Bank Of Japan Prepares To Blame El Nino For Spending Collapse

Tyler Durden's picture

Just in case you were not convinced what a fragile fallacious lie the entire world's status quo has become, the Bank of Japan just provided one more straw on the camel's back of faith-based investing. As Bloomberg reports, BoJ officials are concerned that cooler-than-normal weather triggered by El Nino this summer will curb spending and weigh on an economic rebound. The Japan Meteorological Agency this week forecast a 70% chance El Nino will occur, the highest since its last occurrence in 2009, bringing lower temperatures that could continue through autumn - and, according to Dai-Ichi, could lower growth by as much as 0.9 percentage points. "We can't rule out the potential that the El Nino this summer causes unexpected damage to Japan’s economy," Nagahama said... the first pre-blamed weather forecast from a central bank we are aware of. Of course, given the dismal retail sales data this morning, we suspect a cooler-than-expected summer will be the scapegoat for a lack of economic escape velocity in the US also.

 

As we noted, just this week...

Any day, week, month, quarter, year now... that J-Curve 'recovery' will come bounding over the horizon and save the Japanese economy from its inevitable death spiral... for now, presented with little comment aside for historical confirmation (as even Goldman Sachs has now given up on hope of a bounce), Japan's largest (seasonally-adjusted) Balance of Payment Trade Deficit ever...

 

Not much sign of recovery there - weather or no weather...

And so - just in case the faith in Abenomics is lost this summer - the BoJ comes out with pre-blamed weather to lay the foundation for new excuses... (as Bloomberg reports)

Bank of Japan officials are concerned that cooler-than-normal weather triggered by El Nino this summer will curb spending and weigh on an economic rebound after a sales-tax increase, according to people familiar with the matter.

 

The officials are watching out for potential weakening in consumer spending and sentiment that could add to risks facing the economy from weak exports and developments in Ukraine, according to the people, who asked not to be named because the discussions were private. With an export recovery that could be gradual, the effects of El Nino require close monitoring, the people said.

 

The Japan Meteorological Agency this week forecast a 70 percent chance El Nino will occur, the highest since its last occurrence in 2009, bringing lower temperatures that could continue through autumn. Dai-ichi Life Research Institute economist Toshihiro Nagahama sees a risk that cooler weather could reduce growth by as much as 0.9 percentage point in the third quarter.

 

El Nino refers to a periodic warming cycle in the central and eastern tropical Pacific Ocean which can lead to major weather pattern shifts, including cooler-than-normal sea surface temperatures in the western Pacific. This can cause lower temperatures, higher rainfall, and less sunlight in Japan when it occurs during the northern hemisphere summer, according to Japan’s weather agency.

 

“We can’t rule out the potential that the El Nino this summer causes unexpected damage to Japan’s economy,” Nagahama said. “This could affect the decision to raise the sales tax from October next year as the growth rate in July-September is critical for that judgment.”

As Scogen notes, perhaps front-running this pre-blame...

Our analysis finds that real household disposable income is weaker now than in 1997, and this may dampen consumer sentiment, leading to increased concern about the success of Abenomics.