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Moar QE Hopes Dashed As Japanese GDP Rebounds To Best Since Q3 2011
Following last quarter's biggest miss in 18 months, Japanese GDP surged to its biggest beat in 3 years. This is the same kind of reflexive (and at that time entirely unsustainable) bounce that was seen after the Tsunami in 2011. Of course the big problem is that this removes much of the crutch for further QQE in July that so many have been hoping for. The initial pop in the Nikkei has faded rapidly into selling pressure and USDJPY is also losing ground... good news is once again, terrible news for equity investors.
GDP bounces just as it did after the Tsunami following a big miss... it seems this level of bounce has been unsustainable for the last 14 years...
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and the full breakdown...
The reaction
source: http://www.esri.cao.go.jp/jp/sna/data/data_list/sokuhou/gaiyou/pdf/main_1.pdf
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Buying in advance of the tax increase?
correct. my wife in tokyo told me she was going to stock up and if she did it; her friends did it; and if her friends did it all the housewives did it...
jb
Agreed. Which means that for for Q2 the QonQ number will be an absolute shocker.
Wei tu confused
That probably had something to do with it, but it's probably also just a change in the way they calculate it, adding more stupid shit into the final number that wasn't counted before, giving the illusion of growth when there is none. Same thing the US does. GDP not growing? No problem, change the way it's calculated. Same with inflation, unemployment, etc
"Whatever!"
Less equity levitation, moar Fukushima radiation. Bullish!
Kuroda is speaking in about 4 hours, so it should be interesting to see how he jawbones the GDP print.
Yeah, the word "growth" works so well when talking about Japan.
Fail.
Nothing but short term noise here.
This brings to mind Sony's earnings disaster....doesn't compute
300% debt to GDP will go boom at some point.
What's next? A Chinese Naval Blockade?
Historically speaking public debt to GDP north of 200% has a probability of default between 0.8 and 0.9. At least Japan doesn't have external debtors. As long as the government can hold the country together they will be okay.
The Chinese will probably use it to advantage though, you're right.
The only real question is how long this can go on. Japan is the most indebted developed country in the world and its future prospects are dim and getting worse. The effect of a lower yen on exports is beginning to wane. When the yen drops faster than the Japaneses stock market rises it will no longer protect the wealth of those invested within its borders.
It is only a matter of time before the yen becomes worthless and as inflation begins to take root it will place upward pressure on Japanese bond yields and raise the cost of government to service its massive debt.It appears domestic investors have already started venturing overseas for higher yielding assets. When this turns in to a tsunami of money fleeing Japan it will constitute the end of the line for those holding both JGBs and the yen. More on this subject below,
http://brucewilds.blogspot.com/2013/08/japans-economy-going-forward.html
Japanese Love Doll sales skyrocket [boosting the GDP] as peeples stash their yen in Hard Assets:
http://www.kanojotoys.com/real-love-doll-ange-p-471.html
150mm, LOL.