Komen ze hoor. The Abe Team!
It would appear that something else discussed was the first iteration of helicopter money, because the catalyst that sent both the Nikkei soaring and the Yen tumbling, was not so much Kuroda's whirlwind victory in Japan's latest election - largely as expected - but Abe's announcement that he may proceed with launching a JPY10 trillion stimulus, funded by Japan's first new major debt issuance in four years. From Bloomberg:
The Topix jumped 3.8 percent to 1,255.79, its largest advance since Feb. 15, as Abe said he will order the preparation of an economic stimulus package tomorrow. A person familiar with the matter said Bank of Japan Governor Haruhiko Kuroda met with former Federal Reserve Chairman Ben S. Bernanke over lunch in Tokyo on Monday, also boosting speculation for easing. Japan stocks further benefited as better-than-expected U.S. payrolls helped spur a global equities rally.
“With hopes that stimulus will come earlier than expected, investors are seeing it as an opportunity to buy,” said Hiroaki Hiwada, a Tokyo-based strategist at Toyo Securities Co. The report on Bernanke’s visit “makes it natural for speculation to emerge on additional easing.”
Abe will hold a cabinet meeting on economic measures on Tuesday and consider more than 10 trillion yen ($98 billion) in stimulus, the Nikkei newspaper reported. Following the meeting with Kuroda on Monday, Bernanke will meet with Abe tomorrow, Reuters reported.
“It’s positive for stocks that the ruling party has won so many seats,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Center. “History shows that when the ruling party wins the upper house, Japanese stocks are stronger afterwards.”
Bloomberg adds the following, when reporting on Shinzo Abe overnight speech in Tokyo, a day after winning an increased majority in upper house elections.
o Want to make most of zero interest rate environment to utilize fiscal investments
o Economy stimulus to establish 21st century infrastructure; speed up construction of high-speed train lines
o Will consider size of economic measures from now
o Measures to support domestic demand
However, it is not just as $100 billion fiscal expansion coming out of Japan: it is coming in conjunction with an imminent expansion in BOJ monetary stimulus: "The Bank of Japan is set to announce an expansion of its monthly bond and equity purchases on July 29 and Abe will probably introduce fiscal stimulus by year-end, according to Macquarie Bank Ltd."
However, it is not just as $100 billion fiscal expansion coming out of Japan: it is coming in conjunction with an imminent expansion in BOJ monetary stimulus: "The Bank of Japan is set to announce an expansion of its monthly bond and equity purchases on July 29 and Abe will probably introduce fiscal stimulus by year-end, according to Macquarie Bank Ltd."