The Only Chart You Need To See To Trade Japan's GDP "Beat"

Tyler Durden's picture

While Japan's Trade balance missed expectations once again (bigger deficit than hoped or expected), the flashing red headlines of the night belong to Japan's 1.6% QoQ GDP print (better than expected)  - the 'best growth' since Q3 2011. The initial reaction was JPY weaker, which meant Nikkei higher (and oddly JGBs rallied too). But... and it's a big but... Japanese consumer spending shot up by 2.2% in Q1 - the biggest on record... matched only by Q1 1997, the quarter before Japan's last tax-hike decision. What happened the quarter after that? Take a look...



Now what kind of damage will that do to Q2 GDP? Let's take a look at what happened to Japanee stocks after the same surge in "growth" in 1997....


So are we going to get the bounce of euphoria followed by the 40% plunge of reality?

And in case you think we are over-worrying... Goldman's even more worried...

We expect 2Q 2014 GDP to contract on dropout of pre-tax-hike demand:


We estimate that real GDP will contract by over 4% in Q2 2014 as rush demand to beat the consumption tax hike drops out. Real wages have fallen markedly amid sluggish nominal wages, the higher tax burden on households, and rising consumer prices.


This could dampen consumer sentiment and negatively affect domestic demand over FY14 as a whole.

It's never different this time...

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Yen Cross's picture

   Sell the news/ That is all?

  Mrs.Watanabe has a gun to my head>

MeMadMax's picture



The next big red bar thingy is gonna be really big...



Yen Cross's picture

  Wana take bets on the bids @ 102.35 MMM?

  ??? waiting

buzzsaw99's picture

Watanabe has been making out like a bandit:

Japan's gross external assets rose 20.4 percent to 797 trillion yen, up for a fifth consecutive year, as the weak yen boosted the appraised value of external assets by 105 trillion yen from a year before, the ministry said...

just btfd, btatfh, hell, just BUY ANYTHING

ps: mrs watanabe love abe & kuroda long time

Yen Cross's picture

  look at the 2-5 year  Australian bond chart buzz. It's inverted from the 10 YEAR.

buzzsaw99's picture

Mrs. W luvs her some leeverage(sic).

Take my marker and put it all on six the hard way. lulz

Yen Cross's picture

 If there were an honest government on 'Planet Earth'. (past tense)

  Except those $ 100k<per semester<  art and poly sci kids. They're exempt.


fonzannoon's picture

Yes to the bounce of euphoria.

jim249's picture

Sounds a whole lot like the last export numbers out of China. They were way up. So one has to wonder if China is channel stuffing their products overseas. The MSM plays it as the world economy is soaring. What a bunch of BS.

ArmyofOne's picture

Who cares?  Its all about the headlines and squeezing the shorts. 

GooseShtepping Moron's picture

Just hike the taxes again next quarter. Problem solved.

suteibu's picture

But the current Japaneses leaders are smarter than those guys back in 1997.  And besides, Christine Lagarde said raising the consumption tax was the right thing to do.

fzrkid's picture

none of this really matters when you got central banks around the world manipulating the markets. Few if any histrical trends have 'predicted' the recent direction in the market. I am about ready BTFATH

TheRideNeverEnds's picture

I am going into this week scary long Yen so the probability is high of USD/JPY going sharply higher.....

Yen Cross's picture

    Your bet is probably safe. Take a  look at t-10 yields.

    I wonder who will unwind those 10 year German Bunds? (down 4+% Friday)

  The SNB and Bundsbank use 2 year notes , to smooth the yield curve. (refresh F/X holding ratios)

Bohm Squad's picture

There was an interesting article on here the other day about the EURJPY breaking below its 200dma and then double digits for the USDJPY from there...

Yen Cross's picture

 Usd/jpy is moving lower. I'm not sure what the depth of sell-side means to you?

TheRideNeverEnds's picture

from your mouth to gods ears.

ebworthen's picture

Euphoria, because with an aging citizenry - raising taxes and debasing the currency always brings about euphoric spending.

Yen Cross's picture

Ebbie!  Lesson #1 in trading is never trust anyone!  (NEVER)  Lesson #2 is >Research all your ideas< before you present them.

   We're just having fun on Z/H.

Miffed Microbiologist's picture

I thought the number one rule was never marry your position and,if you have a tendency to do so, quit trading before you find yourself homeless. I guess trusting no one should have included myself.


Yen Cross's picture

          That comment is a "mindbender" Miffed.

  You violated rule (#1) before you did your "due diligence".

  I clearly stated: Do your homework, before proceding forward.

BeetleBailey's picture

FX out of Aucklands says bullish STAWKS, USDX in a 81-79 range....

Hedged here USD/JPY @ 102 and GBP/JPY @ 172....

<Scooby Doo head yank>

Yen Cross's picture

  Nice work B/B. I like the hedge as well. GBP/JPY is ripe for a fall on the cable side. (usd/jpy could be range bound) I've got a nice position myself.

 Gilt yields are on par with everyone else and Carney isn't raising rates....

ThirdCoastSurfer's picture

I so want to short this puppy but since I will only short stocks listed on US exchanges for tax reasons, I just know that "they" are waiting out there for me to do just that.

AdvancingTime's picture

 Japan continues to slide towards an economic abyss with each passing day. 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.


A Dollar Short's picture



Tax HEIST'S, FROM HELL.  I hate those..

Last of the Middle Class's picture

If each one of your little fiat thingys is worth nothing then you can have a gazillion thingy GDP and everyone is happy and proud. That is until they try to buy something with their worthless fiat thingy and realize they're going to frigging starve because of it. I just hate it when this happens. Meanwhile, i'm sure the nuclear reactor clean up thingy is doing fine and all's well. Aside from the fact a complet ocean is now contaminated. Life is good.