Haruhiko Kuroda, the man determined to destroy the Japanese Yen, got appointed to a second term on Friday. Below are central bank balance sheets over the past few years.
The Federal Reserve has not expanded its balance sheet since late 2014. The BOJ is still very active with bond purchases across all durations. The 10 year Japanese bonds are yielding 6 basis points (Basically zero). The BOJ is also buying Japanese stocks. No other major central bank has done this in the post-crisis period. We are currently holding a long position in the Japanese yen, which looks set to rally over the coming weeks. We also have a long position in Japanese stocks, which looks set to fall over the coming weeks. After a few weeks I expect the downtrend in the Japanese yen to continue, which should be constructive for Japanese stocks.
To understand just how crazy the BOJ is watch the video below.
The video is four years old. Since than, things have only gotten crazier.