Two months ago, when looking at the US Import Price Index (by origin), we showed Where The US Is Importing All The "Evil" Deflation From [6]. The answer, courtesy of Abenomics, was simple: Japan. Earlier today we got further evidence that while the Fed is banging its head over how to halt America's deflationary spiral further away from the Fed's 2% target (at least as measured by the BLS), what it should do - if it really cares - is get on the phone with Abe and tell him to end Abenomics and Japan's unprecedented exporting of deflation (and importing of inflation).
As the chart below shows, with a read of 98.4 for November, [7]the "imported deflation" from Japan is the most since 2010.
[8]
And for those curious, the Fed will never actually tell Abe to halt Abenomics because the only thing that is levitating the US stock market (and Nikkei as well) right now, in the absence of sizable ECB QE, even if it means record corporate bankruptcies in Japan [9], is Abenomics itself.
