Bank of Japan to invests in Japanese listed companies

Bank of Japan to invests in Japanese listed companies

This year the Bank of Japan has decided to invest directly into Japanese listed companies.

They are in the top 10 shareholdings for the majority of listed stocks on the Nikkei index. This is supposedly going to help the economy because they will provide a floor in prices.

Unfortunately for the BoJ, this act will attract a lot of criticism in the future and it does seem like an act of desperation.

The money used to buy shares has to come from taxpayers, except that Japan has the largest government debt to GDP in the known world.

There is now talk that China needs to provide more stimulus to the economy as it is inexorably slowing to a point of contraction.

There is a belief that the Chinese government will provide similar packages as their Japanese counterparts.

The level of debt in the world is enormous, with over $14 trillion of government bonds on a negative yield.

Australian Economic Performance

Australian Economic Performance

Yesterday one of the Big 4 banks, I’ll let you guess which one, released a report into the economic performance of each State in Australia.

Predictably the report highlighted the fact that the mining boom has finished. They also argued that the States that were not part of the mining boom have taken the lead and are “powering ahead”.

By powering ahead, there has been a slight increase in housing activity in NSW and Victoria.

The report also argues that personal spending is rising, however they probably didn’t look at the spending increase being based on people maxing out their credit cards even further.

Gold Primed To Fall

Gold Primed To Fall

Gold fell almost 2% overnight and yet again reinforces the wisdom of not going with the crowd. With record long positions held by hedge funds, pension funds, money managers and retail investors, gold was primed to fall against this almost fever pitch of buying.

On the other side of the speculators, there was a record number of short positions held by what is classed as Commercials. They are the companies that dig gold out of the ground and sell it for a profit.

On one side you have a group of people who are speculating. On the other it is simply a business decision.

Given that the speculators are almost always long at the top and short at the bottom, the emotionless Commercials have the right strategy.

Hedge Funds Target Australian Banks

Australian Banks under fire by the Hedge Funds again

Rising bad loans and falling earnings are the trigger

It seems that the mainly international hedge funds have set their sights on the Australian banks yet again. Current data shows that the funds have ‘borrowed’ A$9bn worth of stock to sell short against the Big 4 banks in Australia. The trigger for this increase to record short selling against the banks started with the ANZ’s most recent result, which saw the bank cut its dividend and increase their bad and doubtful debt book for the first time since 2008.