“An epic bond-buying spree by Japan’s central bank means it’s now sitting on assets worth more than the country’s entire economy.
“Data released by the Bank of Japan on Tuesday show that its total holdings stand at 553.6 trillion yen ($4.9 trillion) following years of money printing aimed at jump starting the country’s stagnant economy. That’s bigger than Japan’s annual gross domestic product at the end of the second quarter — and more than five times the size of Apple’s (APPL) market value.
“The years of heavy stimulus have warped parts of Japan’s financial markets and left the central bank with dwindling options to juice growth if a new crisis hits…”
“Japanese regulators are starting to look into underwriting practices in the nation’s corporate bond market, where banks routinely say deals are successful even in cases when they are under-subscribed. The move suggests that the potential damage to some investors in Japan’s ¥76tn ($669bn) company note market is getting too big for the government to ignore. Bloomberg reported last month that underwriters in Japan failed to fully sell at least 29% of corporate debt offerings in September…”
“Japan’s economy shrank more than expected in the third quarter, hit by natural disasters and a decline in exports, a worrying sign that trade protectionism is starting to take its toll on overseas demand… The contraction in the world’s third-largest economy adds to growing signs of weakness globally, with China and Europe losing momentum. Data released later in the day showed Germany’s economy also contracted in the third quarter on weak foreign trade.”
“China delivered a mixed economic report card for October on Wednesday as softening retail sales pointed to a consumption slowdown… the latest readings reinforced consensus views that the world’s second-largest economy will continue to cool in the next few quarters. Facing the weakest economic growth since the global financial crisis, Chinese policymakers are fast-tracking big road and rail projects, pushing banks to increase lending, and cutting taxes to ease strains on businesses.”
“Businesses… are seeing sluggish sales this festive season in part because India’s shadow lending industry, which accounted for nearly 4 out of every 10 consumer loans in the last three years, has grown more more cautious about extending new credit amid a funding crunch of its own.”
“The economic crisis gripping the Iranian Regime is drawing increasingly a growing protest by people from all walks of life.
“Today, following calls for a nationwide strike by the Coordinating Council of Teachers Union (CCTU), large numbers of teachers joined the strike in more than 100 education centers in 54 major cities…”
“Lebanon is heading towards a serious financial crisis due to the government’s debt maturities in the near term, which must be paid in US dollars, with a growing budget deficit that nearly amounts to 11 percent of the GDP. The government also needs to earmark amounts for investment spending to cure the deteriorating infrastructure, especially in the areas of air transport, electricity, waste management, water and roads…”
“A decade after the start of the financial crisis, supervisors are still trying to make the banking sector more robust and avoid a repeat of the meltdown that started on trading floors and brought low the whole euro zone economy.
“ECB Vice President Luis De Guindos said after results of the Europe-wide stress test were published on Nov. 2 that the job was not done.”
“Spain may be the EU’s poster child for economic recovery, but impressive growth rates have failed to make a dent in the number of people struggling to make ends meet despite having jobs, the “working poor”.
“A combination of low wages and reliance on temporary contracts is keeping millions of workers stuck below the poverty line – nearly one in six, according to labour ministry figures.”
“Italy’s populist government defied the European Commission Tuesday by sticking to its big-spending budget plan, risking financial sanctions in a high-stakes standoff with Brussels.
“Despite pressure from the European Commission, which rejected Rome’s budget outright last month in a first for the EU, Italian Deputy Prime Minister Luigi Di Maio vowed to stand firm on the country’s anti-austerity plans.”
“The Federal Reserve needs to take note of the economic forces already weighing on the U.S. economy before it plans more rate hikes for 2019, CNBC’s Jim Cramer argued after yet another wild trading session on Wall Street. “It’s important to recognize that the most important inputs … for future inflation are already going lower, not higher. It’d be crazy to ignore that,” he said Tuesday.”
“Rising levels of corporate debt are well and truly on the radar of global fund managers, and that doesn’t bode well for global stocks. US corporate debt levels have now risen to a record-high 46% of GDP, according to the latest Bank of America survey of global fund managers. The past decade has seen a sharp rise in corporate debt issuance, as investors hunt for yield in a low interest rate environment.”
“International Monetary Fund head Christine Lagarde said central banks around the world should consider issuing digital currency.
“Speaking in Singapore, Ms Lagarde said this could make digital currency transactions safer. Non-cash payments have increased over the years, raising challenges for governments and central banks.”
“”China’s economy is under considerable strain from deleveraging, and we expect growth to take another leg down in Q1 2019… We are also not optimistic for a quick end to US-Sino trade frictions…
“Across many EM economies, financial conditions have tightened and will likely continue to do so, as the Fed continues hiking rates and as aggregate QE of the G4 central banks switches to QT…”
“U.S. West Texas Intermediate (WTI) crude oil futures were at $55.52 per barrel at 0732 GMT, down 17 cents, or 0.3 percent, from their last settlement. International benchmark Brent crude oil futures LCOc1 were down 9 cents at $65.38 per barrel. Crude oil has lost over a quarter of its value since early October in what has become one of the biggest declines since a price collapse in 2014.”
“…the credit bubble that [China has] engineered will cause the coming recession to be a lot worse than it otherwise would have been, drawing parallels to the 1930s Great Depression in the U.S…
“I think that what we will see in China, soon, will be the equivalent of what we saw in 2008.”