Double Dip Alert In Japan

Despite recent optimism about the apparent renaisance of growth in the Japanese economy, and the heightened sense of enthusiasm which surrounds the surge in economic activity right across the Asian continent there are considerable grounds for caution about the sustainability of the Japanese recovery itself.The first of these is to be found in the fact that, as has become plain from the latest

The IMF on Asia's Recovery and its Sustainability

By Claus Vistesen: CopenhagenIn case you had not noticed, the IMF is blogging and it is not "merely" the garden variety IMF staffers they are rolling out to fill the pages; nope here we are treated to the likes of Blanchard, Atkinson, Lipsky, Cottarelli and a host of other of the Fund's A-listers. Consequently, it would seem that in an already (over)crowded world of econblogging, the

A scenario for Japan’s public finances

A few days back there were rumblings of dissatisfaction from the market about Ministry of Finance projected issuance:Japan’s Bonds Drop a 4th Day After 20-Year Auction Demand Cools – Bloomberg.comIt’s possible that the new government will have to limit its borrowing for “stimulus” spending, as the demand for additional JGB’s is limited.It seems to me the scenario would work like this:Ministry of

The Performance of Japanese Companies - A Growing Connection with External Demand

By Claus Vistesen: Copenhagen(click on pictures for better viewing) Last week, we learned that industrial production rose yet again in Japan clocking in at 1.4% month-on-month in September after having increased by 1.6% in August. Companies said they planned to increase production in October and November as well, indicating the recovery from a record export collapse in the first quarter is

Japan - In the Eye off the Beholder

By Claus Vistesen: Copenhagen(click on pictures for better viewing) After a nice and entertaining week in Barcelona where I had the privilege not only to hold a seminar at the Universitat Autònoma de Barcelona, but also to meet a host of interesting people, I thought that it would be about time that I finished my piece on the latest data from Japan which admittedly will be a bit backward

Japan's US Treasury holdings through August

Note yet another increase in spite of continued yen strength.Source

Japan's recent quantitative easing relative to other G-8 countries

Source: Danske Bank

Japan's US Treasury holdings through July

in billions of $...

A Cautious BOJ Stands Pat

By Claus Vistesen: CopenhagenAs the discourse is slowly but surely tilting towards exit strategies, by part of central banks, from ultra low interest rates and unconventional measures the BOJ opted to day to maintain a very cautious stance towards the incoming green shoots and whether they will prove enough to lift Japan out of the mire. (quote: Bloomberg) Officials kept the benchmark overnight

A brief look at the possible economic impacts of the DPJ victory

It appears that the DPJ has not promised much change in economic policy. In analysis leading up to the election the NY Times stated that"The main opposition Democratic Party, which polls indicate will end half a century of nearly uninterrupted rule by the Liberal Democrats, has not offered much more than piecemeal remedies to Japan’s biggest problems. Neither party has proposed politically

Corporate Capex in Japan (Q2-2009) - So, is This What a Recovery Looks Like?

By Claus Vistesen (Copenhagen)Much pomp and circumstance was certainly made in relation to the fact that Japan actually grew in the second quarter at a full annualized 3.7 percent in the second quarter of 2009. Yet, the underlying numbers to suggest a recovery are still sorely missing. Deflation now seem to have taken hold, unemployment is rising fast and although the recent manufacturing

Japan Emerges From Recession, But The Slump Continues

Amidst a huge fanfare of euphoria from the press, Japan's GDP expanded by 0.9% quarter on quarter between April and June, or at a 3.7% annualized rate. In doing so it clocked up the first positive growth in five quarters. Many now claim the worst is over is over for Japan, and in terms of the depth of contraction it may well be, but I fear that recovery may be a much more distant prospect than

Japan still a major factor in US Treasury market

as reported in the US Treasury's TIC report. It's interesting that China did not surpass Japan until September of 2008; and that those two countries dwarf all the other holders. How long can Japan avoid having to redeem some of these assets to fund domestic social programs?

