Friday, October 31, 2014


Well not exactly.  I couldn't sleep last night so there I was, up at 5:00am with a cup of Joe and nothing to do as it was too early for the newspaper delivery.  Naturally, I turned on the TV and what do I find but the futures indicating a DOW opening of 188 points higher.  OK, the ending of QE III was met with a yawn and things went up yesterday, but this?  Ah ha!  QE did not end!  It simply slipped across the Big Pond to Japan.

In a surprise move, the Bank of Japan announced today their own version of Quantitative Easing involving trillions of Yen of asset purchases.  Ben and Janet have nothing on these guys when they want to make a move.  Of course the markets loved it and doubly so because the common thinking is that it would force Sr. Draghi to pull out his ol' bazooka and this time finally shoot it when the ECB gets down to brass tacks next week.  Guess what?  Anyone who believed that there is no connectivity in markets just got schooled.  The other lesson is all QE is fungible.  Right on schedule, the Dow opened damn near what the futures indicated as of 5:00am.

I was still trying to come to grips with all this when the other part of the day's doings that I had missed popped up again.  Not only had the Bank of Japan stepped in with QE but the MOF announced that pension fund's allocation to equities and especially foreign equities would be dramatically increased to nearly 500 billion dollars.  I watched equities all day which I never do (makes me cry) and the damn number didn't move.  Oh sure, it dipped a bit and rose a bit but just now the DOW closed up 195.  It was as though ALL of the buying followed the announcement from Japan.  Damndest thing.  Economic numbers were pretty good too, but they didn't influence the opening level one bit through the entire course of the day.  Thank you BOJ.

Then I got to thinking.  Janet shuts down her program and up pops Tenaka with his.  Mario is on tap next week and the betting is now that you hear a boom from Frankfurt, so do you think that the three of them have been talking?  Sure looks like it and mind you, I don't think that's a bad thing.  Only problem is if the effect in Japan and in Euroland is the same as it was Over Here, what's plan B guys because plan A didn't work--or as we have said it didn't work enough to notice.  The U.S. is slowly coming out of our economic malaise but that's because of the incredible restructuring of the American  marketplace in spite of every obstacle the government has managed to set up along the way not the least of which has been the assault upon the banking system as we knew it which is being rapidly replaced by other sources of unregulated capital providers which in the long run may NOT be a good thing.  Japan and Euroland with the exception of the UK have not restructured and had better take this opportunity to do so otherwise we're going to face this mess again, once there is no more Yen or Euros to print and the U.S. gets sick and tired of watching it's trade balance go to hell again despite our near energy independence because of of a world filled with central bank devalued currencies.  In case you missed it, the Yen was down three points today--not three pips...POINTS!  Tora...tora....tora.

Have a great weekend.

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