Japan Let’s the Dogs Out

Friday, October 31st 2014, Japan’s version of US Federal Reserve Chair (think Greenspan, Bernanke or  Janet Yellen) surprised the entire world.

Japan Goes All In

Bank of Japan Governor, Haruhiko Kuroda announces a major round of government induced stimulus, catching the world by surprise.

Similar to the US’s quantitative easing, Kuroda upped his commitment of government purchase of Japan bonds to $750 billion. More interesting was the fact that Japan’s government pension plan, the largest by far ($1.3 trillion) in the world would, is also being mandated to double their equity holdings by reducing their bond/fixed allocations.

1. Lower the value of your home currency
2. Help locals with exports, due from number 1
3. Push local investors into higher risk assets

Japan is the third largest economy in the world. If Kuroda is successful, the world will thank him, as another growing economy of this size would be very positive for the growth prospects of the globe.

As luck would have it, I have a private meeting with our friend Axel Merk later this week. Looking forward to his take … should be interesting!

Have a Great Monday!

John A. Kvale CFA, CFP

PS Equity markets around the globe cheered, this move was not fundamental based, only reactions to government intervention!