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The Stock Market in Japan Makes the Fed Blush with Envy

Imagine my readers, if the Federal Reserve openly engaged in buying the ETFs and stock market without anyone blinking an eye.

The “house” or land of the rising sun has become a corrupt kleptocracy, where the government guarantees corporate success by maintaining a demographically impossible system of investment while the retiring class, aka, the elderly, withdraw their funds from investments to maintain a stale system of life far above what their elders endured.

However, all that being said, it’s perfectly logical to see this, right:

Thus one is to believe with a terrible demographic profile worse than the United States and China, that a decaying nation dependent on technology should see all time highs in its stock market because of what:

BOJ buys a record high 120 billion yen in ETFs after policy move

That’s correct boys and girls. The entire rally has been based since 2010 on the central bank of Japan buying bonds and equities to support the grand rally since the crash in the late 1980’s. The Bank of Japan attempted to manipulate the economy for almost 25 years via bond purchases, the ultimate “QE” yet failed in the end thanks to their trust in the US Treasury market and investments in American mortgage backed securities for higher yields than their negative yielding crappola.

How bad is it, and why is the United States Federal Reserve Bank watching this with great interest?

Bloomberg‘s article on February 19th barely scratches the surface:

Japan’s rapid stock market rally has boosted the value of the Bank of Japan’s holdings of exchange-traded funds to a level that’s comparable to annual national tax receipts, according to an analyst’s estimate.

The emphasis is this author’s, not theirs. Think about what was just quoted above. Here’s more:

The BOJ, the largest single holder of Japanese stocks, is the biggest winner in the market — at least on paper. That streak may continue as some analysts expect the Nikkei 225 to build on its gains this year. The value of the assets, equivalent to Japan’s annual tax revenues, is another headache for Governor Kazuo Ueda as he contemplates the complexity of exiting from the bank’s ultra-easy policy.  

“This is too huge to sell to markets, or to decide what to do with it by the BOJ alone,” Ide said. “The benefits should be given back to the Japanese people. The decision making will require participation from many others including the prime minister’s office, finance ministry and FSA.”

Thus with now owning over 60% of all equities the Bank of Japan is done, right?


From Reuters on February 22nd:

At last, FOMO puts Japan’s stocks back on global wishlist

So it took almost four decades to make Japan’s stocks appealing to the global investing community. I’m not going to hammer some high quality Japanese companies like Honda, Toyota, Sony, etc., but there is a point to be made here.

If valuations are based on central bank investment, then the United States is 100% screwed.

Seriously screwed.

Because the Fed is going to have to bail everyone out at some point to prevent a retirement and investment crisis far worse than the Japanese issue. Thus when one thinks we have hit rock bottom, barring an EMP type event, then that is the time to buy ETFs and pray for Jay Powell’s QE resurrection.

Because there is a lot of fiat money to be made.

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