Abenomics Suffers Crippling Blow: Economy Sputters As Inflation Soars, BOJ QE Delayed Indefinitely

Tyler Durden's picture

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...


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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Oldwood's picture

Sounds like everything is going as planned, right?

NoDebt's picture

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.

cifo's picture

Or Digital Research, for the younger generation :)

Luckhasit's picture

I was waiting for a betamax joke.. zing!

Son of Loki's picture

So I'm guessing the NIKKEI was up 4% on the horrible economic reports?

AllWorkedUp's picture

Anyone still think the US GDP at -1% was bullshit?

Japan just gave us a glimpse of our future.

yogibear's picture

First Japan implodes, then some time later the US.

knukles's picture

Guys, the real action is gonna be the China implosion.
Probably the biggest, least appreciated and thus, biggest surprise...


Proof, AbeObanoKrugoKeynesioanism Works!

Harbanger's picture

You've been messin round with Pythia, haven't you?

BrosephStiglitz's picture

I agree knukles.  I have been lining up trades to take advantage of this all week.

Bunga Bunga's picture

So what, stocks will go up.

disabledvet's picture

well that's just it ain't it?

"who cares if you nuked to the dollar to make it happen"?

not the best film in the world. here's the wiki:

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.

Groundhog Day's picture

This should be good for another 10-20 spx points tomorrw

I MISS KUDLOW's picture

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

disabledvet's picture

I think Great Britain is Japan's biggest outside investor actually.

hangemhigh77's picture

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.

fonzannoon's picture

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.

Slave's picture

I think we've done all that and now we're on the final step.

Spitzer's picture

That was the 1st stimulus. The George Bush stimulus checks

MachoMan's picture

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. 

NoDebt's picture

"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?

disabledvet's picture

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.


marginnayan's picture

USD/JPY going down. Fuck the banksta gang. HeeHee....HeeHee

yogibear's picture

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.

khakuda's picture

That would be my bet as well.

AdvancingTime's picture

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.


yogibear's picture

"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.

Redneck Hippy's picture

Not too mention all the Chinese money smuggled out through Macau to places west.  There's a reason the yuan is tanking.

khakuda's picture

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.

Serenity Now's picture

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.)

Tortfeasor's picture

Remind me, when did equities crash in Zimbabwe

khakuda's picture

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.

i_call_you_my_base's picture

Bullshit tricks. No surprise.

hangemhigh77's picture

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.

yogibear's picture

The Federal Reserve comes in again with their back-door Belguim buying.


RaceToTheBottom's picture

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....

Spungo's picture

Hopefully Krugman will seppuku himself because his praise of Abenomics proved to be retarded

yogibear's picture

"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?

Make_Mine_A_Double's picture

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.

hangemhigh77's picture

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?

yogibear's picture

These Federal Reserve banksters, including Bernanke should be tried for High treason.

hangemhigh77's picture

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!!!!!

yogibear's picture

The US isn't far behind. 

Yellen will just follow Bernanke's Full retard QE.

Hyperinflate baby!!!

A US Federal Reserve bankster production.

hangemhigh77's picture

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!!!!

orangegeek's picture

Another government fuckup.  Big surprise.   Nice knowing you.  See you never.

Yen Cross's picture

    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)