Update: the notable statements from Trump's prepared remarks:
- Calls Japan a friend, 'steadfast ally' and says committed to security of Japan
- Says seeking relationship that is free, fair and reciprocal.
- Defending against North Korean nuclear threat is a "very, very, very" high priority
- Thanks Japan for hosting our military
It is not clear what sparked the algos, but one of those keywords launched a mini USDJPY buying spike.
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Ahead of a weekend playing golf together at Mar-a-Lago, President Trump and Japanese Prime Minister Abe face the press to explain how a strong (and weak) currency is good (and bad) for the economy, how much Abe will be investing in American infrastructure, and how they will face their real common enemy - China (not deflation) together...
As Bloomberg's Cameron Crise notes, Shinzo Abe and Donald Trump have a lot in common -- they both swept into power on a promise of radical economic change. But if Japan is any example, shifting U.S. growth into a permanently higher gear may be easier said than done...
- Back in 2012, when Trump was still firing contestants on TV, Abe came to power on a promise to revitalize Japan’s economy after years of decay.
- Abenomics included fiscal stimulus, structural reform, deregulation, and changes to the tax system -- a cut in the corporate rate and an increase in the VAT. Sound familiar?
- Perhaps the most notable aspect of Abe’s program was the appointment of Haruhiko Kuroda to head the BOJ, which then embarked on a program of radical monetary easing that continues today. That arrow is one that Trump will not have in his quiver, unless Janet Yellen is replaced with a stooge.
- Abe’s strategy has had a big impact on prices, largely by eviscerating the value of the yen. In the 10 years ending in 2007, Japan’s nominal GDP growth averaged -0.1 percent per year and CPI -0.2 percent. During the Abenomics years, those figures jumped to 2.2 percent and 1.0 percent respectively. However, the latter figure is still well short of the BOJ’s 2 percent inflation target, and in the last two years inflation slowed to just 0.2 percent per annum.
- The Abenomics impact on real growth has been much more muted; in the 10 years ending in 2007 average real growth was 1.0 percent, which has risen to 1.3 percent during his economic plan.
- It’s ironic that Abe has come to Washington bearing a package designed to help Trump revitalize the U.S. economy when he hasn’t yet achieved his own domestic goals. Some skepticism is probably warranted; it’s not exactly a vote- winner for Abe to be seen spending money to boost American growth when Japan is still muddling along.
Optimism for Trump’s economic plan is high. However, the Abenomics experience suggests that the best the president can hope for is to make America OK again.
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