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Abenomics Suffers Crippling Blow: Economy Sputters As Inflation Soars, BOJ QE Delayed Indefinitely
Following last night's record plunge in Japanese retail sales, tonight was another slew of crushingly bad data for Abe and his motley crew of money printers to reflect on. First Household Spending cratered 4.6% YoY - its biggest drop since the Tsunami (and markedly worse than expectations which were bad enough due to the tax hike repurcussions). Then, Industrial Production tumbled 2.5% MoM - its biggest drop since the Tsunami (considerably worse than the 2.0% drop expected and the slowest YoY growth in 8 months). While this would typically be the kind of bad news that is great news for QQE-hopers, it was disastrously capped by a surge in Japanese CPI (well above BoJ target 2% levels) crushing moar-easing hopes as Barclays see no further easing in 2014 (and even Goldman pushes any hope off til October at the earliest).
First Houshold spending missed and plunged...
Then Industrial Production missed and plunged...
And then inflation took off - as Goldman so handily exposes below, adjusted for the tax-hike, this was a major spike in inflation...
We accordingly revise our outlook for the BOJ’s next easing action to October 2014, from July 2014 previously.
and then Barclays gets even more bearish...
- BARCLAYS SEES NO FURTHER BOJ EASING IN 2014 IN 'BASELINE' VIEW
Goldman sounds glum, having already given up on the J-Curve...
We get the impression the correction is larger than the government anticipated, but in line with our expectations. With domestic demand likely to fall, we see external demand leading growth in FY3/15. We highlight risk factors in the form of protracted weakness in China and other Asian economies and a decline in corporate Japan’s structural export capacity.
Time to stock up on Depends...Time to blame El Nino again
The reaction so far...
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Sounds like everything is going as planned, right?
I have a fork. Now I know where to stick it.
Japan is done. In 5 years they'll be as irrelevant to the global economy as Unisys is to the modern computing world. (Yes, I just made an obscure Unisys reference)
And their bond yields will be .0000000000001% with plenty of people still buying them.
Or Digital Research, for the younger generation :)
I was waiting for a betamax joke.. zing!
So I'm guessing the NIKKEI was up 4% on the horrible economic reports?
Stagflation bitchez!
Burroughs!!!!!
Anyone still think the US GDP at -1% was bullshit?
Japan just gave us a glimpse of our future.
First Japan implodes, then some time later the US.
Guys, the real action is gonna be the China implosion.
Probably the biggest, least appreciated and thus, biggest surprise...
Proof, AbeObanoKrugoKeynesioanism Works!
DontforgetBernankonmics...
You've been messin round with Pythia, haven't you?
I agree knukles. I have been lining up trades to take advantage of this all week.
So what, stocks will go up.
well that's just it ain't it?
"who cares if you nuked to the dollar to make it happen"?
https://www.youtube.com/watch?v=tPfXBqXJ_o4
not the best film in the world. here's the wiki:
http://en.wikipedia.org/wiki/Prompt_critical
the math is easy enough to figure..."kinda exciting actually."
not the chemistry or the engineering however.
it's a little too late to say "keep it small" now.
This should be good for another 10-20 spx points tomorrw
sometime later,,,,,you mean an hour or minute or because our treasuries go negative yield on "flight to quality"? .....when japan goes its the final major play for this crisis in the unitedstates
I think Great Britain is Japan's biggest outside investor actually.
That's EXACTLY right. AND we are accelerating into it. This crash is going to be epic. Then when it comes all these stupid sheeple will FINALLY realize WHY our beloved government has been ARMING THEMSELVES TO THE TEETH. Funny how you figure shit like that out in a friggin MICRO-SECOND when the DHS pigs throw down on you.
If the point of QE is to lower interest rates to spur economic growth and now interest rates are imploding on their own, then what is the point of doing QE? Why not do QE and target purchases towards stock index funds for a while? When that fails we can finally start sending people checks in exchange for sitting at home and scratching their hairy asses. Then when that fails we can finally detonate this bitch.
I think we've done all that and now we're on the final step.
That was the 1st stimulus. The George Bush stimulus checks
Bingo. I always harp on those checks, but it was a feeler. As I recall, most all of those checks went to paying down debt. As a result, no more checks and they knew the numbers needed to actually spur the economy would be magnitudes larger...
