David Fuller and Eoin Treacy's Comment of the Day
Category - Japan

    Japan's Wage Jump Offers Fuel to Ignite Stalled Consumption

    This article by Yoshiaki Nohara for Bloomberg may be of interest to subscribers. Here is a section:

    The figures come at a critical time for Japan’s mission to generate stable inflation. Price growth has softened in recent months and household consumption continues to show signs of weakness. Separate data released Friday showed household spending slid 3.9 percent in May from a year earlier.

    Atsushi Takeda, chief economist at Itochu Corp., says strong gains in wages will be needed for many more months before consumption is likely to show a response.

    "There’s no question that wages are improving," he said, commenting on the latest figures and citing the results of annual wage negotiations earlier this year. "But people need a substantial period of wage gains to be convinced that wages will keep rising."

    The gain in overall wages was partly attributable to a 15 percent jump in bonus pay that reflects continued strength in Japanese corporate earnings.

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    Japan's coming Golden Age of Activism

    Thanks to a subscriber for this report from Jeffries which may be of interest. Here is a section:

    Email of the day on evidence of immigration in Japan:

    I believe this does rather endorse your view. Also, my father in law a farmer in Shikoku has told me about many Chinese farmers on their Island!

    Different subject, but I heard recently pearl exports this year are up in the region of 100%, your wife has obviously started a major new trend!

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    BOJ Board Members Stress Need for Prolonged Monetary Easing

    This article by Toru Fujioka for Bloomberg may be of interest to subscribers. Here is a section:

    One board member said the bank needs to make it clear that there is no change in its commitment to fulfill the objective as soon as possible, according to the summary, which don’t identify who said what. Kuroda said the BOJ will continue easing “very persistently” at a press conference following the policy decision.

    BOJ’s updated price forecast for four years through fiscal 2020 was also released on April 27, showing no board members see inflation rising above 2 percent in a stable manner.

    “In order to continue with powerful monetary easing, the bank needs to constantly consider enhancing its sustainability while aiming to gain consensus among the public on the necessity of the price stability target,” one board member said.

    One member said an early rate hike would result in multiple adverse effects, including falling bond and stock prices, while a stronger yen would cut into corporate profitability.

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    Draghi Insists Outlook Is Solid as ECB Skirts QE Debate Again

    This article by Alessandro Speciale for Bloomberg may be of interest to subscribers. Here is a section:

    The central bank’s quest to restore sustainable inflation of just under 2 percent has been complicated by data suggesting that the euro area’s strongest growth in a decade may be faltering. As well as waning industrial output and deteriorating business confidence, the threat of a global trade war is hanging over Europe’s export-oriented economy.

    “Incoming information since our meeting in early March points towards some moderation, while remaining consistent with a solid and broad-based expansion of the euro-area economy,” Draghi said. “The underlying strength of the euro area economy continues to support our confidence that inflation will converge towards our inflation aim of below, but close to, 2 percent over the medium term.”

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    Email of the day on the underperformance of the Topix 2nd Section Index

    I have noticed re the Japanese charts that the Topix second section now seems to be leading on the downside having broken through the 7000 level. Should this be a concern?

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