The Central Bank “Tell” That QE is Beginning to Fail
by Phoenix Capital Research
The financial markets are now being almost entirely driven by activity in Japan where the Great Global rig of the last five years is finally hitting a wall.
As noted in last issue, the Bank of Japan or BoJ has provided the playbook to Central Bankers for dealing with the deflationary crisis of 2008. All told, the BoJ has launched QE plans equal to over 40% of Japan’s GDP.
The “shock and awe” plan announced last year ($1.4 trillion) has put the bond market into revolt. But it’s done more than that; it’s shown the “limits” of QE.
This was the first “tell” that the Central Banks are losing control of the markets. The second “tell” occurred yesterday when the BoJ announced that it is not implementing any new stimulus.
Let us put this into perspective: the BoJ just announced that it would monetize $605 billion per year in early April 2013l… and by the summer traders are looking for the BoJ to announce more measures?