Japanese Trade Data Collapses, Crushes "Devalue Our Way To Prosperity" Dreams

Tyler Durden's picture

Seriously - how many more times can a central bankers' policies be exposed for the total sham that they are?

“The turmoil in global markets is making companies cautious about spending and also weakening global demand. That will be negative to Japanese exports,” Hiroaki Muto, chief economist at Tokai Tokyo Research Center in Tokyo, said before the trade report was released.

 

“There will be no driver for Japan’s economy as domestic consumption may remain weak, and sluggish exports and production may weaken capital spending in the coming months.”

Japanese trade data was just unleashed on the world... and it is abysmal.

  • *JAPAN JAN. EXPORTS FALL 12.9% Y/Y

Notably worse than the expected 10.9% drop and the biggest YoY plunge since October 2009. This was driven by a collapse in exports to the most rapidly contracting marginal economy in the world: China. According to Bloomberg, "exports to China, Japan’s largest trading partner, were down almost 18 percent, driving an overall decline of nearly 13 percent in the value of overseas shipments in January from a year earlier. Imports dropped 18 percent, leaving a 645.9 billion yen ($5.7 billion) trade deficit, the Ministry of Finance said on Thursday."

But we thought that the market had decided China was fine?

Some more humor from Bloomberg:

Falling exports compound poor sentiment in Japan, where wage gains have stagnated, consumer prices are barely rising and households are reluctant to spend. This year stocks have plunged and the yen has gained more than 5 percent against the dollar amid concerns over China’s slowdown and U.S. growth. This adds to worries about the seesawing nature of Japan’s economy between modest growth and contraction.

Sarcasm aside, the chart below proves once and for all that the devaluation of the JPY did less-than-nothing to improve Japan's competitiveness...

 

And then there is Imports - reflecting the "modest" improvement in the domestic economy...

  • *JAPAN JAN. IMPORTS FALL 18.0% Y/Y

Nope - complete carnage!! The biggest YoY drop since october 2009...

 

Is it any wonder Abe says no more stimulus and Kuroda did not unleash anymore QE - they know it's over and now it's desperation.

We leave it to Alhambra's Jeff Snider to sum up... Japan is the very definition of insanity...

GDP fell 1.4% in Q4 2015, marking the fifth contraction out of the past nine quarters and yet the word “stimulus” remains attached to QQE, the Bank of Japan and Abenomics in general. At this point, how much more time and sample size is necessary before calling it a failure? In about six weeks, Kuroda’s massive “stimulus” will mark its third anniversary and the best that can be said of it is that GDP has gone nowhere. Two and three quarters years later, real GDP (SAAR) in the last three months of 2015 was the slightest bit higher than Q2 2013 when everyone was so sure “stimulus” was all so sure.

ABOOK Feb 2016 Japan GDP Real SAAR

The media provides all the evidence necessary as to why everything is so “unexpected.”

The data suggest Japan’s economy is still plagued by the weakness of domestic demand as it enters a fourth year of record monetary stimulus, with wages not rising fast enough to persuade consumers to spend.

There is no sign of a downward spiral in the economy but with the yen rising to trade at Y113.8 to the dollar in recent weeks, the figures put pressure on the Bank of Japan for even more monetary stimulus to encourage a strong round of wage rises this spring.

While economists try to determine if technical definitions for recession have been met, the plain truth of QQE is that monetary “stimulus” put Japan into recession almost immediately and it has never left. The key for any recession definition are the words “significant” and “sustained.” In other words, it is a significant and sustained deviation from the prior or underlying growth trend. By Japan’s GDP figures alone, Japan is in a significant and sustained period of weakness or contraction even when compared to the unsatisfactory growth that prevailed before it.

ABOOK Feb 2016 Japan GDP QQ SAAR

Since the first appearance of negative GDP in Q4 2013, long before the tax change, Japan’s average quarterly (SAAR) growth rate has been -0.07%. Period to QQE from just after the earthquake quarter, GDP averaged 1.74%. No matter how you present the GDP data, there was a significant change in economic growth dating to or close to QQE’s introduction. Since that burst of monetarism was enormous, just as policymakers had once claimed (curious, again, that commentary about QE in whatever form is derived by its tense; it will be powerful and effective vs. it was disappointing and needed more), that leaves little doubt as to the source of the economy’s digression from at least its prior trend, unacceptable as that might have been.

