Nikkei Slides Back Below 18,000 On Deeper-Than-Expected Recession, Record Bankruptcies

Remember when that absolute disaster of a Q3 GDP print hit Japan and the world of talking-heads proclaimed... "yeah, but.. capex revisions and stuff and things will make it all better" or some such nonsense? Well that's exactly what it was - utter nonsense. Going entirely the opposite direction to expectations of a revision up to -0.5% QoQ, Japanese GDP was revsied even lower to -1.9% QoQ (from -1.6% QoQ initial) confirming the quadrupled-dip-recession. Add to that the fact that Abenomics has ushered in record bankruptcies this year as small- and medium-sized businesses have been crushed by soaring import costs amid the collapsing JPY and you have a recipe for domestic disaster... and having rallied in anticipation of the exuberant revisions in Friday's US session, Japanese stocks are sliding quickly off the 18,000 level.

 

Quadruple-dip recession... well played Abe...

 

Goldman was surprised... and is not very hopeful about the future...

Government revised down real GDP, contrary to expectations: The government’s second estimate for Jul-Sep (3Q) 2014 real GDP came in at -1.9% qoq annualized, a slight downward revision from the first estimate of -1.6% and contrary to the market forecast for an upward revision to -0.5%. In the second set of estimates, the government mainly adjusts its capex and inventory figures to reflect MOF Corporate Statistics announced the week before. In the latest MOF Corporate Statistics, capex turned upward qoq, and the market accordingly expected the capex figure in the second set of GDP estimates to be raised (from -0.9% qoq annualized in the first preliminary data). In a surprise move, however, the government revised down the capex figure to -1.5% qoq annualized. Meanwhile, it slightly raised its estimate for the contribution from inventories to -2.5 pp, from -2.6 pp, and slightly lowered estimates for government spending and public fixed capital formation.

 

Nominal GDP was revised downward from -3.0% to -3.5% qoq annualized.

 

We expect a GDP rebound in 4Q, but the momentum of recovery will likely be weak: The pullback from pre-tax-hike rush demand is gradually fading. However, we see potential for declining real disposable incomes and high inventory levels to continue exerting downward pressure on domestic demand that deals a setback to the economy for a comparatively long time. We look for real GDP to rebound from two quarters of contraction in 4Q, but we think the strength of recovery will be weak.

Oh, and don't forget record bankruptcies...

 

 

Japanese stocks are - for once - actually selling off modestly haveing ripped higher on Friday in anticipation of the exuberant upward revision everyone hoped for...

 

Rather notably decoupling from USDJPY!!

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On a side note, PBOC fixed the Yuan at its strongest against the USDollar since March as the market's view of USDCNY started to rapidly weaken...

 

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