First up is the BOJ. Repeated rounds of QE, purchases of everything from bonds to REITs to stocks, negative interest rates, and more haven’t pushed inflation to the BOJ’s 2% target.
You’d think that after three-and-a-half years of failure, Governor Haruhiko Kuroda would just admit this stuff doesn’t work. But alas, reality doesn’t appear to have settled in over there yet. So the BOJ promised last month that it would launch a “comprehensive assessment” of its options, and report the results to everyone after the policy meeting that concludes tomorrow morning.
Economists and central-bank watchers are all over the map when it comes to what to expect. That’s in part because multiple media leaks out of Japan in the past several days suggest all kinds of things are on the table.
They include switching from a fixed-asset buying target to a monthly range … to changing the time frame on the bank’s inflation target … to cutting interest rates deeper into negative territory, but shifting asset buying to the shorter end of the yield curve to cushion the negative impact on banks. Or the BOJ could do absolutely nothing.
Shortly after the BOJ announcement hits the tape, the Fed will weigh in with its own interest rate news. But it will be a much more straightforward affair – with the only two choices likely being a 25-basis-point rate increase or no move.
|It would be a pretty significant move for Janet Yellen to implement a hike.|
Interest rate markets are only pricing in about a 15% possibility of a hike. So it would be a pretty significant move for Janet Yellen to actually implement one. Expectations are higher for a move at the December meeting at around 45%. But that could easily change depending on what the Fed does, then on what Yellen says at her post-meeting press conference later in the afternoon.
From a market perspective, the meetings come at a point of indecision and uncertainty. The major averages broke down out of an extremely narrow, two-month range a few days ago. That breakdown was accompanied by a surge in volatility.
Now, the key question is whether more turmoil lies ahead … or if this will just prove to be a minor hiccup. I come down on the pessimistic side of the debate, given my read of where we are in the credit and economic cycle. But we’ll see what policymakers say and do tomorrow, and how markets react.
So what are you expecting tomorrow? How do you think various potential policy moves will impact stocks? Are we setting up for a fall swoon? Or a strong run into year end? Let me know which way you’re leaning when you get a minute.
On the terrorism front, the investigation continues into the man behind the latest attacks. But many of you weighed in with your thoughts about the bombings in the meantime.
Reader Phil H. said: “I don’t know about our intelligence agencies and police, but there is a great deal that Obama could have done to prevent this. He could have demanded full vetting of every Muslim seeking legal immigration (particularly Sunnis who are responsible for 90+% of all terror incidents). Instead of overruling enforcement efforts by the Border Patrol and all of the INS, he could have commended them and taken harsh action against violators – just like they do in almost all of the civilized world.”
Reader H.C.B. said: “Who let these various terrorists into the country in the first place? Is there no accountability in the U.S. for the immigration process and for those who sign-off on admitting certain individuals into the country and issuing them a visa?
“The whole system needs to be fixed and a ‘new broom’ put in charge. Heads should roll. We need some real accountability instead of mindless bureaucracy.”
Meanwhile, Reader John said: “What can we do? Well, first off we can quit being frightened by every headline that tends to spur us into doing something stupid. Violent crime has dropped in recent years (which doesn’t make for exciting reading). But listening to political rhetoric, you’d think we’re all on the verge of being overrun. Nonsense.
“Frankly, we Americans shoot each other at a rate of about 30,000 per year, which makes terrorism deaths quite low by comparison. You want less terrorism, both domestically and internationally? Then work for more justice and less inequality. Terrorism, sadly, is not going away. But building bigger walls and bombing more civilians is only going to throw more petrol on the fire.”
Finally, Reader Barb said: “People have to be aware of their surroundings at all times and report whatever doesn’t seem normal or legal, even if the reception from the cops doesn’t seem receptive. Without the eyes and ears of the public, there is no way law enforcement can stop all that much if it is coming from self-radicalized or mentally off individuals acting alone, especially if they are American citizens.”
Thanks for sharing your thoughts. If there’s anything else you want to add, be sure to do so in the comment section.
Now that Ahmad Khan Rahami has been taken into custody, investigators are digging into his past to find out what prompted him to allegedly plant bombs in multiple New Jersey and New York locations. Some believe he may have become radicalized during trips to Pakistan or Afghanistan, and they note that his family had past issues with local police. They reportedly sued the Elizabeth, N.J. police department for harassment in 2011.
Wells Fargo (WFC) CEO John Stumpf got hauled in front of Congress to testify today in the wake of the bank’s cross-selling scandal. The bank agreed to pay $185 million to regulators and fire 5,300 workers after it was reported they fraudulently opened up accounts without the knowledge of customers just to meet aggressive sales targets. Stumpf hasn’t given any indication he will step down, but he took a verbal beating in D.C.
The “Everything Bubble” reached into virtually every corner of the asset markets. That includes art, where prices of both classic and modern works soared in value as money flooded in.
But the tide is now ebbing, according to Bloomberg. The story chronicles how some modern paintings have plunged 80% to 90% in value since the peak of the market in 2015. And on it goes.
Do you have any additional thoughts on the latest homegrown terror attacks? What about the Wells Fargo banking scandal, or the apparent collapse in the high-end art market? You know the drill – the comment section is open for business below.
Until next time,