Legendary fund manager Kyle Bass was on CNBC Thursday, discussing Japan’s plan to for ¥120 T in QE over the next 2 years, and the crisis Japan finds itself in when purchasing ¥120 in bonds is not enough to contain rates. Bass states that the outstanding supply of JGB’s are so massive that when rational investors respond to the BOJ’s massive QE program by selling even a marginal amount of bonds, the central bank’s bond purchases will be overwhelmed by selling, and QE will have to drastically increase to contain rates:
There are ¥1 Quadrillion in bonds out there. If 5% of them are sold, that’s ¥50 Trillion! ¥60 Trillion a year in QE won’t be big enough!
Weak yen doesn’t equal higher stocks ad infinitum. Many businesses will move south, and you will continue to see things bifurcate.
Bass’ MUST WATCH interview is below: