OMGodzilla! Japanese Macro Data Revisions Even More Disastrous Than Expected

Tyler Durden's picture

If the US equity market's reaction to the worst jobs data of 2014 is anything to go on; Japanese stocks should be a double overnight given the catastrophe that just printed. While the initial prints for the post-tax-hike period were bad enough (record worst levels in most cases), the revsions are even worse. Drum roll please: 1) Trade balance miss, worst in 4 months; 2) GDP -7.1% miss, revised down, worst since Q1 2009; 3) Business Spending/Capex -5.1% miss, revised down, worst since Q2 2009; and 4) Consumer Spending -5.3% miss, revised down, worst on record. But apart from that, as the Japanese leaders noted last week, "the recovery is heading in the right direction."

 

 

Charts: Bloomberg

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A gentle reminder why Abenomics will never work... (or the terrible missing J-Curve via Patrick Barron of the Ludwig von Mises Institute of Canada):

Perhaps I can shed some light on Japanese Prime Minister Abe’s missing J-curve; i.e., why Japan’s trade deficit seems to be increasing rather than decreasing after massive monetary intervention to reduce the purchasing power of the yen. Monetary debasement does NOT result in an economic recovery, because no nation can force another to pay for its recovery.

 

Monetary debasement transfers wealth within an economy by subsidizing exports at the expense of the entire economy, but this effect is delayed as the new money works it way from first receivers of the new money to later receivers. The BOJ gives more yen to buyers using dollars, euros, and other currencies, as the article states, but this is nothing more than a gift to foreigners that is funneled through exporters. Because exporters are the first receivers of the new money, they buy resources at existing prices and make large profits. As most have noted, exporters have seen a surge in their share prices, but this is exactly what one should expect when government taxes all to give to the few.

 

Eventually the monetary debasement raises all costs and this initial benefit to exporters vanishes. Then the country is left with a depleted capital base and a higher price level. What a great policy!

 

The good news is that Japan does know how to rebuild its economy. It did it the old-fashioned way seventy years ago–hard work and savings.

And as Goldman noted, why the "money illusion" is failing...

In making an assessment of the economy, however, we sound a note of caution about overplaying the positive effects of a small increase in nominal wages in an inflationary climate. We believe the outlook for consumption should focus on the more negative effects of declining real wages. In addition, once people wake up to the illusion of money, its impact will also fade.

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And yes - we have run out of title superlatives for the economic shitshow that is the post-euphoria Abenomics surge...

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ekm1's picture

I am stunned Japanese actually reported this 

Japanese mentality?

WayBehind's picture

The japs are still lying. In reality it was even worse

Bangin7GramRocks's picture

They are all rotting from the inside. Why the fuck would they care about reality, honesty and truthful data? I say, ride it out until the tumors take over.

max2205's picture

Japan is a shit hole...becoming the next Detroit in 3.2.1

remain calm's picture

Krugman is squinting while he furiously jerks off

papaclop's picture

That idiot Krugman thinks the USA should be following Japan's money creation plan. He is so devoted to Keynes he can't see what's obvious to anyone with half a brain.

ekm1's picture

China, EU, USA no better

Spitzer's picture

 

EU- net creditor, no trade deficit

China- creditor

Japan- creditor

USA- debtor

The US has more debt then the EU combined yet the EU as a whole has a higher population then the US.

 THE SEPPO DOLLAR IS THE WORST OF THE BIG CURRENCIES BY ALL MEASURES. PERIOD.

 

 

spencer's picture

Let me see - that's why it's going up right?

Strongest of them all?

Stoploss's picture

Love in an elevator.

Livin it up, as their goin down..

Lewshine's picture

Why don't they just do what the good old USA does - Tell a lie so big it could only be the truth! Bwahahahahahahaha

booboo's picture

Tsunami alarms inside those Japenese pension funds are banging away. The tide of money being drawn away into the stock market shoud be the tell of the big wave of defaults soon to swamp over the walls. Poor bastards are so conditioned to accept the governments edicts that they lack the ability to question.

