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Japan Posts Second Biggest Trade Deficit In History

Tyler Durden's picture




 

For those who may not have noticed it, the headline says "deficit" and pertains to Japan: once upon a time a booming export economy. The reason: the ongoing collapse in export trade, after May exports dropped by 10.3% from a year ago, and just better than April severe economic contraction of 12.4%. Consensus was for an 8.4% decline. The net result was a monthly deficit of 853.7 billion yen, or $10.7 billion, the second biggest inverse surplus ever. And just like in Europe, where things are going to go from insolvent to perfectly solvent any minute now... just not yet... so in Japan the economic renaissance which will cause the economy to surge (unclear how: no new monetary stimulus, and the recently announced fiscal stimulus of Y500 billion in new loans will do precisely nothing to boost anything except for some corrupt bureaucrats Swiss bank accounts) is coming any minute.... just not yet. Bloomberg says: "Shortages of power and parts have disrupted production and slowed overseas sales, prompting Japanese companies including Honda Motor Co. to forecast weaker earnings. Higher unemployment in the U.S. and weakening demand in Asia indicate Japan won’t be able to rely on global demand to pull itself out of a slump caused by the quake." And the understatement of the weekend comes from BNP economist Azusa Kato: "The state of the global economy is a little worrying. Both the U.S. and Europe aren’t doing that great and emerging economies are also tightening at an incredible pace, increasing uncertainty." Surely this enough is enough to explain why futures are up, since the Fed has no option but to do QE3. Alas, as the dumber by the minute algos continue to not realize, the market has to plunge from here (just like what crude has been doing for the past 2 weeks), before the Fed gets the greenlight to engage in Operation Twist 2.

More from Bloomberg:

Recent data suggest the economy’s contraction has extended into this quarter. Machinery orders fell 3.3 percent in April, the first decline in four months, a sign companies are reluctant to spend after the March disaster. The unemployment rate climbed and households cut spending in April.

Honda Motor, Japan’s third-largest carmaker, last week forecast a bigger-than-estimated 63 percent decline in full-year profit, citing production disruptions on parts shortages and the strong yen.

Hitachi Ltd., a Japanese electronics and power-equipment maker, projected that net income will drop 16 percent in the year ending March 31 after the disaster crippled its factories.

“Given a slowdown in the overseas economy, it’s difficult to expect a long-term economic expansion, although a recovery in production is becoming clear,” Junko Nishioka, chief economist at RBS Securities in Tokyo, said before the report. “A V-shaped recovery scenario for later this year is looking fragile.”

There is some good news: the ongoing collapse in exports to the US, means less imports by the US, means an artificially smaller trade deficit, means higher GDP. Alas, only in the land of economic bean counting is one nation's undisputed collapse the reason for another's growth.

Shipments to the U.S. fell 14.6 percent in May from a year earlier, compared with a 23.3 percent drop in April, the report showed. Sales to Europe decreased 8.8 percent.

Exports to China, Japan’s largest market, fell 8.1 percent, compared with a 6.8 percent drop in April. Shipments to Asia, where countries from South Korea to the India have raised borrowing costs to quell inflation, slid 8.7 percent.

An increase in energy prices pushed up import bills. Crude oil prices have gained about 20 percent in the past year and Japan gets virtually all of its oil from abroad. Imports rose 12.3 percent in May from a year earlier, today’s report showed.

“Japan’s trade deficit could remain intact for a prolonged period,” Kyohei Morita, chief economist at Barclays Capital in Tokyo, said before the report. Still, “the driver is likely to change from decreasing exports to increasing imports,” which isn’t bad as it reflects domestic demand for reconstruction.

As we have claimed since early May, the only possibility for Japan to regain control of its economy is through another massive quantitative easing episode, which however will shift the scales in the USD-JPY carry currency race well to the benefit of the ridiculously strong Yen, something that the banking clergy, whose sole purpose in life is to extinguish the greenback, may not appreciate too much.

 

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Sun, 06/19/2011 - 23:19 | 1383739 moonstears
moonstears's picture

wonder why?

Sun, 06/19/2011 - 23:17 | 1383744 HungrySeagull
HungrySeagull's picture

because no one was yet born when Japan reported the lost Generation back in the 80's It's the young just graduated from University now working in Government making thier way discovering just how bad things are.

