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Hi DIMITRIS,
Tuesday, January 20, 2004, 6:43:05 PM, you wrote:
DT> Yuki, I will post later today a nice code to see H&S of the past
DT> [not only the recent one]. BTW, do you agree with Hiroaki
DT> Kuramochi comment at
DT> http://biz.yahoo.com/rf/040119/markets_japan_stocks_12.html
Well, there has to be a "reason", doesn't there. ^^_^^
Yes, and no. The only reason the BoJ is doing this, the absolute
only reason, is to give the MoF (no, not a dirty word, but Ministry
of Finance) more freedom to intervene in the currency market. There
is hardly any liquidity problem here, as banks can't or won't lend
the money they have anyway. The only liquidity problem is that of
keeping the printing presses cooled sufficiently as they print out
reams and reams of 10,000 yen notes to offer in exchange for dollars.
I think printing press manufacturers are certainly a 'buy', because
the MoF must be wearing them out weekly. ^^_^^
All this intervention is 'unsterilized' too, I'm told. (For those
few who probably don't know: Unsterilized means they leave the money
they use to buy dollars in the system, rather than mopping it up 3 or
4 days later, to avoid dramatically increasing the money supply,
which is the normal central bank action -- most CBs that intervene
come right in a few days later and absorb back the funds.) So there
is no liquidity crisis, shortage, or even a hint of anything that
would require the BoJ to increase the float -- *other* than the MoF
buying dollars as if they were made out of gold.
Of course, both the extreme liquidity and the determination to peg
the yen to the dollar are somewhat bullish for the market. All that
money needs a home, and there is really no "productive" place for it
right now, other than speculation. And this tends to put a halt to
deflation, which everyone here would love to see. And if they can
hold the yen steady, all those Toyotas, Hondas and Nissans sold in
N.A. get dollars repatriated to Japan that are worth more in yen. So
P&Ls look better.
Yuki
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