CNBC: 'It's a Big Moment for Japan': Fed's Bullard

http://www.cnbc.com/id/100761735

'It's a Big Moment for Japan': Fed's Bullard

Text Size
Published: Friday, 24 May 2013 | 2:13 AM ET
By: Jenny Cosgrave, Staff Writer
Twitter
36
LinkedIn
6
Share


Source: Federal Reserve Bank of St. Louis
James B. Bullard, St. Louis Fed President
The huge volatility in the Japanese market is not surprising given the aggressive monetary policies put in place in the country over the last six months, St Louis Federal Reserve Chairman James Bullard told CNBC.
"I wouldn't be surprised with that kind of action over that kind of timeframe that you're going to get some volatility," Bullard said Friday.
The policy, which includes pursuing quantitative easing as long as is needed to achieve a 2 percent inflation target, has led to a surge in Japanese stocks.
"It is a big moment for Japan," Bullard said. "Any time you see any market in the world go up by this amount in six months, you are bound to see volatility in the trading. More volatility if it was a stable market that hadn't moved at all."

Play Video

'Big Moment for Japan': James Bullard
James Bullard, president and CEO of St. Louis Federal Reserve Bank, explains why he was not surprised to see such volatility in the Nikkei.
Japan's stock market witnessed a second straight day of heightened volatility on Friday, swinging from gains of 3 percent to deep losses before bouncing back again, leaving traders puzzled as to what was going on in Asia's biggest stock market.
"I'm sure some traders might be nervous over 'has it been overextended'. It is very sensitive, which way the market is going to go, which way the policy is going to go for Japan," Bullard said.
—By CNBC's Jenny Cosgrave; Follow her on Twitter @jenny_cosgrave.

Stop spamming and creating a thread for every article.

It would be better to just create one thread and put all the articles in it.

Sorry if I have irritated you but I thought they should be read as separate headings.

Mkt is down and everyone is affected. Sorry again.

GG

(24-05-2013, 10:32 PM)TheMillennium Wrote: Stop spamming and creating a thread for every article.

It would be better to just create one thread and put all the articles in it.

(24-05-2013, 10:40 PM)greengiraffe Wrote: Sorry if I have irritated you but I thought they should be read as separate headings.

Mkt is down and everyone is affected. Sorry again.

GG

(24-05-2013, 10:32 PM)TheMillennium Wrote: Stop spamming and creating a thread for every article.

It would be better to just create one thread and put all the articles in it.

Relax relax everyone.
Mkt down also good.. can buy more of what is good.
Just that the "good" is highly judgemental to personal opinion.

GG
Can share what is your take on bonds' yield moving on forward?
Do you think it will affect the stock markets' returns?

Didn't mean to sound aggressive. Perhaps I should have said "Stop spamming and creating a thread for every article?" with a ? to change the tone.

Anyway, just to clarify, I like reading GreenGiraffe's posts, especially the St****** ones.

(24-05-2013, 11:20 PM)arthur Wrote:

(24-05-2013, 10:40 PM)greengiraffe Wrote: Sorry if I have irritated you but I thought they should be read as separate headings.

Mkt is down and everyone is affected. Sorry again.

GG

(24-05-2013, 10:32 PM)TheMillennium Wrote: Stop spamming and creating a thread for every article.

It would be better to just create one thread and put all the articles in it.

Relax relax everyone.
Mkt down also good.. can buy more of what is good.
Just that the "good" is highly judgemental to personal opinion.

GG
Can share what is your take on bonds' yield moving on forward?
Do you think it will affect the stock markets' returns?

Hi Arthur,

Newton's law will never be defy...so bond yields will head up for sure.

Fed in my opinion will stick to their guns and not raise rates till late 14 by the latest. Its the mkt reaction that will continue to spook sentiment since mkt always leadactual policies.

Even then I maintain that the party will and must go on since it is TINA. If anyone can come up with a better alternative than printing $, they would have done it long ago.

Fed has proven that given time, printing $ heal wounds and hence Abe follow suit but since mkt players have their positive experience with uncle Sam, their herd mentality actually help Abe accelerate the intended recovery. Many other countries have since pursued the race to zero and I have previously said the whole race will be a zero sum game even though the earlier starter may have an edge but eventually it will be down to each country's fundamentals.

Anyway, so long as $ is awashed globally, after a correction,buying on dips will come back and the complacency building phase will continued.

If you looked at some recent threads, it is becoming self-fulfilling that bond mkt bulls will end in years '4' with equities bull in years '7'.

Basically there remains economic logic behind as a recovering economy in its early phase can take rate rises since growth will outpace nominal inflation (since asset inflation is never being correctly measured).

Anyway, now everyone is cautious so equities mkts are unlikely to crash. Central Bankers are mindful that economies remain fragile. Mkts only crashed when it is least expected ie when players are complacent - the last one was China and uncontrolled borrowings in US. I don't know what the next will be but when we cross the bridge we will know.

Hope that helps.

GG

I always felt that QE is a just a delay of solving the root problem. Politicians do not have the courage to make the painful decisions. Let those responsible go bankrupt, take serious losses, then start over from a sound base. Fed is adding $85mil worth of garbage monthly into its balance sheet - not the real solution.

Throughout history, it has always been the case of 'one nation falls, another nation rises'. After Second World War, USA was in its ascendancy. Now, USA on the decline, it is Asia's moment.

USA will experience negative growth in the future. They already have a bulging debt. Asia is their largest creditors. The higher the debt, the lesser competitive the country will be, and the currencies will fall. When that happens, the quality of living in USA will fall.

(24-05-2013, 11:40 PM)greengiraffe Wrote: Hi Arthur,

Newton's law will never be defy...so bond yields will head up for sure.

