QE’s hope is that in the course of redistribution any spurt of temporary activity caused by such monetary deck shuffling will lead to follow-on activity (the cult of aggregate demand). As we see in the US, the redistribution appears to have had the reverse effect, including effects on global trade. In Japan, the other nation so fully devoted to QE, [...]
If you haven’t discerned to this point, funding markets are incredibly complex and intricately linked across innumerable network nodes that make precise estimations, even analysis, equally difficult and complex. The primary nodule as it relates to global finance is geographically centered in London, as the eurodollar market largely operates there. With the “US dollar” as the reserve currency (I use [...]
In the wake of taper tightening, currency markets and credits everywhere around the world are adjusting pretty much as they had previously. While the Indian rupee remains stuck in a range, the Bank of India tried to ignite growth through “surprise” interest rate non-movements. Other markets have not been so fortunate, particularly Indonesia. While India soaked up much of the [...]
US stocks, based on long term valuation techniques, are the most expensive in the world. Expected returns over the next decade, again based on long term valuation techniques, are somewhere south of 5% real and with inflation very low, nominal returns won't be much better. At Alhambra, we believe that, at best, the S&P 500 is uninteresting and at worst [...]
Japanese exports continue to rise, but as we have seen in actual results elsewhere, both anecdotal and empirical, it’s a mirage driven by changes in the unit of measure (yen). Total exports from Japan rose 18.6% in yen terms, the highest growth rate since the middle of 2010. The problem was that imports also rose, by 26.1% as energy importation [...]
The Japanese administration is facing increasing criticisms as frustrations grow. This is contrary to the established narrative that everything is on the right track in Japan, and that Prime Minister Abe’s economic programs, including the Bank of Japan’s epic monetarisms, are wildly successful. Nowhere was that narrative more evident than recent commentary about Japan Inc.’s revival through current earnings. The [...]
I spend a lot of time on Japan not simply because it is the originator for the great QE experiment, rather the similarities between the US and Japan are well-worn and numerous. The primary interest in 2013, with the central banks of both going all out in monetary cajoling, is that those similarities are growing ever-closer. A few days ago [...]
In the middle of September, nearly a full year after the yen began its devaluation, the Japanese administration held talks with business lobbies and labor unions. The focus of the affair was to make sure businesses knew that the intentional appeal of yen devaluation and thus commodity inflation was doomed absent wage growth. “’Our mission with these talks is to [...]
The last time Japan increased its sales tax rate in an effort to get its fiscal “stimulus” deficit under control was 1997. It was, in part, responsible for ZIRP and the perpetual QE that followed. These days Japan’s economy functions in a similar state of decrepitancy that has “forced” the Bank of Japan to reach further into the activist policy [...]
The first paragraph of this article in the Financial Times reveals perhaps more about the inability of the policy to render any successful result than anything I have seen in a long, long time. It’s not just that policy is badly calibrated or miscalculated, those are simply symptoms of a discipline that has totally lost all focus or sense of [...]
Stay In Touch