600-billion bond purchase plan as the recovery picks up steam and the threat that inflation will fall too low begins to wane.

The economy is on a “firmer footing, and overall conditions in the labor market appear to be improving gradually,” the Federal Open Market Committee said in a statement yesterday after a one-day meeting in Washington. While commodity prices have “risen significantly,” inflation expectations have “remained stable.”

U.S. equities pared losses as Fed policy makers looked past threats to growth such as higher oil prices, unrest in the Middle East and the earthquakes in Japan. Their statement reveals confidence that the plan to buy Treasury securities through June will be enough to achieve the self-sustaining expansion that they say is vital before reversing record stimulus, said analysts including Josh Feinman, global chief economist for DB Advisors, a unit of Deutsche Bank AG.

What wonder of spin doctoring this is...the Fed said no such thing, and inferred even less.  If anything they stuck to their guns, and insisted they will contiue to bu treasury debt.  They continued to lie about the effects of their actions on Inflation, and for the most part continued to blow smoke up the asses of anybody that will listen to them.

The recent increases in the prices of energy and other commodities are currently putting upward pressure on inflation. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations.

Transitory?  You got that right fellas.  Inflation is going to transfer this make believe recovery into a full blown hyperinflation ending in a depression...all in time.

FOMC STATEMENT  read the Fed statement...  Where does it say they will stop stimulus?  How can they stop?  Who is going to buy the Treasury's debt if the Fed doesn't?

Fed says economic recovery on firmer footing- AP

Why, just because they say so?  I guess they had their TVs off all weekend...

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