The word decoupling has made a comeback in recent months. In 2008, it was believed that the world would be able to withstand a slowdown in US growth, as global markets would “decouple” from the primacy of US consumers. In some ill-conceived instances, it was even argued that financial markets would as well. Of course, we know that the interconnected [...]
I suppose there is some cosmic and ultimately cruel irony to the fact that the new release of wage data in Japan happened today, April Fool’s Day. All the hopes that were pinned on last month’s positive reading in scheduled wages, the permanent income component, were flushed down the memory hole of statistical revisions. For a fleeting moment, Abenomics had [...]
So far in China this year there have been defaults and “bailouts” in the credit markets, but they are tiny in relative comparison to everything else. That they have occurred at all is why they have grabbed so much attention. We all have some inkling of the credit and monetary inequities that are roiling inside the Chinese economic gut, but [...]
Persistent whispers throughout the autumn that the Bank of Japan was thinking and even planning (I suppose that meant more modeled simulations) to raise its intervention quota beyond what was judged only months ago to be monstrous and more than sufficient had an anesthetic effect on Japanese “markets.” Despite what was serious consternation about the damning resistance of Japanese companies [...]
While most everyone in the investment world has been focused like a laser beam on the amazing US stock market, some subtle shifts are happening that could have major implications for investors. These shifts are not large yet but they are significant if they are the beginning of a trend. For the last couple of years the investment landscape has [...]
I have been pointed toward an alternate explanation for what I described as Japan’s potential tipping point. Scott Sumner (and others) is arguing that the tremendous increase in importation of goods into Japan is a sign Abenomics is actually working. His reasons relate to the orthodox idea of a “demand shock”, ostensibly how he classifies the yen devaluation, triggering what amounts [...]
The concept of a tipping point is remarkably easy to relate in the physical world that we actually experience day-to-day. We all have intuitive sense of it owing from that concision and familiarity. In more complex systems analysis, that innate “feel” is no less applicable, particularly where it is transparent, thus making it more confounding that it goes so unnoticed [...]
Slowly the optimism fades as last year’s spurt of activity is recognized for what it was: temporary. It is entirely common for such ebbs and flows to take place in inventory approaching recessions, as businesses themselves experience extremes in expectations in light of both hope and reality. Last year was, I must say, a bit unique in that spread between [...]
I’m not sure what popular perception believes of international holdings of “reserves”, but I would wager there is a rather large disconnect between it and how the international system actually works. This is more than just theoretical notions of banking in eurodollar shadows, but the pipelines that connect and cross the globe. Central banks do not have massive stores of [...]
After the Great Crisis and Recession of 2008 there were a lot of economic and market commentators arguing that the US was headed in the direction of Japan. Japan's economy, stock and real estate markets peaked in the late 80s and they've been trying to find the formula for sustainable growth ever since. Since the US had suffered a real [...]
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