Fed in my opinion will stick to their guns and not raise rates till late 14 by the latest. Its the mkt reaction that will continue to spook sentiment since mkt always leadactual policies.

Even then I maintain that the party will and must go on since it is TINA. If anyone can come up with a better alternative than printing $, they would have done it long ago.

Fed has proven that given time, printing $ heal wounds and hence Abe follow suit but since mkt players have their positive experience with uncle Sam, their herd mentality actually help Abe accelerate the intended recovery. Many other countries have since pursued the race to zero and I have previously said the whole race will be a zero sum game even though the earlier starter may have an edge but eventually it will be down to each country's fundamentals.

Anyway, so long as $ is awashed globally, after a correction,buying on dips will come back and the complacency building phase will continued.

If you looked at some recent threads, it is becoming self-fulfilling that bond mkt bulls will end in years '4' with equities bull in years '7'.

Basically there remains economic logic behind as a recovering economy in its early phase can take rate rises since growth will outpace nominal inflation (since asset inflation is never being correctly measured).

Anyway, now everyone is cautious so equities mkts are unlikely to crash. Central Bankers are mindful that economies remain fragile. Mkts only crashed when it is least expected ie when players are complacent - the last one was China and uncontrolled borrowings in US. I don't know what the next will be but when we cross the bridge we will know.

Hope that helps.

GG

Thanks GG
Cheers

(25-05-2013, 12:10 AM)kelvesy Wrote: Throughout history, it has always been the case of 'one nation falls, another nation rises'. After Second World War, USA was in its ascendancy. Now, USA on the decline, it is Asia's moment.

USA will experience negative growth in the future. They already have a bulging debt. Asia is their largest creditors. The higher the debt, the lesser competitive the country will be, and the currencies will fall. When that happens, the quality of living in USA will fall.

I think it might be a tad too early to believe that US is on the decline and its Asia's moment.

Talking about financial power - They have the biggest gold reserves in the world locked up in their vaults. If/when QE eventually triggers massive inflation, who will lose out more? As the trade currency of choice, the USD also has the greatest fire power in the world to back them up.

Talking about brain power - There is a reason to believe that the highest frequency of creative destruction continue to happen in the US. On a net basis, it's culture, lifestyle and freedom of expression also continue to attract the best brains to congregate onto its shores. I believe there is a basis for Warren Buffett's faith in his country to continue to bounce back from adversity and demonstrate their animal spirits'.

It is conventional wisdom that debtors are under the mercy of their creditors - I think our minds have been primed into this mentality after witnessing the soap opera between Germany, Greece and Cyprus in the last 2 years. But we do know that US is NOT Greece nor Cyprus. Picture this scenario - You have a flashy banker who lends tons of his customers' savings, to the neighbourhood towkay. This towkay owns a couple of guns and his henchman patrols the street at night. So WHO IS THE BOSS?

And the neighbourhood towkay owes all his neighbours so much money due to "business on credit" (by flooding the world with keeping on issuing treasury bonds), that all the neighbours have no choice but continue the "business on credit". If towkay declares bankruptcy, all your bonds are worthless. So a win-win situation is carry on business as "usual" rather than no business done.

---

(24-05-2013, 11:40 PM)greengiraffe Wrote:

(24-05-2013, 11:20 PM)arthur Wrote:

(24-05-2013, 10:40 PM)greengiraffe Wrote: Sorry if I have irritated you but I thought they should be read as separate headings.

Mkt is down and everyone is affected. Sorry again.

GG

(24-05-2013, 10:32 PM)TheMillennium Wrote: Stop spamming and creating a thread for every article.

It would be better to just create one thread and put all the articles in it.

Relax relax everyone.
Mkt down also good.. can buy more of what is good.
Just that the "good" is highly judgemental to personal opinion.

GG
Can share what is your take on bonds' yield moving on forward?
Do you think it will affect the stock markets' returns?

Hi Arthur,

Newton's law will never be defy...so bond yields will head up for sure.

Fed in my opinion will stick to their guns and not raise rates till late 14 by the latest. Its the mkt reaction that will continue to spook sentiment since mkt always leadactual policies.

Even then I maintain that the party will and must go on since it is TINA. If anyone can come up with a better alternative than printing $, they would have done it long ago.

Fed has proven that given time, printing $ heal wounds and hence Abe follow suit but since mkt players have their positive experience with uncle Sam, their herd mentality actually help Abe accelerate the intended recovery. Many other countries have since pursued the race to zero and I have previously said the whole race will be a zero sum game even though the earlier starter may have an edge but eventually it will be down to each country's fundamentals.

Anyway, so long as $ is awashed globally, after a correction,buying on dips will come back and the complacency building phase will continued.

If you looked at some recent threads, it is becoming self-fulfilling that bond mkt bulls will end in years '4' with equities bull in years '7'.

Basically there remains economic logic behind as a recovering economy in its early phase can take rate rises since growth will outpace nominal inflation (since asset inflation is never being correctly measured).

Anyway, now everyone is cautious so equities mkts are unlikely to crash. Central Bankers are mindful that economies remain fragile. Mkts only crashed when it is least expected ie when players are complacent - the last one was China and uncontrolled borrowings in US. I don't know what the next will be but when we cross the bridge we will know.

Hope that helps.

GG

Ha! Ha! (Just for laugh)
On the other hand, a Bear can also sneak in from the back door. And when you discover it's a Bear in the hall, the Bull has also already sneaked out the back door.
Not necessary to see the Black Swan first in the hall before seeing the Bear. But i agree this is not so often. The other way (the Black Swan) is more often.