ABOOK Feb 2016 Japan GDP HH less Imputed RentQQ SAAR

The fact that Japanese households have borne the brunt of the disaster only confirms its negating nature. Prior to QQE, household spending and income had been better than the overall GDP figures; after QQE, that relative position has reversed and intensely so. Nobody would accuse the Japanese economy of being robust between the tsunami and the start of 2013, but at least for households there was steady growth without “inflation” and disorder. Japan was certainly in need of re-orientation and reform so that its system could finally become a full economy once again, but QQE was the exact opposite of what was required – especially since it was just amplifying what had already failed nine times (at least) before.

ABOOK Feb 2016 Japan Devastation QEs

The Bank of Japan and Abenomics in general put the Japanese economy into a recession from which it hasn’t yet recovered; nor are there any signs that it is even close to doing so. The conditioned response in the media and by economists is entirely the problem – it doesn’t take much to realize that “stimulus” created the recession, therefore more “stimulus” will likely only do the same.

“Consumption was weak, even after taking out seasonal factors, as households tightened their purse strings,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. in Tokyo. “The downside risks to Japan’s economy are likely to increase as the yen’s gains may damp capital spending and exports, and private consumption also is looking weak. There’s no clear driver to support Japan’s economy.”

That’s an astounding piece of commentary after nearly three years; to have “no clear driver to support Japan’s economy” is utterly damning. Monetarism doesn’t work, that much is inarguable no matter which data you use or how you use it. That it is directly harmful may be somewhat debatable, but that view is becoming less so with each passing quarter. Japanese households, in particular, were at least experiencing some steady growth prior and now they are most certainly not. Central bankers declare that the cost of implementing a full recovery, yet it is nowhere to be found even in overall GDP (which is the most generous account of any economy). After three years (let alone fifteen), there is no basis anymore for “stimulus.” None.

Sure enough, stocks are rallying in the dismal news in anticipation of some more insanity from Kuroda...

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kotfare17's picture

As I said in 2013 when QE3 announced, world dies due to QE and 0% rates.

 

World trade has now died.

Dr Freckles's picture

(now comes the butt reaming)

bbq on whitehouse lawn's picture

NOOO butt reaming as you put it comes from not having the YEN to repay your long on the S&P.

The Once-ler's picture

   
 Repeat after me…
   
      “Prosperity is JUST around the corner”

Dorkface's picture

And someone was expecting Japan to "turn the corner"?

philipat's picture

Despite all this and the intention to ban cash, there are still no pitchforks. Indifference, agreement or was Gruber right?

bbq on whitehouse lawn's picture

Do you remember being diper changed, of course you do, this is the same thing everyone wants to save face and say no,,, they dont remember diper changes and they dont remember the scolding of their mother, but they do.
Humans are cowerds untill they have no choice then they do things that their mothers would disaprove of and bring great dishonor to them and their family.
It has never been about a paper they control it has always been about you bowing to them. So will you bow?

Curiously_Crazy's picture

"Do you remember being diper changed, of course you do"

Wtf.

knukles's picture

Y'all can devalue all y'all want but does no good when the folks y'all is devaluing against ain't got the moolah to pay for them cheaper imports.
Ya'll see where I'm a goin' with this now, don'tcha?
This is exactly what happened in the 60's with the round robin devaluations in Europe.  Big load of nothing but political theater and governmental intervention bringing about massive unintended consequences.... exchange and capital controls, taxes, whatever.  Nuffin' got any better only worser and aorser

philipat's picture

Yeah, they really don't get it because they are living in their Ivory Towers and they don't know any ordinary people. Their Keynsian models tell them that folks should be spending. What they don't understand is that even if, despite rising costs of essentials and declining disposable incomes, folks had anything left to spend, after 10 years of ZIRP these same folks are scared for their future into old age and will still not spend. They just don't get it because their models tell them otherwise. And, incidentally, in an "economy" which comprises 70%+ consumption, growth requires additional consumption. Duh....

sun tzu's picture

That's why we're importing millions of Muslims and Mexicans. They will save our eCONomy

sun tzu's picture

The sheeple have run out of room to store more garbage from Asia. How many flatscreen TV's can fit in your house and how many cars in your driveway?

