Sunday, December 18, 2016

Bank Of Japan Meets This Week And Is Talking About Tightening

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*One reason for the stock market's success has been record global central bank easing and bond buying.

*The latest leaks out of the BOJ are that they are excited about growth and even in early discussions for tightening. Add to that inflation just jumped in Japan.

*A shift to tightening is a serious change and could be reported as an element of the BOJ's meeting this week.

This is a stock market risk.

Japan has recently been excited about their own growth along with that of their trading partners. That is a change. Their key inflation measure also jumped in the last reading. The BOJ has been a main contributor to global market strength by buying everything they can in the bond and stock markets (NYSEARCA:EWJ). If they have hints to a change in direction that will remove a several-year market support. That can be a risk to stocks globally (NYSEARCA:SPY).
Japan Growth Picking Up Will Cause BOJ To Slow Stimulus
Reuters recently reported that insiders at the BOJ are getting more bullish. Here are leaks from the BOJ that Reuters reported:
"Global economic conditions are improving, and consumption appears to be picking up," said one of the sources. "All in all, we're seeing more bright signs for the economy." Another source echoed that view, pointing out that recent economic indicators had been "mostly positive."
That would be a pick up from their more moderate expectations previously.
Reuters reported that these insiders told them that the BOJ "will hold off on expanding stimulus measures in the coming months."
The BOJ has a meeting this Monday and Tuesday.
The BOJ has cornered the Japanese stock and bond markets with huge positions. Their moves have caused Japan's markets to hit all-time highs. This enormous buyer (The BOJ) may hint at halting or slowing this barrage of purchases.
That is a major change.
Inflation has Jumped

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