Mish's Global Economic Trend Analysis

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Could Non-Citizens Determine the Outcome of the Midterm Elections? Posted: 31 Oct 2014 01:30 PM PDT Here's the question of the day: Could Non-Citizens Determine the Outcome of the Midterm Elections? Some elections, especially for Senate are so close, the unfortunate answer is "yes" as the following video insight from Insight from the Libre Institute explains. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Nikkei Futures Up Limit, Yen Collapses, Dollar Up, Gold Down as BoJ Pledges "Unwavering Determination" to Get 2% Inflation Posted: 31 Oct 2014 10:38 AM PDT "Whatever it Takes" Japanese Style It's a world truly gone mad. In a surprise move today, the Bank of Japan announced further quantitative easing, dominated by long-term Japanese government bonds. The BoJ also announced it  and would triple annual purchases of exchange traded funds and property investment trusts. BoJ governor Haruhiko Kuroda defied objections from four fellow board members, arguing that a tax-hit economy and a lower oil price have led to "a critical moment" in the country's bid to escape from deflation. The Financial Times quotes Kuroda as follows: The extra action "shows our unwavering determination to end deflation. There was a risk that despite having made steady progress, we could face a delay in eradicating the public's deflation mindset. This is a pretty drastic step, so I think there will be a significant effect [on the economy]." Stunning Market Reaction Nikkei futures up lock limit (1160 points) S&P 500 up 1.0% (new all-time high) Yen plunges 2.5% Dollar rises 0.9% Gold sinks 2.75% Oil down 1.1% Nikkei Futures S&P 500 Futures Yen Futures US Dollar Futures Gold Futures Oil Futures One of my top two trade ideas worked today: Long the Nikkei hedged with a short-yen position. Gold certainly didn't. I still have faith central bank madness will eventually light a fire on my second key idea. Buyer of Only Resort Not only is Japan's population in decline, the remaining population is aging. Somehow, Japan believes its economy ought to grow anyway. In addition, Japan wants 2% inflation even though that is the last thing Japanese savers need. Given that Japanese pension funds are now net sellers of Japanese government bonds, and given Japan's pledge to destroy the Yen to fight deflation, the buyer of only resort of Japan's government bonds is the Bank of Japan. Currency Crisis Awaits Japan's government debt is over 250% of GDP. Japan's debt is so high that an interest rate of somewhere between 2 and 3 percent will consume 100% of tax revenue. Amusingly, the central bank wants 2% inflation and 0% bond rates. How's that going to work? The answer is "It's not". Today's message is clearly "get the hell out of the yen". Somewhere down the line, a global currency crisis awaits. I am willing to hold gold indefinitely until that happens. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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