Following the USDJPY touching on a fresh post-WWII low earlier today, not only has Noda made the transition from simply watching to outright panicking to being on suicide watch, but the BOJ has finally freaked out (something we predicted back in April only to be just 6 months ahead of the curve). Case in point: the Nikkei just reported that the BOJ "will discuss additional monetary easing measures to help blunt the mighty yen's impact on the economy when its policy board convenes for a meeting Thursday." Translation: printing goes to Japan, now that it is widely expected that no matter what Europe does, the outcome will be one of EUR weakness. Everyone knows the proclivities of the deranged Chairsatan (and for those who don't just observed the dramatic backwardation in Crude observed here first yesterday), which only leaves Shirikawa. And he has just had enough. Which in turn explains the surge in gold: with the entire world once again entering hyprintspeed mode, the only safe repository of value is now exclusively gold (sorry CHF, you are no longer relevant: thank Hildebrand and the goonies at the SNB who are quietly padding up the asset side of their balance sheet with hundreds of billions of soon to be even more worthless euros).
The low prices sure were fun while they lasted. In other news, Spam is still cheap. And now, it is time for the CME to scramble to reinforce "risk management" and send margins to 100% because this aggression against "sound" money will simply not stand (oddly enough the 14% or so jump in the ES and various other equities contracts was not sufficient to prompt corresponding margin hikes).
The US Treasury just completed the first of 3 bond sales, which as Zero Hedge observed last week, will take total US Debt to GDP to over 100%. Today's auction was more or less plain vanilla, with $35 billion in 2 Year bonds pricing at 0.281%, just inside of the 0.29% When Issued, higher than the September 0.249%, and with the Bid To Cover declining modestly from a near record 3.76 to 3.64 this month, which however is still the second best BTC for 2011. That said, the interest was not due to Directs who saw their take down share drop from 12.16% (and an LTM average of 14.30%) to just 8.21%, the lowest since February 2011. Yet while Directs (China's London-based buyers, PIMCO) Dealers stepped up and bought 52.57% of the auction, the highest since June. Naturally as has been the case recently, the bond priced well inside 3M USD Libor of 0.422%, something which in an era pre-central planning would be quite laughable, but now: perfectly normal.
We last presented the chart below following the most recent UMichigan consumer confidence data. We update it for today's Conference Board update, which regardless of how one looks at the data, confirms that either consumer confidence, or retail data is being either massively manipulated, or there has been a revolution in mass psychology whereby the more depressed and hence broke a US consumer is, the more they shop. But going back to reality, this divergence is absolutely unsustainable, and we are certain that any and all calls by fly-by-night journalism majors calling for an end to the US recession, driven purely by an overhyped short covering rally in the stock market, will shortly, and mercifully, cease.
But lately, my thinking has changed: Like the characters in Godot, I think that we’re waiting in vain. The Lehman-like event will never arrive because it won’t be allowed to arrive. So this miserable slog we are going through will continue—indefinitely. (Yeah, I know: Sucks to be us.)
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