June Exports Sustain Upward Momentum But Surplus Employment Rockets

Japan’s June exports fell at the slowest annual pace this year, helping the trade surplus widen for the first time in 20 months. Shipments abroad were down 35.7 percent from a year earlier, following a 40.9 percent in May, according to the Finance Ministry. The surplus widened to 508 billion yen ($5.4 billion).Real exports (adjusted for price change impacts) rose an estimated 8.0% over May (

Daniel Gross on Mellowing Japan

By Claus Vistesen: CopenhagenIn a recent article published in Slate, Daniel Gross gets to the heart of the matter. Essentially, he argues that one of the principal reasons that Japan is not rising is that it has failed to do the homework in the human capital department or as Gross phrases it; while Japan is still leading in engineering, this is not the case with respect to social engineering.

A Kickstart on Japanese Elections?

By Claus Vistesen CopenhagenFor regular observers of Japanese politics (which does not include yours truly) this will be something of a non event. In fact, it has been brewing for more than a while given the rising unpopularity of the ruling LDP and its stifled leadership (a wobbly minister at a G7 meeting springs to mind). However, it is still significant, I think, that the troubled PM Aso and

Deflation Grabs Hold of Japan

By Claus Vistesen: CopenhagenI really don't want to beat a dead horse here and although I already gave it a kick in the context of the release of the May consumer price data I do think that this is pretty significant [quote from Bloomberg with my emphasis]. Japan’s producer prices fell at a record pace in June as oil costs declined and companies required fewer materials amid a global

Long term outlook for the yen

Yen: Safe Haven, But for How Much Longer?"The Yen carry trade is long gone. Now that everybody else has the same "zero interest rate policies" the trade has been unwound. The Japanese economy is absolutely imploding as the fatal flaw in the great export experiment is revealed. No amount of so called "stimulus" at home will make up for evaporating foreign demand, especially after fifteen years of

Consumer Sentiment Rises As Exports Slump - But Where, Oh Where Is The Recovery?

Japan put in a pretty negative export performance in May. Even shipments to China show little sign of improvement, and the general impression is that hopes for a quick recovery in global demand are looking very premature.On the other hand a 42 per cent year-on-year fall in imports in May left Japan with a trade surplus of Y299.8bn for the month - something that will help push gross domestic

Facebook Links

Quietly clicking my way through Bloomberg last Sunday afternoon, I came across this:Facebook Members Register Names at 550 a SecondFacebook Inc., the world’s largest social-networking site, said members registered new user names at a rate of more than 550 a second after the company offered people the chance to claim a personalized Web address.Facebook started accepted registrations at midnight

Japanese nationals and $135 billion

Border bust equals possible international incident-missing TARP funds?I have written a bit regarding this at the above link...a developing story worth at least a glance.Scott

No "Green Shoots" Here - German and Japanese Capital Goods Output Continues Its Fall

Well, as I was busying myself yesterday scratching around looking for green shoots in Turkey. I couldn't help notice this coming in over the radar from Germany, courtesy of Bloomberg:German exports fell more than economists forecast in April as the global crisis restrained demand, keeping Europe’s largest economy mired in a recession. Sales abroad, adjusted for working days and seasonal changes,

Bernanke Choppers make an appearance...in Japan

The facetious title of this piece refers of course to US Federal Reserve chairman Benjamin Bernanke's well known reference to dropping bundles of cash from helicopters as a last resort to fight deflation.Edward Hugh noted in the previous post here that "The government...have begun distributing 12,000 yen ($125) to each resident in March to encourage spending." I've found a few reactions to this

More Than "A Whiff" Of Deflation In Japan

Well, as Claus pointed out in his last post, Japanese data is pretty much a mixed bag at the moment. Industrial output shot up in April, and the May PMI data suggested that the easing of manufacturing contraction continued in May. However household spending and retail sales fell, unemployment rose, and the CPI reading suggested the Japanese economy is once more getting itself firmly wedged in

