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World economy 20th December 2014

Japanese economy: short-term gain, long term pain?

MADRID | By Luis Arroyo | When many were speaking of a new Japanese recession and the failure of Shinzo Abe’s bold Keynesian policy, his Liberal Democrat Party obtained a sweeping victory at the polls on Sunday. In Europe, the Abenomics are in austerity fans’ crosshairs because if these policies happen to work they would look ridiculous. They were delighted when Japan’s GDP contracted in 3Q. But I’ve been following the Nippon economy for some time and I don’t really rust quarterly figures.

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World economy 16th December 2014

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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World economy 17th November 2014

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.

Japanese valuations

Markets 24th September 2014

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.

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World economy 3rd August 2014

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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World economy 28th July 2014

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.

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World economy 24th July 2014

Will the Bank of Japan act again?

MADRID | The Corner | Will the Japanese Central Bank act again to raise inflation expectations and get inflation to reach its target of 2%? Some analysts believe the BoJ should allow the economy to overheat a little in order to promote higher inflation expectations. “Kuroda is convinced that the country will reach its inflation target of 2% in the FY2015,” experts at JP Morgan pointed out on Thursday, “but the help of the yen’s depreciation is fading since expectations of further monetary expansion are lowering too.”

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World economy 21st July 2014

Japan would be better off depressed!

SAO PAULO | By Marcus Nunes via Historinhas | This can be inferred from a speech by Rintaro Tamaki, Deputy Secretary-General and acting Chief Economist of the OECD, who for 35 years worked for Japan´s Ministry of Finance: “The chief economist of the Organization for Economic Cooperation and Development, Rintaro Tamaki, recently gave a talk that should be heard by all Japanese economists and policy makers. He observed that the aim of Japanese economic policy is still mainly about strengthening growth.”

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World economy 23rd June 2014

Stage two of the Japan macro trade

LONDON | By Barclays analysts | The Japan macro trade has been off the radar in 2014, but that should change (for better or worse) in the coming few months. US yields have likely bottomed, while the effect of Japan’s VAT increase appearsmanageable. More important, PM Abe has unveiled more details of his 3rd Arrow (the structuralreform program), including a long-anticipated cut in the corporate tax rate.