Bank of Japan on a Mission to Destroy the Yen.

Friday June 16 2023 Monaco 64 home of alternative economics and contrain views we're going to look at the bank of Japan they're digging deeper and deeper they're destroying the currency they've kept rates negative despite prices rising at over three percent and it could probably be even more because governments always Tinker with the price statistics so we're going to look at that today before I start just

like to say yeah I'm coming down with some kind of uh cold that's why my voice uh is going a bit funny I apologize for that and uh yeah I'd like to also look at some some of the headlines before we go into Japan to see what's going on I see here that Wall Street Bank Job cuts set to surpass 11 000 as CEOs unwind hiring

binge Executives try to reverse pandemic recruitment spree that propelled had counts to record high so it seems like the pandemic or the lockdowns more the lockdowns that they instituted upon us uh the General Public had a lot of really disruptive effects and this is one of them here in the UK we were locked down for 240 days uh and we're hearing now uh stories that uh

260 000 yesterday and if you look at the chart of jobless claims going back let's say to 2015 2014 the last time uh it was above 260 was around 2017 and I'm not looking at the period doing their lockdown because it was an artificial Spike right so recently we'd been I think last year we went below 200 and now it's picking up so I I think

that's a bad sign for the U.S economy that jobless claims are making uh like six year highs if you of course take out the lockdown periods because it's disrupted everything just like it's disrupted hiring on Wall Street the other uh news is related to the UK uh it came out yesterday two of UK's biggest lenders to raise mortgage rates pressure amounts on governments struggling to contain

cost of living crisis as NatWest and Nationwide push-up costs are boring and the uh the forecast for a lot of people in the mainstream in the mortgage space in the city of London is that rates are going to Peak around five and a half maybe six but I'm afraid uh it could be a lot higher unless the bank of England wants to let inflation rip while

they've allowed already Let It Rip but one thing that uh caught my attention in this article is that uh there's a lot more deals uh that were fixed that are coming uh due to for renewal at by the end of this year I had read earlier that it was like 650 000 deals uh from the end of June to the end of the year but according

to uh Marcus Brooks Chief investment officer at quilter investors he said that he predicted 1.4 million fixed rate deals are expected to come to an end uh this year so maybe he was counting prior to to now or maybe he's counting from now and if he's counting from now it means that it's double of what other people thought a week or two ago I'm I'm not

too sure but uh they even talk about a debt UK that time bomb uh and uh or mortgage bump and I even have a playlist a UK that time bomb so there you go it's becoming mainstream some of you say well nothing ever happens but it is happening uh it is happening it's just that things are gradual because the central bank and the politicians are trying

to keep it going and that's what it's all about back to Japan so I have a playlist about Japan about the Yen carry trade I recommend you watch that it's very important the Yen carry trade basically uh to put it in a nutshell it it helps the rest of the world uh borrow and spend and invest and why well because the Japanese they've kept rates low

artificially as well and negative they've kept doing QE and that keeps uh the Yen low keeps the Yen weak and it allows people to borrow in Yen which is selling the Yen and getting paid for it minus 0.1 the rate right now and then they take let's say the dollars or the pounds of the euros and they buy higher yielding assets and that's the Yen carry

trade and uh yeah it's like Japan is holding the world on on its shoulders and they're continuing to do that and uh there's news today here Bank of Japan maintains rates policy despite price pressures so despite the fact that that food prices are going up quite a lot over there despite the fact that CPI is at three and a half percent which is probably more like

uh five because we know that how governments Tinker with the data they've kept uh rates at minus 0.1 and they're still pegging the 10-year bond uh jgb uh below 0.5 I think it's around 0.41 that that uh Market has gone off kind of uh the headlines right now it's interesting to keep an eye on it and is it it's not surprising then that if you look

here uh at data from your danny.com and I'm going to put a link to this Below in the description they track central banks uh balance sheets you can see that the boj uh they hold more than almost 130 percent of GDP uh in assets and they've started to do uh QE again of course they had to last year because the 10-year jgb yield was breaking through

that half a percent uh so also wanted to show you something more important the the price of gold in Yen yes uh this is the real barometer or indicator that the yen is doomed in my opinion it's probably going to be one of the first major Fiat currencies to really get hammered uh here we are we at 276 338 as I speak and uh approaching uh

the all-time high as you can see which means the yen is continuing to drop against gold and they're concerned about deflation no they're concerned about they have to keep inflating they they've created such a a huge that bubble uh that they can't stop and I I'm afraid it's going to be the same for the US for Europe for the UK in the coming years uh we're

gonna go down the Japanese way but I think it's going to be a lot more turbulent in in these countries than in Japan because Japan still has a big pool of savings so it's not going to be as simple and I think the central banks eventually are gonna the non-jgb central banks they're gonna start QE again and uh if you look at the wall deck clocks

um and you can get that from going to the US that clock you can see that the Japanese uh public debt to GDP is just under 300 percent here 299.85 so this policy of keeping the Yen week of keeping the base rate negative still minus 0.1 uh all it does is trash the currency but at the same time it makes uh jgb the debt that the