Bits and Bobs on the Latest Data from Japan

By Claus Vistesen: CopenhagenIt appears that there is still some green shoots left in the news from Japan even though the underlying picture is one of deteriorating fundamentals. We learned recently how Q1 was absolutely horrid in Japan with out declining at an annualised 15.2% which, I a dread to say, are numbers normally reserved to the likes of the Baltics, Ukraine and Hungary [1]. The second

Japan Exports Flat In April

Japan’s external trade held steady in April, although since exports were up ever so slightly on March (13 trillion yen) while imports were down slightly (45 trillion yen) the country did post a slightly larger trade surplus than in March (69 trillion yen, over 10 trillion yen in March).Nontheless year on year the numbers, while slightly better than in previous months, still look horrible.

A case of need

where the need for markets for its industrial sector is causing Japanese leaders to reconsider a longstanding policy. Nikkei is reporting that the Japanese government has decided to lift its ban on arms exports by domestic companies."TOKYO (Nikkei)--The Japanese government decided Saturday to relax its rules on arms exports to allow more joint development and production of weapons with other

Japan's Economy Contracts At An Annualised 15.2% In The First Three Months Of 2009

Japan’s economy shrank at a record rate last quarter as exports collapsed and businesses drastically cut back on investment spending. Gross domestic product fell by an annualized 15.2 percent in the three months ended March 31, following a revised fourth- quarter drop of 14.4 percent, according to the Japanese Cabinet Office. The economy contracted 3.5 percent in the year ended March 31, the most

Japan's loss of AAA rating

The quote from Moody's is "Japan's credit profile is Aa2 The unified rating of Aa2 reflects Japan's considerable strengths. These include Japan's large domestic savings, a strong home bias on the part of its domestic financial institutions and institutional investors, relatively low holdings of government debt by foreign investors, and Japan's $1 trillion of official foreign exchange holdings.

Japanese Housewives Back in the Game?

By Claus VistesenI am sure all investors, analysts, and commentators have been tracking a wide range of indicators to gauge whether the shoots of green would continue to spark or whether it was merely a blip on the way down. Clearly, this has been and is a little more than a blip I think and for my own part, decisive evidence came today that things might have changed. I am of course

Japan's Economic Contraction Stabilises In March

Japan's contraction showed signs of easing in March, even though the recession has now set in for the duration, the deepest point may well have been passed. The ship may be stable, but it is still far from being right side up.Industrial Output Up On The MonthJapan's industrial output rose in March (more than anticipated), and showed the first gain in six months, suggesting that the steepness in

Japan's Export Decline Slows (Slightly) In March

The rate of decline in Japan’s export slowed in March, after four-months of record breaking contractions. Evidentally this constitutes some sort of sign that the intensity of the recession may have started to ease.Overseas shipments were down 45.6 percent from a year earlier, as compared with February’s unprecedented 49.4 percent plunge. Most notable was the fact that (on an annual basis)

Data supporting the concept of continued deflation in Japan

Bloomberg's Jason Clenfield has a piece out today describing how Japan's business have been coping with economic weakness by cutting wages rather than through layoffs. This is not really a surprise given that "lifetime employment" is a concept that still has some support in the country. However, the piece refers to OECD data showing "Japanese salaries have fallen in seven of the last 10 years".

