Central Banks buying equities

[jneal3]

Re: 3 month treasuries go negative

US Treasury Bonds (13:56 ET June 18, 14)

3 Month	-0.01	0.00	0.00	0.00	-0.01
6 Month	0.03	0.03	0.02	0.03	0.00
2 Year	0.44	0.45	0.29	0.32	0.02
5 Year	1.68	1.73	1.68	1.53	-0.01
10 Year	2.60	2.63	2.62	2.52	-0.01
30 Year	3.40	3.42	3.45	3.36	-0.01

Where did this come from? I checked treasury.gov and the 3 month yields are all positive. Was this a blip in the daily time-history?

[Slimprofits]

Re: 3 month treasuries go negative

You know it's one thing for the FED to forecast something for which it is 100% in control of. It's another thing to see them forecast something they have no control of, especially two years out.

I don't know who to laugh at more, the FED for their hubris or the Talking heads for their foolishness in believing them.

I think even the first part is too generous, but generally we agree.

[Slimprofits]

Central banks have a growing taste for equities and are beginning to eye exchange-traded funds too as they diversify their swelling currency reserves.

That’s the finding of a survey of 69 monetary-policy authorities responsible for overseeing $6.7 trillion and released today by Central Banking Publications. More than a third of participants said they are investing in stocks or envisage doing so. A similar proportion said they were already putting money into ETFs or likely to do so at some point.


^^^ These are lines from a new article on bloomberg . com about a different report than was discussed last week.

http://www.bloomberg.com/news/2014-0...ves-swell.html

Here is a link to the source of the polling data: http://www.centralbanking.com/category/central-banks/reserves That is a subscription publication. Here is what we can see:


Reserve managers look to exit bonds sooner as global ‘taper' looms

Central Banking | 23 Jun 2014
Fed taper has reserve managers fretting, new Central Banking Publications survey of 69 banks show; ETFs are gaining traction as reserve asset class
Topics: Reserves, Robert Pringle, Bonds

[Slimprofits]

Re: Central Banks buying equities

Norway’s $890bn oil fund is accelerating its push to become a more active investor as the world’s biggest sovereign wealth fund said it would double the number of companies it owned big stakes in over the next three years.

In its 2014-2016 strategy published on Tuesday, Norges Bank Investment Management, the manager of the oil fund, showed how it would deal with the challenges of its ever-increasing size, having tripled its assets since 2007.

The number of companies in which the oil fund holds a stake of at least 5 per cent should increase to 100 from 45 last year, with two-thirds of its biggest investments coming in Europe.

It will bulk up the number of industry specialists in its equity team that follow specific sectors from 20 to 50, while the overall number of workers will increase from 370 to 600 by 2016. The number of companies under “deep analysis” will be doubled to 1,000.

“All [the changes] are in the same direction: we are incorporating as distinguishing characteristics, firstly, that we are very long-term investors . . . and, secondly, the very large scale and size of the fund,” Yngve Slyngstad, the oil fund's chief executive, told the Financial Times.

Norway’s oil fund on average owns 1.3 per cent of every listed company in the world and 2.5 per cent of each European stock, making it one of the most influential equity investors. But, after years of stressing that it was a purely financial investor that cannot own more than 10 per cent in any one company, the oil fund has started to take a more active approach to its largest investments.

Mr Slyngstad said that the fund sought to engage with the chairman and board of any company in which it held more than 5 per cent as part of its push for "responsible investing".

The fund holds 61 per cent of its assets in equities, 38 per cent in bonds and just over 1 per cent in property but can hold up to 5 per cent in real estate. In its strategy document, it laid out how it might boost its property investments, which have until now focused on partnerships for office buildings and prime real estate such as London’s Regent Street.

Mr Slyngstad said 200 of the 600 staff would work in the property arm and “the growth we are foreseeing in the real estate portfolio is such that we will have to manage some of these properties ourselves”.


June 24, 2014 10:53 am
Norway’s oil fund to take bigger stakes in companies

By Richard Milne, Nordic Correspondent
http://www.ft.com/cms/s/0/a39e37ec-f...44feab7de.html

[Slimprofits]

Re: Central Banks buying equities

Here's a report from October 2012

Israel's central bank started buying equities this year, investing 2 percent of its foreign exchange reserves in U.S. stocks. Eventually, it plans to raise this to 10 percent, or nearly $8 billion.

South Korea's central bank's share of stocks in its reserves grew to 5.4 percent last year from 3.1 percent in 2009 and the Czech Republic's bank has increased its equities holdings to 10 percent of its foreign reserves over the past three years.

Czech National Bank board member Eva Zamrazilova says her country chose in the mid-2000s to buy stocks because it had reserves beyond its monetary policy needs. It has increased the exposure gradually from 2008 to 2011.

"Bond yields are very low in absolute terms and dividend yields are exceeding bond yields," Zamrazilova told Reuters, adding that the central bank had maintained a "stable market risk profile" while buying stocks.