Japanese are carrying become worth less so that's how they default uh governments and central banks they do it through inflating the currency yeah that that's what they're doing basically inflating the currency inflation is not the CPI uh CPI is the consequence of inflation and we can see in Japan that um it's rising I mean this excuse of deflation in Japan is really not a good one

but people still seem to buy it so there you go interesting times we're going to look at the markets now and one thing I'd say about uh gold and silver in US Dollars of course is that yesterday I saw that gold got hammered down uh to 1924 and uh I was expecting maybe to see that uh like uh recently because gold was under pressure and why

that 1920 area well because if you go back to 2011 the high was right around there in 1921 and some of you might say well um it's been uh wasted uh 12 years Maybe but in other currencies uh gold has done its job there's no way around the debt unless they're gonna default on all the debt that's coming in the U.S we're looking at 50 52

maybe even more trillion by 2033 it's going to be impossible for the general public on its own to finance all of that debt uh foreigners of course are moving away from the dollar the brics Nations and the global South they're diversifying uh that's gonna come out of the demand for treasuries so yeah I would say to my viewers in the US or those viewers who think

in dollars to be patient and for uh viewers uh elsewhere uh I think gold is already doing a very good job and even uh going back to 2000 incrementum keeps a tab of gold performance in all major currencies and uh in US Dollars it's going up by nine percent every year in this century so that's how we have to look at it in my opinion and

uh at the bigger picture so yeah so what I'm trying to say is we hit that high from 2011 yesterday are we out of the woods yet I don't know uh it could go back down there it could break through it but uh I think it's a very strong support and I know we've been like at 1600 last year so some people might argue that we

could go there but uh I find it unlikely and it doesn't really matter in my opinion but for Traders it's a different thing if you're thinking longer term gold and silver are in my opinion the best way to preserve your savings it's not investment of course that's a different thing and I think silver will outperform eventually as well I'll perform gold so with that let's quickly

look at the markets it's just before 8 A.M London time so we got spot gold at 1962. it's up about four dollars Heisman 63 low has been 54. Silver's trading around 24 is up 10 cents Heisman 02 and the low has been 68. stock market of course has been very strong the NASDAQ s p I recommend you watch an interview I did with Tommy Costa where

he uh talks about his view on all asset classes I'm going to put it up in the cards uh I posted it uh yesterday on the channel if you haven't watched it yet so right now uh the Dow uh Future's down 14 uh NASDAQ down 17 s p down three so not much happening there uh we've got uh the dollar very weak because versus the other

Fiat currencies that aren't that great either it's all relative of course the pound is pretty strong or is it the dollar that's weak we're at 128 up 0.2 the euro is almost back up to 110 we're at 109.50 and the dollar of course is uh Rising though versus the Yen it's up half a percent it's almost at 141. uh the dollar is down a little bit

versus the U1 at 7 11 50. Aussie dollar uh that's very strong as well we're at 68.90 it's up 0.1 of a percent dollars on change versus the Canadian dollar 132.23 and the Kiwi dollar is up about 0.2 is 62.34 let's check the general Commodities uh WTI Crude is up slightly at uh 70 90. uh Brent is up 0.2 at 75.80 high grade copper is up

a third of a percent at 391. and we've got uh Platinum up five bucks trading just below a thousand before we look at the uh Bond markets I just wanted to show you this uh chart here that Tavi Costa published on social media so this agricultural commodity prices are sharply moving higher again suggesting that food prices are poised to follow suit not that they haven't been

rising here in the UK already uh so it says agricultural Commodities versus food prices so the blue line is the U.N food and agriculture world food price index and the other one is an ETF on agricultural Commodities the DBA ETF so you see that one's got a correct here either food prices go up or the commodity prices go down we'll have to see so I thought

that was interesting and I showed that to you so let's look at the bond markets before we sign off the U.S two-year yield is at 470 that's up six basis points the ten years at uh 375. that's up about three basis points I think the key level there in the 10 years around 380. uh 385 that seems to have been the top recently uh let's check

the UK yields which have been rising quite quite fast they kind of moderated right now I think the bank of England is probably doing a lot of management of price here through its agent Banks but right now the two years approaching five percent with 497 that's up another seven basis points yeah and that's the one we need to keep an eye on because that's going to

affect those mortgage rates we spoke about earlier so with that I'm gonna wish you all a very good day and a very good weekend take care bye