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Japan's Money-Printing Frenzy and Today's Other Important Financial Stories

By John Maxfield - Apr 4, 2013 at 10:52AM

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After a rough day yesterday, financial stocks are generally higher this morning. These four financial stories help explain why.

After a rough day yesterday, financial stocks are generally higher this morning. The financial stories below help to explain why.

1. Bank of Japan: Let the printing begin!
What's the best way to get an economy up and going again? According to Japan's central bank, the answer is to print copious amounts of money. In the first policy statement since Haruhiko Kuroda took over as the head of the institution, the Bank of Japan outlined what's being claimed as the most aggressive monetary policy since the Weimar Republic:

The Bank will achieve the price stability target of 2 percent in terms of the year-on-year rate of change in the consumer price index (CPI) at the earliest possible time, with a time horizon of about two years. In order to do so, it will enter a new phase of monetary easing both in terms of quantity and quality. It will double the monetary base and the amounts outstanding of Japanese government bonds (JGBs) as well as exchange-traded funds (ETFs) in two years, and more than double the average remaining maturity of JGB purchases.

Policymakers in Japan have been struggling for nearly two decades to find a solution to the deflation that's hung over the country's economy since the early 1990s. In the most recent election, it was a central facet of the new prime minister's economic policy. And following his inauguration last December, he's set upon accomplishing this objective by selecting Kuroda to chair the central bank.

According to the bank's president, "Incremental steps of the kind we've seen so far weren't going to get us out of deflation. I'm certain we have now adapted all policies we can think of to meet the 2 percent price target." To read more about this, check out The New York Times article here.

2. MF Global Report
Thought you had heard the last about former New Jersey governor Jon Corzine and MF Global's astonishing collapse? Think again.

This morning, the trustee for the failed commodity company's bankruptcy issued its long-awaited report on what led to the collapse and how significant the damages were. As The Wall Street Journal noted, the bankruptcy trustee laid the blame squarely at Corzine's feet, saying that a risky business strategy, inadequate systems, and "negligent conduct" contributed to the company's unraveling.

"Corzine and his management team failed to strengthen the company's weak control environment, making it almost impossible to properly monitor the liquidity drains on the company caused by Corzine's proprietary trading strategy," the report said. You can read the 124-page report here.

3. Jobs Data
According to data released today by the Labor Department, the number of Americans filing for unemployment benefits last week hit a four-month high. For the week ended March 30, the advance figure for seasonally adjusted initially came in at 385,000, an increase of 28,000 applications over the prior week. According to Reuters, economists had expected the figure to drop to 350,000. Stating the obvious, a Wall Street executive quoted by the news agency noted that, "It does look like recently we've seen some stalling in job creation, or at least a stalling in the lowering of claims."

4. Banks rebounding today
Finally, bank stocks are rebounding in early trading after taking a beating yesterday. At the time of writing, JPMorgan Chase (JPM 0.86%), Bank of America (BAC 0.72%), and Wells Fargo (WFC 1.78%) are up 1.09%, 0.85%, and 1.04%, respectively. Meanwhile, the industry overall is up somewhat less, as measured by the KBW Bank Index (INDEX: ^BKX), which is currently higher by 0.66%.

Yesterday's move was fueled by worse-than-expected data about mortgage volumes from the Mortgage Bankers Association. The industry trade group had reported that mortgage applications were down by 4% last week, leading some to fear that the lucrative underwriting wave that banks have been riding may be waning. Today's move, conversely, appears to have been sparked by the Bank of Japan's announcement.

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Stocks Mentioned

Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$35.91 (0.72%) $0.26
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$127.45 (0.86%) $1.09
Wells Fargo & Company Stock Quote
Wells Fargo & Company
WFC
$44.06 (1.78%) $0.77

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