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Japan's Nikkei Flash-Smashes 400 Points Higher In Milliseconds After 3 Abenomics Gets Three Year Extension

Whether it is due to thin holiday liquidity, due to the BOJ intervening at its usual time just around the Japanese market open, because Japan's "legendary" Twitter trader "CIS"

), because prime minister Abe just learned he would be reinstalled as head of his ruling LDP party because no challenger had emerged,or because Japan's Q2 GDP was just revised modestly higher (to a less negative number) or just because this is how the New Normal rolls, moments ago the Nikkei flash smashed higher some 300 points, in an algorithmic frenzy to take out Friday's high stops.

 

Whether this latest ridiculous move was predicated by the USDJPY momentum ignition which today came 30 minutes ahead of its usual time...

... or by some of the economic data is neiter relevant nor worth digging into.

Speaking of the economic data, this is what Japan reported: instead of a -1.8% drop in Q2 GDP, Japan - like the US - revised the number higher to "only" -1.2% (versus the initial -1.6% report) with the real sequential decline of -0.3% fractionally better than -0.5%, even as nominal GDP posted the smallest possible sequential gain.

Additionally, Japan reported that its July Current Account balance was higher than the JPY1.732 trillion expected, and rose to JPY1.809 trillion, up from JPY 559 billion in June.

Perhaps the catalyst was the report that Prime Minister Shinzo Abe has returned as president of the ruling Liberal Democratic Party on Tuesday, as rival Seiko Noda failed to garner signatures of support from 20 LDP Diet members, a requirement to file a candidacy for the Sept. 20 election. According to the Japan Times  the deadline for filing the candidacy was set at 8:30 a.m. Tuesday, but Noda held a news conference to tell reporters that she gave up running prior to that the same day.

In other words, Abe’s new term as LDP president continues for another three years, which means his term as the prime minister will be extended for that period as well, assuming the increasingly jerky Nikkei - the only thing that has allowed Abe to keep his position as long he has - does not crash in the interim.

As a result, Abe is on course to become Japan’s longest-serving prime minister in more than four decades after standing unopposed in his party’s latest leadership election.

Abe’s re-selection Tuesday as president of the Liberal Democratic Party comes as protests flare over unpopular legislation to expand the role of the Japanese military; Abe isn’t required to hold a general election for another three years. If he stays in office until 2018, he would become the third-longest serving prime minister since World War II

There is no term limits for the prime minister, but a general election of the Lower House will be held at least once in every four years, and a new prime minister will be elected each time by members of the chamber.

“I tried to run for the presidential election, but I was unable to accomplish that,” Noda said. Noda continued her last-minute efforts to garner support from other LDP members but the LDP leadership led by Abe kept putting pressure on them not to support her.

Top LDP executives feared that if Noda succeeded to run, it could trigger internal strife within the party and give ammunition to opposition parties to further delay deliberations on contentious government-sponsored security bills, which are now being deliberated on in the Upper House.

And while Abe's reign is now literally supreme and unopposed, Japan Times cautions that Abe’s ruling camp is now set to bulldoze the bills through the chamber and have the legislation enacted next week. This is expected to cause a big public stir and will likely push down the Cabinet’s approval rating in media polls.

Whether that means more or less Abenomics, read printing of money to make the rich richer, remains to be seen. Recall on Friday the IMF joined the chorus of warnings that the BOJ's QQE will soon need to be tapered as Kuroda runs out of willing sellers.

Judging by today's early market kneejerk reaction, the algos have not gotten the memo.