They're also impotent to jigger with the minimum wage because the rungs of the underclasses are so tight, meaning if you raise the minimum wage to $15/hr. ($30k/yr), then you're going to get people leaving more important jobs (with more responsibility) to go flip burgers. Hell, if they'll raise it to $20/hr., I might go flip burgers... put on some head phones and put the salt on them fries (walmart door greeter, bank teller, stocker, tv salesman at best buy). If the fry cook is pulling in $20/hr., then what's the "manager" pulling in, $50-60k/yr? If a fry cook manager makes $50k/yr., then does a physician in general practice making $110k/yr. (and $250k+ in debt) go to medical school? If the minimum wage is doubled then do the legions of able-bodied people presently choosing not to work actually go look for a job?
If they do care for anyone to pay down the debt, then it will have to be through the indentured servitude most folks refer to as work, which is going to create a myriad of other problems, both intended and unintended.
"then what is the point of doing QE?"
To monetize Keynesian wet dream government stimulus spending. Where they gonna get the money otherwise? Taxing people more? Hah!
You silly goose.
Fake money to pay for non-productive projects. What could be better than that?
actually "what is the point of saying this will delay QE" as these total phucking idiots have in actuality said?
and the answer is "because we have no phucking clue what we're talking about or what we're doing."
so if you're belief is "this will only delay QE for Japan" what does that mean their thinking is vis a vis the USA?
i would argue they think "this QE thing in the USA is the best thing ever and we want MOAR!"
so I say again "why are those treasury yields so low?"
and yes...I am still long treasuries.
i long ago stopped trying to explain this to the full retard money management folks. don't even get me started on their policy execution "think alikers." those folks only know MOAR (squared!)
now "back to your bikini beach volleyball on the moon" regularly scheduled programming.
https://www.youtube.com/watch?v=R7iX9X5-RQ0
USD/JPY going down. Fuck the banksta gang. HeeHee....HeeHee
First Japan then the US,
Japan is the Federal Reserve's PhD Keynesian grand debt and printing experiment.
As stated above It give us a glimpse to our future. Ours will be far worse.
That would be my bet as well.
Japan has gone to far down this path. The writing is on the wall. Japan is facing a wall of debt that can only be addressed by printing more money and debasing their currency. This means paying off their debt with worthless yen where possible and in many cases defaulting on promises made. Japan's public debt, which stands at around 230% of its GDP and is the highest in the industrialized world.
The moment the Japaneses stock market fails to rise enough to offset inflation this will turn into a tsunami of money fleeing Japan and constitute the end of the line for those left holding both JGBs and the yen. This has been a long time coming and I contend the cross-border flow of money leaving Japan is why some stock markets have remained so resilient . When Japan crumbles it will be felt across the world. More on this subject in the article below.
http://brucewilds.blogspot.com/2014/05/japan-sliding-towards-abyss.html
"The moment the Japaneses stock market fails to rise enough to offset inflation this will turn into a tsunami of money fleeing Japan and constitute the end of the line for those left holding both JGBs and the yen. "
THen the US later.
Not too mention all the Chinese money smuggled out through Macau to places west. There's a reason the yuan is tanking.
Seriously, given the policy actions that they have taken, isn't this exactly what anyone with even half of a brain would have expected?
Similarly, with a policy of leaving interest rates at zero, remember that is zero, for a period of six years with promises of years more to come, the US Federal Reserve should be expected to create the biggest speculative equity bubble ever, followed by one of the largest crashes which will ultimately reveal massive capital misallocation and be devastating for the economy thereafter.
Why is any of this surprising? The Fed is telling people they want to raise their cost-of-living and they are doing a very good job, as they deny it is happening. Why people aren't screaming and asking how can this be good is beyond me.
That is precisely how it played out with the housing bubble, and NOBODY saw that coming. (Even though plenty of people did see it coming.)
Remind me, when did equities crash in Zimbabwe
Nominally, they didn't. But those prices represented the death of the currency and hyper inflation, not real increase in value so what does it matter? The economy suffered from massive and devastating inflation which caused it to malfunction, misallocate, not produce and destroy value and productivity. That is all you need to know about the effectiveness of these policies. Don't confuse nominal increases in price with the creation of real value.
If you are arguing that the stock market could double in nominal price, I'm not arguing with you. If you read my original post, that is actually what I am saying is/will and should happen. Just don't confuse the death of money with real value creation.