TheSecondLaw's picture

Sounds like the Nips and the Yanks have a lot in common.

holdbuysell's picture

It's a cry for help that TPTB hurry up with the global reset via external means so that the current leadership isn't blamed.

ekm1's picture

Something tells me they are sticking it to Obama and the Fed for printing dollars.

They are saying: Do not believe western data.

Here's the real one

WillyGroper's picture

The reset will consist of human beings, not monetary.

himaroid's picture

See that exit down at the corner of this crowded theater honey?

Head that way.

AdvancingTime's picture

The money leaving Japan may be flowing to a market near you. 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

himaroid's picture

Heck yes. I wanted to reload more tbonds before this happened, but I expect those that I hold will be jumping. Could be worse.

Spitzer's picture

I guess you don't seem to realize that Japan will be liquidating its T bonds to defend its currency in the event of capital flight. But maybe you are right. Maybe the Japanese will starve its own population just to afford the US a few more years of trade deficits.

himaroid's picture

You pays your money and you takes your choice.

Tomorrow morning looking real good.

Bangalore Equity Trader's picture

Listen, It's high-time that Kyle stop bleeding from the ears! I'm hoping that his perseverance pays off dearly.

q99x2's picture

Don't fight the FED's software applications.

cpnscarlet's picture

Gold hording steady at 133K Yen. All fine. No ploblems here. Now on to next thrilling movie, "Gammara vs. Ben Bernanke" stalling Janet Yellen as Gammara.

adr's picture

So they claim Abenomics can't support the Japanese economy yet most claim the Fed's QE eternity program has done nothing but help the US Economy.

 

teslaberry's picture

HIGHLY BULLISH. monday will scream up as expectations of more QE go up in japan as well. this is called collective planned debasement. just every CB agreeing to print the fuck out of the money to steal the collective PP from the peasantry under the pretsense of 'need'. 

ahhahah. 

bullish buy buy buy. 

limacon's picture

Is Japan banking on an energy saviour?
Mitshubishi is rumoured to have made a fusion breakthrough .
Hence the low oil prices even with all the wars .
See
http://andreswhy.blogspot.com/2013/04/petroleum-price-and-clathrates.html

http://www.wfs.org/blogs/richard-samson/shhh-new-energy-breakthrough-qui...

abenomicstimebomb's picture

Data looks terrible, but Japan keeps plodding along.  What will spark the next crisis?  Don't look for a bond crisis ala Kyle Bass, bonds can and will be propped up forever by the BOJ.  Look to the currency markets.  JPY strengthening will be the trigger.  This last drop in the yen past 105- perhaps to 107+ will be followed by a holy hell yen rally (ala 1998) that will knock everyone off their feet.  BOJ will be powerless to stop the tsunami.  You can manipulate some markets but not all.  

kowalli's picture

all bad things will start after 1.5-2 years...People going to stop using dollars -> dollars come back to usa and inflation going to the sky

hooligan2009's picture

little difference between japan, the US, the UK and Europe.

exchange rates reflect relative debasement..not much more

 

Dapper Dan's picture

You will find the reason for Nippons problems here.

http://en.wikipedia.org/wiki/List_of_countries_by_median_age#mediaviewer/File:Median_age.png

notice all the M.E. countries, looks like a good place to loan money.

sick a squid on them 

this may help

http://www.nippon.com/en/in-depth/a01001/

 

Bighorn_100b's picture

No place to hide except in cash or short term T-Bills. Gold and Silver will not save you. Not yet anyways. I already posted my targets. At last check, spot gold down two dollars.

Spitzer's picture

T-bills.

 

Funny how people always get bullish at the top

fibonacci's claus's picture

Yen will bounce off 90.  Euro needs to go lower, 1.15ish

homiegot's picture

The honorable thing would to be to fall on his sword.

robnume's picture

This is more fun than playing whack-a-mole!

Tachyon5321's picture

 

 

According to Krugman, it is too little stimulus... Japan should double it.

 

 

yogibear's picture

Demographics. Krugman ignores it. Only one mode with Krugman, full stimulus ahead.