Peter Boockvar writing at The Big Picture notes two stories today which I find truly remarkable.
First, "If You Have it, the BOJ Will But It"
"If you have it, the Bank of Japan will buy it. The BoJ cut interest rates from .1% to a range of zero to .1% and announced a 5T yen fund to buy not just JGB’s but corporate debt, commercial paper, ETF’s and Japanese REIT’s. If you live in Japan and thought about selling stuff in the closet on EBAY, hawk it to the BoJ instead."
Amazing. ETFs? But Boockvar's second story is even crazier, and seems to be getting less attention:
"Evidence of how extraordinary the demand for yield has become, Mexico today plans on selling $500mm of 100 year debt with a coupon of about 6%. It’s an amazing leap of faith on the part of investors for a country that saw y/o/y CPI inflation in 1988 of 179% and 52% as early as 1996. We also can’t forget the 1994 Mexican Peso currency crisis that led to a multinational bailout for Mexico that consisted of loans and guarantees totaling $50b. Investors also have to hope that at least over the next few years, the drug wars don’t suffocate their economy. Bottom line, artificially cheap rates can finance anything at historically unforeseen levels when the demand for yield is strong. Sound familiar?"
Oh, how quickly we forget.