A Perspective on Carry Trading

By Claus Vistesen: CopenhagenARE carry trades back in Vogue? With all the talk about second derivatives, equity rallies, and for my own part spring sensation in the market place this question is, I think, a natural one to ask. And by all means, I am not the only one who is asking it. Actually, I think most serious FX punters out there are considering (or have considered) whether it is

US Treasury holdings: Japan vs China

This is based on data from the Treasury Department on Major Foreign Holders of U.S. Treasury Securities. The chart below(click to enlarge) through January 2009 shows that China passed Japan in official holdings in September 2008. Now we know from Brad Setser's analyses that there is more than just official Treasury holdings to consider when comparing total foreign

A shortage of leadership and ideas

Yesterday Japanese Prime Minister Aso released his administration's economic support plan, amounting to 15.4 trillion yen or about $150 billion. Bloomberg reports that PM Aso's stimulus plan is receiving largely negative reviews from economists. This plan would result in Japan's total debt reaching 800 trillion yen by next March. The Bloomberg piece states that "Aso, 68, said the government

How to Increase Consumption in Japan?

By Claus Vistesen: Copenhagen Even though the big news of last week undoubtedly is represented by the one trillion session in London, the smaller than expected nudge from the gents at Kaiserstrasse and the emerging talk of a market bottom and impending recovery, I am going to wonkishly stay on the topic with respect to my latest long piece on the land of the rising sun and its economic

An analysis of Japan's financial system that is likely still valid

Michael J. Oakes, in a Reason piece titled More Bang For the Yen? from 1998 describes how fiscal policies relating to savings and investment affect individual financial decisions in Japan:"Japanese haven't accumulated large savings merely because of cultural preferences. The tax system encourages savings and discourages participation by individuals in stock and bond markets. (Dividends are

A novel approach to unemployment problems

The Associated Press are reporting that Japan gives cash to jobless foreigners to go home. The lead states that "Japan began offering money Wednesday for unemployed foreigners of Japanese ancestry to go home, mostly to Brazil and Peru, to stave off what officials said posed a serious unemployment problem.Thousands of foreigners of Japanese ancestry, who had been hired on temporary or referral

Japan - Engine Failure

By Claus Vistesen: Copenhagen Last time I had Japan under the loop I asked whether there was no end in sight for Japan's economy and as I wind up for another close look, I must say that it is still very difficult to find good news if any at all. However, and for the sake of argument I thought that we might begin with some recent arguments in the context of the global economy which suggest that we

Japan's Industry Reels Under The Slump In World Trade

Japan's economy certainly looks to be one of the worst case scenarios globally at the moment. Indeed, as Claus Vistesen puts it (in a very fine and thoroughly argued post - Engine Failure - that you can see here): "Final estimates from Q4 2008 suggested that Japan contracted at an annualized 12.1% which puts Japan in the dubious pole position of biggest GDP declines among industrialised economies

A critical decision

Bloomberg has a piece out describing the debate in Japan over the Aso government's plans for a new spending package, noting that "Japan’s 17-month recession is showing no signs of abating, and Aso may be tempted to attract rural voters with the pork-barrel projects that left the country with the world’s largest public debt." The Bloomberg piece adds that "some ruling Liberal Democratic Party

Japan - The Lost Quarter Century

Despite the fact that Japanese Finance Minister Kaoru Yosano said Friday that February's fall in the so called "core-core" consumer price index doesn't mean Japan is back in deflation, few are ready to accept his judgement. Indeed, if you look at the core-core line in the chart below, it is at least debateable whether the Japanese economy was ever out of it in the first place. But the present

Japanese savings shrink

The Nippon Keizai Shimbun is reporting today that "Japanese household financial assets totaled 1,433.5 trillion yen at the end of December, falling 5.7% on the year to a 4-year low, the Bank of Japan's preliminary data released Tuesday showed. This is the sharpest annual drop on record. Slumping stock and investment trust prices took a toll on household assets. Stock holdings plunged 40.2% on

Summary of Japan's economic situation

A commenter provided a link to Japan in trouble; India relatively safe, a piece in The Economic Times which states:"Some foresee Japan--one of the world’s biggest exporters--going bankrupt and its currency plummet if the situation doesn’t change near term. For years, the Japanese have relied on exports to support their economy... but exports have dried up given the severe recession in the

Effect of US government debt monetization on Japan

The yen has strengthened versus the dollar significantly in the short period since the US Federal Reserve announced that "the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to

Possible inflection point?