Soul Glow's picture

What was your avatar in 2013?  Or are you new here.  Either way, welcome to Fight Club.

bbq on whitehouse lawn's picture

No back in your cage, we have no need of tigers on the field ment for mice.
You play to rough. When you learn to play with kittens, kittens will play with you. Back to your pillow kitty.

DogeCoin's picture

So another 1k rally on the Nikkei?

Dr Freckles's picture

Some say it could go as high as 12 ... or 5676 ...

rickowens's picture

400 (2.5%) right now lmao

can't make this shit up anymore

Soul Glow's picture

To anyone who pushes the "This will go one forever - in the US - because it did in Japan" meme, lest you forget the Nikkei made a high of 39k a few decades ago.  It is currently sitting below 16k.  That is the equivelent to the Dow Jones being at 7k in the year 2040.

Good luck trading!

jtmo3's picture

Could only mean another highly ramped us stock rally. After all, the stawk sluts have to make all that easy money.

Sanity Bear's picture

There's only one solution: devalue moar!!!1!!111

Bank_sters's picture

No big deal china, japan and europe are falling apart.  Obumbles says we are in strong recovery.

 

Update, Japan opened up 3 percent on the news.   

NotApplicable's picture

So... why is it that currency devaluation is always spun as a positive, unless they're talking about China and Russia's "collapsing currencies?"

Donald J. Trump's picture

It's obvious that after 15 years of the same outcome that they are achieving desired effect.  Insane to those that think they wanted a different outcome.  No way can an entire race claim insanity.

Bunga Bunga's picture

Dear Abenomies, you have to try just long and often enough.

starman's picture

Maybe Japan should join the EU? 

Insurrexion's picture

 

According to this guy's post, monetary policy failed because the CBs did not also kill the government debt and break up the big banks.

Might be a central banker, not sure.

https://www.linkedin.com/pulse/angry-americans-story-failed-economic-rec...

hooligan2009's picture

japan is about to benefit from the massive drop in oil prices, providing a massive stimulus on top of the fiscal and monetary stimuli- it imports 40% of its oil needs or 48 million barrels a day 4.8 billion dollars a day (at a price drop of $100 a barrel) times, say, 300 days is the odd $144 billion a year, perhaps $100 billion as hedges roll off. Certainly no surprise that imports have collapsed 18% YoY. I mean an oil price drop of 50% on the 40% oil consumption to around just 60 bucks v spot of 30 dollars a barrel would be entirely responsible for the import drop.

there is no support for the exports that are massively worrying, especially given the strength of the yen for all those japanese companies that don't have trade matching with non-Japanese factories (sited in Mexico, US, Canada, UK etc).

The BoJ and the Japanese Treasury have been pursuing easy money with massive deficits since the crash in the Nikkei from just under 40,000 in 1991, that is 25 years of writing on the wall for central bankers everywhere, not 15 years. The equivalent for the Dow Jones is around 8,000, from where it is today if the Fed and the Government do not stop allowing welfare and drug company cheating plus massive and record military spending.

i am stil wondering why gasoline prices at the pump aren't closer to $1.25 a gallon for a 20% mark-up on RBOB at just over a buck a gallon. Why isn't this a national scandal?

http://www.barchart.com/commodityfutures/Gasoline_Rbob_Futures/RB?search...

those califronia hippies must love bending over and holding their cheeks

http://www.gasbuddy.com/GasPriceMap?z=4

 

 

Kina's picture

They just need to call Paul Krugman again.

personal109's picture

Holy Nagasaki!! Imports and exports are in free fall and the Nikkei is growing by triple digits. There's your wtf moment.

GotGalt's picture

Everything is fine!  It's fiiiine!!!!!!!!

Cutter's picture

What? You mean all the analysts coming on CNBC stating Japan is a great investment opportunity are wrong? Can't be. QE hasn't worked, negative rates aren't working, they are the world's Guinea pig for Keynesian failure. They can only delay the crash with more QE until the yen is worthless. Bass is right. Anyone investing in Japan is "picking up pennies in front of a bulldozer."

bmr22's picture

Looks like the whole world has enoght cunsumer crap