Sun, 06/19/2011 - 23:35 | 1383768 Thomas
Thomas's picture

Seeming glaring omission of Tsunami effects. Let us not forget they are digging out of a lot of rubble right now. They also have had a complete shut down of any exports of their glow-in-the-dark ag and fishery products.

Sun, 06/19/2011 - 23:59 | 1383837 slewie the pi-rat
slewie the pi-rat's picture

hey, T:  just < 1/2 metric ton of japanese green tea was stopped @ a paris airport last week.  too radioactive.  now, they hafta figure out how to dispose of it!

Mon, 06/20/2011 - 00:06 | 1383850 Popo
Popo's picture

Even Vietnam, Cambodia, Laos and Thailand are blocking Japanese food imports.   

Mon, 06/20/2011 - 00:14 | 1383885 Thomas
Thomas's picture

Green Fluorescent Tea. Madison Ave could market it in a heartbeat. 

Mon, 06/20/2011 - 00:36 | 1383951 Oh regional Indian
Oh regional Indian's picture

Hmmmmmh. I had dinner last night with my old business partner from Japan.
All is well. Government has everything more under control now.Remember Yoshi? Yoshi quit AliBaba and is now working in his own trading company, importing mini power stations from Korea. Because in Japan we are so dependent on Nuclear power. Even hospitals buy from him. And now Tokyo is no problem. Business is good. We got new USA clients.....

I just sat there open mouthed...

ORI

http://aadivaahan.wordpress.com/2011/06/17/nuclear-american-cross-other-...

Mon, 06/20/2011 - 01:02 | 1384028 HungrySeagull
HungrySeagull's picture

We ran on Generator power for a week after substation was destroyed some time ago.

Power is good. Big power is better, espeically the kind you can move.

 

Samurai does not want one big Nuke plant anymore. Samurai dreams of a million little drifting butterflys providing power through the beams of sunlight among the Bonsai.

Samurai eats good this year selling mini power.

Mon, 06/20/2011 - 00:51 | 1383989 Misstrial
Misstrial's picture

And of course, there is this:

http://www.seashepherd.org/news-and-media/news-110523-1.html

"A sting operation undertaken by Sea Shepherd Conservation Society resulted in a court case for a Californian seafood dealer who imported endangered whale meat from Tokyo and sold it to restaurants within the state.

Expected to plead guilty, 50-year-old Ginichi Y. Ohira was charged in Los Angeles federal court with knowingly selling a marine mammal product for an unauthorized purpose, considered a misdemeanor, in violation of the federal Marine Mammal Protection Act."

~Misstrial

 

 

Sun, 06/19/2011 - 23:26 | 1383754 RobotTrader
RobotTrader's picture

Risk assets are rolling over in Asia, more bids coming into U.S. Fiatscos and AAA-rated, Gilt-Edged Uncle Gorilla Notes.

New chart pack I made with updated futures here:

http://clearstation.etrade.com/cgi-bin/bbs?post_id=9765290

 

 

 

Sun, 06/19/2011 - 23:29 | 1383759 Reese Bobby
Reese Bobby's picture

You forgot to explain why that is bullish.

Mon, 06/20/2011 - 01:51 | 1384118 disabledvet
disabledvet's picture

i like new.  what about you?  time to "swing some lumber" as I "sense dissension among those who wish to exterminate the Americans"--especially "those on home front" who "hate America with particular relish"

http://www.youtube.com/watch?feature=player_detailpage&v=d-sV-O2-jCY

Sun, 06/19/2011 - 23:38 | 1383767 Zero Govt
Zero Govt's picture

Nikkei up 0.60% today on the historic deficit news... pleasing to see Japanese investors confidence remains high (today!) while the country crumbles ....I'm just miffed i'm all out of money shorting the US Indexes to short these muppets too!

Sun, 06/19/2011 - 23:33 | 1383770 Boston
Boston's picture

Risk Off = Treasuries Up

It doesn't get any simpler (and easier) than this.  Why fight it?  

 

Sun, 06/19/2011 - 23:58 | 1383830 Yen Cross
Yen Cross's picture

 Exactly right Boston +1

Mon, 06/20/2011 - 00:07 | 1383858 Popo
Popo's picture

... because it flies in the face of the "locally" preferred inflation argument?

Sun, 06/19/2011 - 23:35 | 1383773 holdbuysell
holdbuysell's picture

Not sure how long TPTB can keep directing people's gaze away from what's coming. 

