G-20 Should Address Income Gap, Fragility of Financial Systems

Guntram B. Wolff via Caixin | G-20 ministers in Shanghai appeared to be aware of the importance of structural work. In particular, there was agreement in our panel discussions that the Base Erosion and Profit Shifting (BEPS) project of the OECD was an essential element to deal with tax avoidance and ensure that profits are taxed where economic activity generating it takes place.

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Japan enacts new stimulus plan by €24 bn

MADRID | The Corner | The Japanese government approved last Saturday a new stimulus program to inject up to ¥3.5 billion (€23.8 billion or $29.1 billion), which will help the less developed regions of Japan and the households with subsidies, vouchers for goods and other similar measures. The government of Japan expect this new stimuli plan to boost the GDP by 0.7%. Despite the many critics to the so-called Abenomics program, the measures are still on-going as the advisor to the new government William H. Saito explained in an interview for The Corner.

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Abenomics: “Third arrow” as a necessary condition for trickle-down effects

LONDON | Barclays analysts | The post-election challenge for Abenomics will be how to promote a transition from a favourable turn in expectations to the real economy (real GDP). For example, JPY depreciation has boosted earnings and led to an improvement in business sentiment (expectations), but export volume remains sluggish, suggesting it has not given a boost to the real economy (real GDP). 

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Japan falls into technical recession

MADRID | The Corner | The Japanese economy unexpectedly entered recession in the third quarter, just after the GDP decreased by an annualised pace of 1.6 per cent, versus forecasts that it would rebound by 2.2 per cent. Japan contracted by 0.4% in the 3Q14, leaving the country in a technical recession, which drove the Nikkei to near 3% losses and raised serious questions about the planned sales tax hike next year.

Downgrading EM, upgrading Japan

LONDON | The Corner | Emerging market equities no longer hold the attractions they did earlier in the year, according to Barclays analysts. They had previously recommended an overweight stance and now they’re cutting to neutral. In the same time they are raising exposure to Japan.

Can China keep running?

MADRID | The Corner | A bull market. But how sustainable? Asia ex Japan has just breached its 2011 high. Key to this is China. Over the last month MSCI China is up 7% on strong volume. It is now up 5% for the year. Easier monetary conditions, better growth data and improved earnings, meeting low valuations and poor sentiment, have driven the China rally and recent outperformance.

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In some cases the central bank cannot control inflation…

SAO PAULO | By Marcus Nunes via Historinhas | …while in others it cannot promote it! Japan falls in the latter category. According to this article in the WSJ “Japan´s price target looks difficult.” The nationwide core consumer price index rose 1.3% from a year earlier in June, after adjustment for a recent sales-tax hike, below a 1.4% increase the previous month, according to government data released Friday. Inflation moderated in May and June due to falling energy prices and a stable yen, which has put the break on growth in import costs.