So much for Godzilla-sized QE advocated by this clown:
http://finance.yahoo.com/blogs/breakout/godzilla-sized-qe-could-help-bri...
Bullshit tricks. No surprise.
This could implode the carry trade tomorrow and crash out the market. But wait, I'm sure Belguim will buy the shit out of the dollar.
The Federal Reserve comes in again with their back-door Belguim buying.
Thank god we have the belgium on our side.
Imagine what would happen if they were not there?
They are truely doing god's work....
Hopefully Krugman will seppuku himself because his praise of Abenomics proved to be retarded
"So much for Godzilla-sized QE advocated"
See Yellen, DUdley, Evans, Bernanke, it's what what happens when you keep printing like a MoFo.
The US federal Reserve is still QEing through the back-door. Die by hyperinflation.
Bernanke said hyperinflation always occurs after wars. How many wars has the US been involved in, stacking up debt?
Nippon is not going to coast into a soft or even hard landing.
Those fuckers are going Super Nova when they lose the handle on the Yen.
I just get the feeling we are close to the inflection point.
Jap Black Swan coming. Yellen is gonna get shit on by a Jap Black Swan. Gee, how did this happen? Maaaaaaaybe PRINTING gazillions of fiat paper had something to do with it? Ya think?
These Federal Reserve banksters, including Bernanke should be tried for High treason.
Just like when Reagan went to Japan and gave a speech for 3 mil after he was out of office, the pay off for letting the Japs steal our R&D and dump their shit in this country and gutted the UCC codes. Bernanke is getting 250 large from all the appreciative banksters who made BILLIONS from his thievery and lying for standing in front of a microphone and expelling foul gas and shit from his pie hole. It's like watching a retard talk about E=MC/2. You just want to throw a shoe at him and tell him to take the damn money but STFU!!!!!
The US isn't far behind.
Yellen will just follow Bernanke's Full retard QE.
Hyperinflate baby!!!
A US Federal Reserve bankster production.
They have no choice, if they let it deflate it's "hang me now". If they hyperinflate it's "hang me later". All I care about is that we HANG ALL THESE MOTHERFUCKERS!!!!
Another government fuckup. Big surprise. Nice knowing you. See you never.
I squared up my usd/jpy position last Friday. I'm going to see how it opens next week before getting back in. It looks llike there could be a nasty short squeeze coming. (taking the stops under 101.00)
Wow Fuck. Does Asia have so many problems !!
"Asia is the Africa of Asia" - Yogi Berra
And Yellen says: "gee I didn't see this coming. No one could have seen this coming" she said as they dragged her gnome ass up to the gallows and hanged that dumb bitch.
JPY is down to 101 and some change.. When that shit breaks below 100, i will grab a cold one and start my popcorn maker.
Serious question. Now Gold doesn't even go up when that breaks down ??? I really have no clue any more what anything means or reacts to. The whole thing is fucked up.
I don't know either. I expect to see a surge then have it slammed like a DDT tomorrow. Go physical brother.
<< Go physical brother. >>
I did...I bought more SLV today. Although the market is at all time highs, there are some good bargains of underpriced stuff out there. Silver is one of them (come on...$19 bucks is way too low!) and some oil drillers got beaten down too low. I would not be surprised if oil is at least $125 by the end of year. Most drillers predict that I read in their annual reports...due to inflation and geopolitical turmoil. For example, look at Libya - it's total chaos now and the news reports show Shell, TOT, etc pulling out completely.
The lawyer down the street uses 25% of every paycheck to buy physical slv, gld, pall, and stores it in their law firm vault. He has one heck of nice collection of Perth Mint silver stuff. If I had a vault I would do the same.
You do have a vault. It is just that your vault is paper, just like your silver.
It's not a serious question, because the yen is going up. Duh.
I come to Zerohedge to be with the smart people!
Buy gold! The Keynesian collapse is coming!
I hope they go and find Krugman...
Cable is next....
Gold isn't going up because it manipulated by the Keynesian fascist Federal Reserve bankster global conspiracy that is driving the world's currency system to its ultimate collapse! Don't you know anything? You need to read more Zerohedge. Then all will become clear, and you'll be one of the smart people!
Like me and yogibear
I knew something absolutely terrible had happened when I saw S&P Futures down 2 points. My God!!!
I don't think you realise the gravity of the situation. The yen is up 0.19 percent.
After Japan dies the Federal Reserve's Keynesian death, the US is next.
