No yen for helicopter money, maybe?

Wednesday night news out of Tokyo said Bank Of Japan was going to launch a Y10 to Y20 TRILLION in helicopter money.

Helicopter money is where the government gives cash to the general population in leiu of the banks to spur spending and growth.

Well the headlines drove high frequency traders to buy, buy, buy on the news. By Thursday morning Bank of Japan chief Kuroda said there is no plan to execute that plan and in fact the news was a month old.

The news had credence, since ex-Fed chief Ben Bernanke was said to be talking to the Japanese central bankers about what to do to break an almost 30-year economic malaise.

The news had the markets gyrating due to USD-YEN movements. Stock markets move higher on a weaker yen, which helicopter money in the trillions would do. So when the announcement from central banker Kuroda walked back that news the yen strengthened and US futures fall.

There is such a coorelation between $/Y and US equity markets that trumps all other economic/monetary news. The yen carry trade is mother’s milk to high-frequency trading algorythms

Now don’t be surprised if the market takes the news that Kuroda said no helicopter money a month ago and says that he might be for it now. Stranger things have happen.

And just for good measure we get ECB chief Mario Draghi talking Thursday morning on what that central bank may or may not do with Italian banks.

 

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