Bloomberg has a report headlined Japan’s Funding Crunch Deepening with the key item being that "The funding crunch for Japanese businesses is intensifying as foreign-currency financing dries up, forcing larger firms to turn to the nation’s state policy bank for emergency loans, the head of the lender said...JBIC, which provides funds to help bolster Japanese companies’ international

Update on QE in Japan

By Claus Vistesen: CopenhagenQuantitative easing is certainly all the rage at the moment after this week saw the Bank of England move interest rates down 50 basis points to the level of 0.5% and, effectively, into QE. Over at Morgan Stanley, Manoj Pradhan talks about a new global QE scheme even if we are not quite there yet, and David K. Miles and Melanie Baker talk about the UK version.

Japan's Industrial Slump Deepens In January

Japanese manufacturing output fell in January by a record 10 per cent month-on-month while new job offers declined 18 per cent, reflecting the deepening recession in the world’s second biggest economy. Industrial production was down a whopping 30.8 per cent year-on-year, as manufacturers of vehicles, electronics parts and devices and general machinery slashed output to adjust to the rapid fall in

Japan's Exports Collapse In January

Japan’s exports plunged by 45.7 percent year on year in January, producing a record trade deficit, as recessions in the U.S. and Europe, and a sharp downturn in China crushed demand for the country’s machinery, cars and electronics. A drop of this size is truly staggering.“People are coming to realize that Japan is in deep trouble,” said Hiroshi Shiraishi, an economist at BNP Paribas Securities

Japan's "Unimaginable" Contraction

Well, it isn't only in Europe that we are having a hard time of things. Last week Kazuo Momma, head of the Bank of Japan’s research and statistics department, warned that Japan’s economy now faced an “unimaginable” contraction, and today we can begin to see just what the unimaginable might look like, since the preliminary data for fourth quarter GDP are now out. And what we find when we come to

To Print Or Not To Print, That Is The Question

Well in a week which has seen Kazuo Momma, head of the Bank of Japan’s research and statistics department warning that Japan’s economy now faces an “unimaginable” contraction, and Prime Minister Taro Aso's approval rating dropping to a mere 14 percent according to the latest Asahi newspaper survey, it should not surprise us to hear reports that yet another set of "exotic" proposals have been put

Japan's Economy - No End in Sight?

By Claus Vistesen: CopenhagenAs I wind up, post exam session, for some serious economic analysis it is to an economic landscape which is increasingly looking like a surreal mixture between Kafka and Dali. Having been paying only scant attention to the data stream the past 5 months, I have been adequately awake to note that the incoming barrage of data from the real economy has been absolutely

Japan's Grim And Bear It 2009 Outlook

Things in Japan are looking grim. They keep getting grimmer, and it doesn't seem they will be getting less grim anytime soon. To give you some idea of what this means, only this week we learnt that Japan’s steel production fell 28 percent in December. This was the steepest decline in no less than six decades. Meanwhile Hiroshi Yoshikawa, Tokyo University professor and head of the Japanese

Exports Collapse As Consumer Confidence Continues To Fall

Japan’s exports plunged by a record in December, signaling companies will be forced to shut factory lines and fire more workers, driving the economy deeper into recession.Exports plummeted 35 percent from a year earlier, the sharpest decline since 1980, the earliest year for which there is comparable data, the Finance Ministry said today in Tokyo. The December drop eclipsed a record 26.7 percent

One New Year's Resolution Japan Badly Needs

In a week when we learn that Toyota plans to suspend production at all 12 of its Japanese plants for 11 days over the next couple of months, news which follows hot on the tails of last week's report that industrial output shrank at the fastest pace since at least 1953 in November (16.2% y-o-y), with December's Purchasing Manager Index survey - described in JPMorgan's Global Report as the weakest