Money and Finance
- Today's Market Indicator
Monday, 22 October 2012 TimeCountryMacroeconomic IndicesPeriodPrevious ReadingForecastActual ReadingImportance00:50Merchandise Trade ImportsSep-5.4% y/y2.9% y/y4.1% y/yReflects changes in the volume of imported goods in comparison to the...
- John Mauldin: The Mother Of All Painted-in Corners
I wrote several years ago that Japan is a bug in search of a windshield. And in January I wrote that 2013 is the Year of the Windshield. The recent volatility in Japanese markets is breathtaking but characteristic of what one should come to expect from...
- Albert Edwards: Spain's Bailout Solves Nothing
Going through Japan's lost decade with Peter Tasker was a prequel to our current plight. One of the key differences he had with consensus was on the banks. Consensus believed Japanese banks were at the apex of Japan's economic woes and the main...
- From Ice Age To Hyper-inflation With Socgen Bear
(Reuters) - Three months ago, with the Federal Reserve nearing the end of its second major stimulus program and inflation pressures on the rise, Albert Edwards' bond market view stood out from the crowd. Societe Generale's famously bearish analyst,...
- Hussman Weekly Market Comment: Sequential Signals
On the subject of inflation, I should emphasize that while I expect inflation pressures to be contained for several years, the impact of massive deficit spending should not be disregarded simply because Japan, with an enormously high savings rate, was...
Money and Finance
Albert Edwards on Japan...
Excerpts from Edwards’ report via ValueWalk:
There is a large body of highly respected commentators who dismiss the notion that Japan is bust. My friend, former colleague and Japan guru, Peter Tasker is certainly one of them. In a recent FT article Tasker highlighted Japan’s “structural excess of savings and net overseas financial assets equivalent to more than 50% of GDP” – link. He is worried though that the rise in the consumption tax is a policy error because the economy is simply not strong enough at this stage to shrug off such a fiscal hit equivalent to 1.7% of GDP.
Our own economist’s views are similar – even with the likely ¥5tr stimulus package to offset the impact of the consumption tax hike. Tasker points out that since a sizable stimulus had already been implemented this year, another of a similar size will be required just to avoid, ceteris paribus, a GDP contraction (no wonder Japan’s public sector deficit is still almost 10% of GDP in 2013!). Our own economists believe that at the current(ish) ¥/$100 exchange rate, GDP will stagnate next year with the announced mix of policy. Hence both they and Tasker expect more QE from the BoJ to be required and in the process a decline in the Yen to ¥/$110 should sustain growth at a meagre 1% next year.
In my view we are quickening the pace towards losing control of both the Japanese currency and inflation. We reiterate our view that any decline in the yen at this time will echo the 1996/7 period where yen weakness put a severe strain on other Asian countries balance of payments and contributed in large part to the 1997 Asian currency crisis. I expect yen weakness over the next year to begin accelerating out of control as BoJ QE is stepped up, forcing widespread devaluations in the EM world, including China. The impact of this on the West is not rocket science. There have only been two occasions when US implied inflation expectations have turned negative – 2008 in The Great Recession and 1998 in the wake of the Asian crisis.
- Today's Market Indicator
Monday, 22 October 2012 TimeCountryMacroeconomic IndicesPeriodPrevious ReadingForecastActual ReadingImportance00:50Merchandise Trade ImportsSep-5.4% y/y2.9% y/y4.1% y/yReflects changes in the volume of imported goods in comparison to the...
- John Mauldin: The Mother Of All Painted-in Corners
I wrote several years ago that Japan is a bug in search of a windshield. And in January I wrote that 2013 is the Year of the Windshield. The recent volatility in Japanese markets is breathtaking but characteristic of what one should come to expect from...
- Albert Edwards: Spain's Bailout Solves Nothing
Going through Japan's lost decade with Peter Tasker was a prequel to our current plight. One of the key differences he had with consensus was on the banks. Consensus believed Japanese banks were at the apex of Japan's economic woes and the main...
- From Ice Age To Hyper-inflation With Socgen Bear
(Reuters) - Three months ago, with the Federal Reserve nearing the end of its second major stimulus program and inflation pressures on the rise, Albert Edwards' bond market view stood out from the crowd. Societe Generale's famously bearish analyst,...
- Hussman Weekly Market Comment: Sequential Signals
On the subject of inflation, I should emphasize that while I expect inflation pressures to be contained for several years, the impact of massive deficit spending should not be disregarded simply because Japan, with an enormously high savings rate, was...