Sun, 06/19/2011 - 23:45 | 1383787 Zero Govt
Zero Govt's picture

when 48% of Americans polled think a Depression is due in a year you need to ask who do TPTB think they're kidding any longer with their smoke and mirror games...

...and now Obumma has shot his bolt ($Trillions) after promising ending recession with stimulus, what the fuk does he think he's doing running again?!! 

Sun, 06/19/2011 - 23:47 | 1383793 HungrySeagull
HungrySeagull's picture

Oh yah, 4 more years of the big wad smearing everything from hotel floor over the whore to the wall and ceiling?

 

No thanks Ugh.

Sun, 06/19/2011 - 23:50 | 1383808 gwar5
gwar5's picture

I saw that poll too, and could only conclude that the other 42% must have been illegal aliens who don't speak the language. 

Sun, 06/19/2011 - 23:46 | 1383796 Yen Cross
Yen Cross's picture

 Watch out for the 200hr SMA 80.30 area. Kampo is rumored on the bid, that area can't be broken into Europe.

usd/jpy

Sun, 06/19/2011 - 23:48 | 1383803 StrawberryBlonde
StrawberryBlonde's picture

The NKD is hovering just above a critical level of support:   http://screencast.com/t/UaarOpSn

 

Sun, 06/19/2011 - 23:55 | 1383817 XRAYD
XRAYD's picture

So what about our "soft patch" which hindered production here due to shortages in the supply chain due to constraints in Japanese production?

 

The patch will now be softer and spread wider or deeper?

Mon, 06/20/2011 - 00:56 | 1384008 DoChenRollingBearing
DoChenRollingBearing's picture

I keep wondering...  Do we buy MORE Japanese bearings now...?  In anticipation of these items becomin unavailable...?

JIT is DEAD for our bearing import company in Peru!

On July 16 we will have more knowledge, from the President himself of one of our Japanese suppliers.

Supply chains are now a real issue.  My hunch is that those who can AVOID stocking "just enough" (JIT, that is we stock MORE) will be winners if we have what our customers want while our competitors do not.

Mon, 06/20/2011 - 01:05 | 1384040 HungrySeagull
HungrySeagull's picture

Buying Bearings from Japan is too hard.

Go to Japan, collect a few plane loads or cruise ship loads of hungry, tired and desperate Japanese holding onto hope of salvation through thier days of misery and trial.

Bring them to your homeland, give them a safe haven and allow them to enjoy life making Bearings for you. They will be grateful and provide good bearings.

Mon, 06/20/2011 - 00:13 | 1383833 Itsalie
Itsalie's picture

And the Japanese were upset by CNBC report that their neighbors across the Sea of Japan had bought $16b of JGBs in April? They should be happy that at last they have become the Bernank's model student - "print money - be happy - crush your own currency"!

Mon, 06/20/2011 - 00:03 | 1383836 Bansters-in-my-...
Bansters-in-my- feces's picture

This news is Glow in the Dark,bullish,right...???

Mon, 06/20/2011 - 00:06 | 1383854 holdbuysell
holdbuysell's picture

For those one-stop shoppers:

Saw this in Costco the other day for the first time. It's been available online for some time, however.

Is this marketing spend prompted by inventory liquidation (lackluster sales after Japan disaster), or due to increased demand? Not sure.

Regardless, this was different. The display is huge.

http://www.costco.com/Browse/Product.aspx?Prodid=11613699&search=thrive&Mo=15&cm_re=1_en-_-Top_Left_Nav-_-Top_search&lang=en-US&Nr=P_CatalogName:BC&Sp=S&N=5000043&whse=BC&Dx=mode+matchallpartial&Ntk=Text_Search&Dr=P_CatalogName:BC&Ne=4000000&D=thrive&Ntt=thrive&No=3&Ntx=mode+matchallpartial&Nty=1&topnav=&s=1

Mon, 06/20/2011 - 00:41 | 1383972 Printfaster
Printfaster's picture

Freeze dried Mormon conversion.  Comes with a bishop, and a map to your nearest stake.

Mon, 06/20/2011 - 00:40 | 1383975 Misstrial
Misstrial's picture

Yeah, Costco is *the* place for emergency food supplies.

~Misstrial

Mon, 06/20/2011 - 00:48 | 1383987 HungrySeagull
HungrySeagull's picture

100 Items to disappear first.  -- google it.

No I am not Mormon.

