Japan’s Continual Recession Reveals Something Important About US Consumers
Japan fell back into recession again in Q3, expected this time, which is actually being charitable to Abenomics and especially QQE. To even believe that this monetary insanity has produced even marginal benefits, it has to be given “credit” of at least mini-recoveries in between these “technical recessions.” It is a problem far worse than that, as even a technical recession exists only in the media. By all that truly counts, Japan has never left its QQE-induced hysteria, and thus the Japanese economy has remained distinctly subdued throughout.
Japan’s economy contracted in the third quarter as business investment fell, confirming what many economists had predicted: The nation fell into its second recession since Prime Minister Shinzo Abe took office in December 2012.
Gross domestic product declined an annualized 0.8 percent in the three months ended Sept. 30, following a revised 0.7 percent drop in the second quarter, meeting the common definition of a recession. Economists had estimated a 0.2 percent decline for the third quarter.
Going back all the way to the fourth quarter of 2013, not long after QQE began, Japan’s GDP has averaged a very slightly negative rate. Owing to compounding effects and time, Japan’s real GDP level in Q3 2015 is actually slightly above what it was when QQE began. In other words, where even GDP has not grown for more than two years you can count that as a single and ongoing recession with variation in between that does not change the overall trajectory. The fact that the quarterly levels appear highly unstable only produces the common QE element, one which, as everyone should appreciate, is being reproduced by the US and Europe.
We took a hard look at Japan in NFTRH 368. I had been on it based on the bull patterns that showed up on the Nikkei and DXJ and currency dynamics now in play with USDJPY pushing upward. EWI popped up with their Kondratieff seasonal change (to spring) and I found that very interesting. Here is Mark Galasiewski on the subject…
Analyst Spotlight: Mark Galasiewski
Learn a bit about EWI’s big-picture from our Asian-Pacific markets expert
Mark Galasiewski is the editor of our monthly Asian-Pacific Financial Forecast. Mark’s a big-picture guy — he loves analyzing the longer-term chart patterns, because they have the most significance to human social history.
Listen to this 3-minute interview to learn what shaped Mark’s current outlook on the markets — and how he got his start with Elliott wave analysis. Then, please look below the video for details on his new special report on Japan — it’s free.
Free Report: “3 Reasons to Get Excited About Japanese Stocks”For two decades Japan has been in and out of recession and suffered a gut-wrenching deflationary environment. Read Mark Galasiewski’s new study on Japan’s economy and markets, as published in the October issue of Global Market Perspective.Is this sleeping giant ready to emerge and offer opportunities for investors? Learn now in this new free report.
This article was syndicated by Elliott Wave International and was originally published under the headline (Interview, 2:47 min.) Analyst Spotlight: Mark Galasiewski. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
biiwii comment: I know, that is a lame, over done title (it’s mine, not EWI’s) referencing a lame (IMO) over done song but what the hell. An NFTRH+ update focused on Yen hedged Japan and so I was interested to see EWI show up with a bullish bent on Japan as well…
New Report: 3 Reasons to Get Excited About Japanese Stocks
Is this sleeping giant ready to offer opportunities for investors?
Anyone investing since the 1980s knows the boom and bust story of Japan and its Nikkei stock index. The Nikkei peaked just below 39,000 in 1989. Once known as a leading economic power, Japan’s “bubble economy” burst, and for the last 25 years it has been in and out of recession and suffered a gut-wrenching deflationary environment. The Nikkei spent several years below 10,000, dashing any hope for investors.
Back in 2010, Elliott Wave International’s Mark Galasiewski presented a long-term study of Japan to his subscribers. His study noted that Japan was nearing the end of its economic “winter,” a time of falling stock prices, deflation and economic depression.
He just updated his study and presented it to a packed house at the 28th Annual Conference of the International Federation of Technical Analysts (IFTA) in Tokyo, Japan.
You can read the first half of this fascinating study in a new free report from Elliott Wave International. You’ll learn about Japan’s economic journey, then see where its economic cycle is now. He even shares an eye-opening clip from his recent live presentation that compares the effect of Reaganomics on the markets to that of Abenomics. You’ll soon understand why he is so excited about the Japanese market and why he wants others to know.
The analysis comes straight from Galasiewski’s in-depth study, as presented to subscribers in a recent issue of EWI’s Global Market Perspective. It shows you exactly why he believes Japan’s “spring” is beginning — great news if you’re looking for international opportunities to put your money to work.
“Just an update for you, some disturbing news has leaked out this week. Machine tool builders have put out blow out [lists] to all sales persons in the USA, not sure if world wide. Mori Seiki list has 600 to 700 machines on it WOW!!! never have i heard of such a huge list by any one Builder. Not sure what they see coming but it can’t be good.”
My comment from that post: “Mori is a big builder and when the big builders start blowing out it goes right down the food chain.”
Concurrent with this NFTRH had been watching Machine Tool builder Fanuc ever since projecting its upside in Q4 2014 (due to BoJ’s Yen eroding monetary policy that would help exporters). We watched Fanuc in particular because it has been getting hyped (on Robotics) by certain suits (i.e. financial types) who have probably never set foot on a manufacturing floor in their lives, let alone operated a Machine Tool. But also, I know first hand that Fanuc is a quality builder and I like a good and progressive company as much as the next guy.
Is Japan Zimbabwe? How preposterous: Japan is an advanced economy that cannot possibly suffer the same fate as Zimbabwe. Right? Or could Japan get hyperinflation? Below I explain why Japan, and with it investors’ portfolios, might be at risk.
The other day, when I was on a panel discussing unsustainable deficits in the U.S., Eurozone and Japan, the risk of inflation and Zimbabwe style hyperinflation came up. When asked about the difference about Japan and Zimbabwe, I quipped that there isn’t any. My co-panelists were all over me, arguing Japan is different. Notably that Japan could not possibly go broke because, unlike Zimbabwe, it’s an advanced economy. The argument being that Japan produces goods the world wants.
Why the biggest monetary stimulus effort in the world did NOT stop deflation in its tracks
When Shinzo Abe became the Prime Minister of Japan in December 2012, he was regarded with the kind of reverence that politicians dream about. He was featured in a hit pop song (“Abeno Mix”), hailed as a “samurai warrior,” and featured on the May 2013 The Economist cover as none other than Superman.
But in the two short years since, Abe as Superman has been struck down by the superpower-zapping force of economic kryptonite. On November 17, government reports confirmed that Japan’s brief respite from a 20-year long entrenched deflation was over as the nation’s 2nd & 3rd quarter GDP shrank 7.2% and 1.6% respectively.
This is getting hard to believe. The announcement that Japan has plunged into a triple dip recession should have been lights out for Abenomics. But, no, its madman prime minister has now called a snap election to enlist more public support for his campaign to destroy what remains of Japan’s economy.
And what’s worse, he’s not likely to be stopped by the electorate or even the leadership of Japan Inc, which presumably should know better. Here’s what Japan leading brokerage had to say about the “unexpected” 1.6% drop in Q3 GDP—- compared to the consensus expectation of a 2.2% gain and after the upward revised shrinkage of 7.3% in Q2.