Modi and the NDA/Yen quietly at one month high/Other notable stuff

There was not a question of whether Narendra Modi was going to be re-elected or not for another term, it was just a matter of by how much. His National Democratic Alliance (his BJP party and their allies) is on track to win a majority of seats in parliament but far less than what was anticipated. Polls over the weekend had the NDA winning anywhere between 353 and 401 seats in the lower house known as Lok Sabha and it's looking like it could be below 300, though above the 272 seat threshold needed for a majority. We (I) have been bullish and long Indian stocks with Modi's business friendly approach since the day he was elected in 2014 but markets their are not liking the possibility of a more narrower coalition and the Sensex is lower by 5.7% after closing at a record high yesterday. 

The yen is quietly rallying to almost the highest level in a month vs the US dollar. Two things here, Bloomberg News is citing 'people familiar with the matter' that "The Bank of Japan is likely to discuss the reduction of bond purchases as early as its policy meeting next week." They meet next week and the article further said "BoJ officials will probably consider if the timing is appropriate to slow the pace of bond buying from the current roughly 6 trillion ($38.4 billion) per month and whether they need to provide more details on the outlook to improve predictability, according to the people." This news hit after the market closed so we'll see how JGB's trade Wednesday. 

Also, the BoJ Deputy Governor Ryozo Himino said today "Exchange rate fluctuations affect economic activity in various ways. It also affects inflation in a broad-based and sustained way, beyond the direct impact on import prices. That's why we obviously need to be very vigilant to, and analyze very closely, the impact of exchange rate volatility on the economy, prices and their outlook." The exchange rate now really seems to matter to them when conducting monetary policy as the political and societal pressure is finally being realized by the BoJ. 

The yen is one of the cheapest currencies out there relative to the US dollar and a rally could be at hand, finally, after being quite the widow maker trade.