Stagflation
Deathflation
Krugflation...
Greensflation...
Bernankation....
Yellation
Bit worried about the AUD with China, Japan...thus SEA on contraction
What a load of old bollox. Japan's doing just fine. Stagflation my arse.
Chinese central committee have to be saying to each other "patience, patience".
These stories about Japan are probably the most important posts appearing on Zero Hedge. Here we have a country that has the third most important economy in the world and it's absolutely cratering with no hope in sight. This was inevitable given Japan's demographics and was easily foreseeable 25 years ago, but most people elected not to pay attention. This teaches us something very curious about human behavior. People can know they're headed for the cliff, know their strategies are not going to work, and simply carry on with business as usual anyway because they are unable to collectively behave any other way. Pray for insight and the grace to change.
"bwaaa haaa haa haaaa!" i read this article and that was the only way I could respond. fucking idiots. all of them. every central banker who thought he could push inflation higher without creating standard-of-living-crushing stagflation. c'mon ya'll! where's that nominal GDP targeting movement? it has to work!! there's a special place in hell for fuckers like those and their good intentions. i'd pay to watch them suffer a day in it.
No moar printing? WTH - it is working well so far! Wait until the market raises rates as CONfidence in the CB and Gov't evaporates even moar and carry trade Yen comes home to roost.
Why is it so hard to equate BS to Guillotines????????????????????
Tsunami - a massive and irresistible flow that eventually recedes, leaving total devastation in its wake. Kind of a fitting description for
Abenomics too...
Raise the taxes, devalue the currency, and increase food costs with QE.
Gee, wonder why spending is down and prices are up?
Do they really expect this to work?
Again "next up Great Britain."
We'll see what's left of the media if that one blows...
From the Price is Right "UK, Come on Down, Representing the UK tonight George Osborne. George you were at the meeting in Copenhagen How are your friends in Bilderburg?"
Careful what you wish for.
The UK is still the biggest foreign investor in the US economy.
Dominos.
there be some angry stupid people on this thread. oh. it's zerohedge. of course!
So you're telling me the weather is bad in Japan too?
Summer weather is coming.... all around the world
"This somewhat rough approach is unusual to say the least, and may seem like every socialist’s dream scenario. But one should not be fooled into thinking that Shinzo Abe’s heart necessarily bleeds for the average Japanese worker. This is simply part of the government’s ongoing attempt (for about a year now), to manufacture inflation in Japan – something that ultimately will NOT benefit the average consumer.
The government’s approach rests on the following assumptions: Higher wages will tend to induce consumers to spend more, which will – at least theoretically – allow companies to hike prices, increase earnings and thus afford salary increases, which will in turn lead to higher consumption and so on and so on, in a virtuous cycle that is meant to pull Japan out of the low growth, deflationary situation it has been mired in for a few decades now.
The publicised goal of this approach is to produce enough inflation to kick-start the Japanese economy and send it onto a self-sustained growth track. However, NipponMarketBlog has no doubt that the real and underlying goal is to create enough inflation to be able to ‘monetize’ the government’s enormous debt."
http://nipponmarketblog.wordpress.com/2014/03/24/impatient-shinzo-abe-is...
"Industrial Production tumbled 2.5% MoM" I read somewhere that machine parts and such were on a surge I commented that it was gearing up for war with China. I wonder if someone is downplaying the numbers.
It would help Japan to have a military distraction just now
Abe was hoping for consumer demand caused inflation...
Instead he got costs increase caused inflation...
This must explain futures dropping
Last I checked, they were down a staggering .03%
Just a pause while the spinmeisters lube their keyboards
Japan... CRASH! Europe... CRASH! England... CRASH! China... CRASH! Russia... CRASH! Rest of BRICs... CRASH! Australia and Canada... CRASH! USA... CRASH!
Hmmm... what went wrong? Are we rhyming with history? Who is responsible for this? What do we do now?
I'm hungry. I'm thirsty.
The only good news is that Japan will get the blame when the US collapse follows soon after the Japanese collapse, rather than vice versa.
Gee Wally,
What a bunch of idiots. All they have to do is change the way inflation is measured and make it go away like US round eyes have done.
the boj doesn't have the big hairy balls it once had. trying to weaken your own (non-world-reserve) currency while running a trade deficit is a recipe for disaster. i guess nobody told abe that.
I am glad we have Japan to see what the US will become.
Get Kruggy wit it