What’s the best quote to describe Japan’s decision to intervene in the FX market to weaken the Yen, “Desperate times calls for desperate measures” (who knows who said it) or is it “doing the same thing over and over again and expecting different results” is the definition of insanity said by Albert Einstein. The last time the BoJ intervened to weaken the Yen was from Jan ’03 thru Mar ’04 where they spent 35T Yen (about $320b). During that time however, the Yen RALLIED by about 13%. Just recently the Swiss National Bank spent about $200b over the past year buying Euro to weaken the Swiss Franc and in that time the Swiss Franc RALLIED 15%. Unconfirmed reports say the BoJ spent about 100b Yen and an official has said that 82 vs the US$ is their line in the sand. For perspective, the FX market trades $4T per day and thus the BoJ is again spitting in the wind outside of the short term impact.
At the same time the WSJ reports that the Fed is still mulling when and if to embark on another round of money printing to lower interest rates even more, evidence mounts that the economy is not responding to historically low interest rates, outside of corporate refi’s, as the MBA said mortgage apps for refi’s fell 10.8% on the week and are now at a 5 week low even with historically low interest rates. Purchases fell .4% after 3 weeks of gains. ABC confidence was unchanged at -43, holding at a the highest since early July. Portugal sold 12 month bills at a yield of 3.37%, up from 2.76% in a 12 month auction just two weeks ago. II: Bulls 36.7 v 33.3 Bears 31.1 v 32.2
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