This blog is an effort to sift through the noise. Please note that a number of resources are used to create these theses and due to an overriding desire to think rather than edit I will not be citing every little source.
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Tuesday, April 9, 2013
Kyle Bass on CNBC
Kyle Bass was recently on CNBC discussing his opinion on the recent moves by the BoJ. Japan is going through a giant experiment in doubling their monetary base in two years. He thinks its interesting that they abondoned the bank note rule since the BoJ is now monetizing more debt than exists in the system, so the BoJ is buying assets at a rate of 75% of the US Fed but the Japanese economy is only 1/3 the size of the U.S. He thinks its very important to not be long Yen and not be long Japanese equities as the Japanese industrial complex has been hollowed out and he thinks it will end badly. He thinks Japan will start to buy foreign bonds and when they do that it will start an implicit trade war. Japan's declining population, hollowed industry, and living tax increase in 2014 it will likely move nominal GDP higher but this is not the panacea that everyone thinks it will be. He thinks they need to get the Yen/USD to 118-120 in order to hit their GDP targets. He thinks this is a dangerous game and is further protracted by other central banks across the world playing a similar currency war / rate targeting game.
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