Nikkei Chart

How To Spin BOJ Action?

Nikkei ChartBold, unprecedented stimulus and the Nikkei reacted, really reacted. 6% isn’t a number you see often on index moves. I started looking around for some reaction and I didn’t find much. The Fed’s Lockhart says he’s “unsure how the new policy will affect the US”. Ok. If he’s unsure… I guess I can go home now. Yet one line after on my Dow Jones feed Mr. Lockhart says, “the Japan experience explains the Fed policy stance.” Maybe this isn’t contradictory, but something about these two quotes, rings false. The Fed’s been using Japan’s decade of deflation as an argument for QE x3. And now the BOJ is using QE to fight deflation and the Fed says they’re unsure? Strange bag of worms, I’d say.

What about the other indicators?

Gold is going nowhere, no change. The USD JPY pair is up 3%, that would seem normal. Adding to the confusion Mr. Draghi, brought down the European indexes, by saying very little. And for the US markets, after a nice little pull-back yesterday, they’re flat.

Yet, yet…

The VIX and the 10 Year Bond are rising, like they’re hiding out in the background, rising while everyone else is hoping Bernanke has their back. Alas options and Bond traders are consistent. The VIX just nearly tagged 15 (remember yesterday, when I said it was undervalued?) and the 10 Year is on its highs of the day. The VIX is showing some fear for the indexes, and the 10 year is saying, I’m not so sure about the BOJ’s QE plan…

Time will tell, how the spinners decide to spin this.