I use a west coast supplier for the goods.

I understand some in Kansas are pretty damn timely with the Case of MRE's or whatever once the Military contracts are filled first.

Mon, 06/20/2011 - 00:57 | 1384017 ebworthen
ebworthen's picture

 

With Government Motors and Chrustler being propped by U.S. Gubermint (taxpayers) and fancy pants elites buying Hyundai's and Audi's and Chinese flat screens poor Japan is in a world of hurt.

Remember how hard Ray La "Hood" hit Toyota over recalls?  Yeah, like that.

Now that TPTB are in bed with China for everything from plastic crap at WalMart to CAT to John Deere to 100 years of agricultural research paid for by the U.S. taxpayer Japan is in full "U.K." syndrome.

 

Mon, 06/20/2011 - 01:53 | 1384121 Yen Cross
Yen Cross's picture

+1 What ever happened to that "Cresent Wrench" La Hood?  Crustler is propping up Fiat as we speak. Or visa versa?

Mon, 06/20/2011 - 01:56 | 1384131 disabledvet
disabledvet's picture

just for starters.  "Look at the battle between the State of Washington and South Carolina."  This is what we get when we get "bailouts."  Corporate USA hasn't even woken up to the truth--the whole "world trade" fallacy.  "Chimerica" is no "chimera" of course--but the "special-ness" of this relationship is based upon that oh, so Chinese of traits:  RELATIONSHIPS!  Rationality runs deeper in the American marketplace than any other--well beyond the point of madness really.  Still--blood lines always run deeper.  No less a man than Barak Obama himself should understand that.  "His mother was from Kansas."  Reminds me of story of young boy "Island hopping" and "having to be talked out of wearing teath around his neck."

Mon, 06/20/2011 - 02:32 | 1384181 Yen Cross
Yen Cross's picture

  Nice post. Dav.

Mon, 06/20/2011 - 01:47 | 1384117 nathan1234
nathan1234's picture

Met a Japanese friend who likened the Fukshima incident to the rebuilding of Japan after Hiroshima & Nagasaki. Said the present generation have no skills other than computers and books. Now they have realised that others skills like Farming , Fishing etc are important for their survival as jobs have now become scarce.

Mon, 06/20/2011 - 02:06 | 1384138 HungrySeagull
HungrySeagull's picture

It will be very difficult for me to readapt to a life without technology. In those days it's long slow summers with ball game at night followed by winter working to keep the trolley line clear on the corner so that the cars dont have to deplete the sand box so fast.

Especially knowing the newspaper now is full of shite and the telly even worse.

 

Maybe I drop wood for a bit of food and warmth on the left overs after the village quit buying the prime stock wood cut for the day.

Mon, 06/20/2011 - 04:03 | 1384250 lucylary
lucylary's picture

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Mon, 06/20/2011 - 05:13 | 1384289 BarrySoetoro
BarrySoetoro's picture

Two factors that weren't mentioned:

1. In the aftermath of the triple-crown earthquake/tsunami/meltdown, Japan was importing A LOT of coal and oil to keep the lights on.  This undoubtedly skews their trade balance significantly. 

2. From personal experience at my own company in attempting to get shipments from Japan, I discovered that in the mad rush to get coal into the country, ships were being paid a premium to haul coal into Japan.  Finding a boat to haul goods out of the country was incredibly difficult.

Mon, 06/20/2011 - 05:31 | 1384305 Yen Cross
Yen Cross's picture

 So you defaulted/re-negociated contango? I doubt it! I know coal costs from Pan pacific.

  Boats are applenty. I ( have plenty of them!

Mon, 06/20/2011 - 05:32 | 1384306 Yen Cross
Yen Cross's picture

Mad.

Mon, 06/20/2011 - 05:32 | 1384307 Yen Cross
Yen Cross's picture

pissed off!

Mon, 06/20/2011 - 08:42 | 1384492 Hobbleknee
Hobbleknee's picture

So all those extra boats bringing in coal were going back home empty?

Mon, 06/20/2011 - 15:08 | 1385824 BarrySoetoro
BarrySoetoro's picture

I doubt it, but considering that the West Coast of the US isn't exactly on the way between Japan and Australia...

Mon, 06/20/2011 - 05:21 | 1384297 Yen Cross
Yen Cross's picture

 Ok, I see where this is going now. It makes sense.

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