The Czech bank defines itself as a "risk-aversed investor" using a purely passive management, simply tracking the likes of the MSCI Euro, S&P 500, FTSE 100 .FTSE and Nikkei 225 .N225.

"Equities are an efficient diversifier with a potential to enhance returns (equity premium) and smoothen volatility of returns (negative correlation)," Zamrazilova said.

BY INGRID MELANDER
http://www.reuters.com/article/2012/...8980S920121009



It's a perverse and entangled financial web.

[Milton Kuo]

Re: Central Banks buying equities

It's a perverse and entangled financial web.

Unless these central banks also happen to be chartered to be sovereign wealth funds, I don't see any good reason why they should be looking to make a profit or, as the article you reference, a greater profit than they are already making.

[Slimprofits]

Re: Central Banks buying equities

Bank of Japan officials see buying exchange-traded funds based on the JPX-Nikkei Index 400 as a future option to boost the impact of unprecedented easing and encourage companies to deploy cash for investment, according to people familiar with the central bank’s discussions.

Including funds that track the index would broaden the range of shares in the BOJ’s ETF purchases, which now target the Nikkei 225 Stock Average and the Topix index, said the people who declined to be named because the talks were private. An increase in funds tracking the JPX-Nikkei 400, higher liquidity and vibrant trading in futures would be required before any decision to add the new benchmark to the bank’s ETF program, the people said.

http://www.bloomberg.com/news/2014-0...-etf-buys.html

[Adeptus]

Re: Central Banks buying equities

Gordon T. Long offers a pretty good video summary of this thread in his recent broadcast. The good stuff starts at around 1:45 minutes.

In the end he suggests that a correcting market event will "soon" occur followed by even more unprecedented central bank actions to prevent an all out collapse.
At present, global central banks own some 5% or less of the global stock markets... how far can they carry this before things implode?

[thriftyandboringinohio]

Re: Central Banks buying equities

Thanks , Adeptus!

[Slimprofits]

Re: Central Banks buying equities

Looks as if Evans-Pritchard got his hands on the OMFIF study.

"It appears that PBOC itself has been directly buying minority equity stakes in important European companies," it said.

http://www.telegraph.co.uk/finance/c...-tapering.html

[vinoveri]

Re: Central Banks buying equities

Macleod sums it up well IMO. There need not be any end to the asset inflation in the foreseeable future. Only a loss in confidence of the currency would bring it to an end. Of course the central planners can decide to slow or crash an asset class if they will.


http://www.financeandeconomics.org/m...-and-carry-on/

We have known for years that through intervention central banks have managed to control the prices of currencies, precious metals and government bonds; but there is increasing evidence of direct buying of other financial assets, including equities. The means for continual price management are there: there are central banks, exchange stabilisation funds, sovereign wealth funds and government-controlled pension funds, which between them have limitless buying-power.
Doubtless there is a growing band of central bankers who believe that with this control they have finally discovered Keynes’s Holy Grail: the euthanasia of the rentier and his replacement by the state as the primary source of business capital. This being the case, last month’s dip in the markets will turn out to be just that, because intervention will simply continue and if necessary be ramped up.
But in the process, all market risk is being transferred from bonds, equities and all other financial assets into currencies themselves; and it is the outcome of their purchasing power that will prove to be the final judgement in the debate of markets versus economic planning

[vinoveri]

Re: Central Banks buying equities

http://online.wsj.com/articles/boj-s...ump-1407830786

who needs a "plunge protection team"? it is happening right out in the open now; stock markets supported with money created out of and backed by nothing. this is what is going to continue to happen in all the developed markets over the coming years.
boy, sure wish I went long us equities 5 years ago! to quote zerocred BTFD or BTFATH

one giant gilded cage

[vinoveri]

Re: Central Banks buying equities

https://twitter.com/nanexllc/status/...141377/photo/1

[metalman]

Re: Central Banks buying equities

https://twitter.com/nanexllc/status/...141377/photo/1

original doc here...

http://www.cftc.gov/stellent/groups/...xandcomex1.pdf

but central banks never denied making trades in the futures markets & that's not the same as outright equity purchases. what's the big deal?

zercred making a mountain out of molehill... again.

[vinoveri]

Re: Central Banks buying equities

original doc here...

http://www.cftc.gov/stellent/groups/...xandcomex1.pdf

but central banks never denied making trades in the futures markets & that's not the same as outright equity purchases. what's the big deal?

zercred making a mountain out of molehill... again.

what have central banks denied by the way?

the big deal to me is centrally managed asset markets, don't think it fair, don't think it's efficient, and frankly I don't trust the bastards. Let's see a handful of unelected guys with the ability to create and direct unlimited amounts of "capital" towards whatever (and whoever) they please.

would you have any problem with outright equities purchases?