WisdomTree Japan Hedged Equity Fund
Aging Population May Keep Global Growth Muted
An aging population is likely to keep global economic growth muted in the years to come. This is primarily because the dynamics of the population are rapidly changing.
Japan’s trade deficit with China: Worse for GM than the recall
This article considers the impact of Japan’s trade dynamics on Japanese automakers like Toyota (TM) versus General Motors (GM) from a macroeconomic perspective.
Capital Spending May Help Japan’s Economy to Grow at 1.7% in 2016
After sliding for two consecutive quarters, Japan’s economy has advanced 0.3% in 3Q15. This comes as a relief to the ailing Japanese economy.
Overview: Shinzo Abe’s Abenomics
Abenomics is an effort to pull the world’s third biggest economy, Japan, out of two decades of stagnation by expanding the money supply, freeing up regulations, and encouraging the yen to fall.
Is China’s real estate bubble getting out of control again?
With new properties developing slower, the current price levels in China could in fact be supported. The risk for the future of housing prices is more likely to be associated with China’s GDP.
GM’s long-term competitive threat: Japan’s investment recovery
Japan is showing signs of investment recovery with its new economic policies coming into play.
Will “Abenomics” bring real growth to Japan’s economy?
Japan’s economy versus the U.S. economy The below graph reflects trends in Japan’s gross domestic product (GDP) measured in U.S. dollars as of 2005 and 2013. Japan’s Gross Domestic Product (GDP) in 2012 was approximately $6 trillion USD, versus the U.S. GDP of approximately $16 trillion USD (so Japan’s economy is approximately 38% the size […]
China’s wage inflation: Bad news for corporate profits and banks
Wage inflation in Chinese manufacturing With an appreciating currency and growing economy, Chinese manufacturers have experienced wage inflation. The cost of Chinese labor is simply becoming more expensive, as the below graph indicates. Private sector wage growth in China was 14% in 2012, while GDP growth is slowing to around 7.5% per annum. Wages are […]
Why consumer confidence in China has declined long-term
This series explores the implications of China’s gradual transition to a more consumer-oriented economy.
Japan Outperforms While Manufacturing Growth Is Muted
The flash reading for the Japan Manufacturing PMI deteriorated slightly in June. The index came in at 49.9 for June against May’s 50.9.
Abe’s ‘Third Arrow’ to Benefit Investors in Japanese Equity
Quantitative easing measures in Japan are making Japanese equity attractive. Abe’s third arrow of Abenomics should boost corporate profitability and, consequently, Japanese equity.
Why we could see a new trend in Japan’s exports and imports
Japan’s import and export dynamics The below graph provides a clearer picture of the import and export dynamics of the Japanese economy. By using 2005 as a base year and adjusting for inflation or deflation, the graph shows how exports and imports have changed on a “real” basis, as opposed to a “nominal” basis. Viewing […]
Analyzing the BoJ’s Monetary Policy Enhancement Measures
The BoJ’s monetary policy was the most awaited macro event this week. It was the first major central bank to expand its easing program after the Brexit vote.
Why China’s trade is good for Apple’s sales in China
China is becoming a relatively less expensive manufacturing base, although it’s also becoming a source of stronger revenues for companies like Apple.
What Paul Krugman Thinks about Japan’s Yield Curve Control Policy
In its latest policy move, the Bank of Japan left rates unchanged and delayed inflation target timings for the Japanese economy (EWJ) (HEWJ) (DXJ).
Analysis: Why China’s export growth rates are slowing
China’s export growth declines The below graph reflects an apparent decline in the rate at which Chinese exports and imports have been growing. The red line reflects the rate at which exports exceed imports (trade surplus). Though growth rates in trade declined in the wake of the year 2000’s dot com bubble and the 9/11 […]
Are we seeing the end of Japan’s 30-year investment collapse?
This series explains why Japan’s investment decline happened and what might happen in the future under “Abenomics.”
Does “Abenomics” mean a new era of yen depreciation?
A change in yen appreciation? The below graph reflects a potential big change in Japan post-2012—has yen appreciation turned the corner as a result of post-2012 “Abenomics“? In the mid 1970’s, the U.S. dollar bought 300 yen, and by the mid-1980’s, the U.S. dollar bought 250 yen. By the end of the 1980s, the dollar […]
Is Japan’s investment turning the corner, or beyond help?
Japan’s fixed capital formation The below graph reflects the ongoing decline in fixed capital formation in Japan. Since Japan’s bubble economy burst in 1990, investments have been in a long-term phase of winding down. However, there has been a slight, though potentially ominous bounce recently. This article examines the trend in capital formation in Japan […]
Bank of Japan announces QQE2, expanded monetary stimulus
At its monetary policy meeting held on October 31, the Bank of Japan (or BOJ) announced new stimulus measures. The measures come in addition to those it announced earlier.
Japanese Yen Rose on Positive GDP Numbers
The Japanese yen gained early on December 8, 2015, as GDP (gross domestic product) figures were upwardly revised.
China tightens monetary policy: Will this be a Japan 1990 redux?
Interbank lending rates The below graph reflects the effects of the China Central Bank’s monetary tightening policies on interbank lending rates. The interbank seven-day lending rate spiked in June. Rates on government bonds have also risen, with the three-month yield on Chinese bills rising from 2.65% to 3.50%, and the ten-year bond yield rising from […]
Why inflation scare tactics in Japan drive consumption recovery
Private consumption growth in Japan The below graph reflects the trend in private consumption growth in Japan. As noted in Part 1, Japan’s real gross domestic product (real GDP) today is approximately where it was in 2005. The lack of overall economic real GDP growth has reflected in stagnated wage growth, as well as a […]
Japanese wage growth: Off to the races?
What can the policies of Japan’s new Prime Minister provide in order to convince consumers to spend more and grow the overall economy? Prime Minister Abe has some fairly radical ideas.
Why the Japan Services PMI Improved in June 2017
The Japan Services PMI (EWJ) (DXJ) stood at 53.3 in June 2017 compared to 53.0 in May 2017. It met the market expectation of 53.2.
Why hedge funds show interest in Japanese ETFs
DXJ tracks the performance of the WisdomTree Japan Hedged Equity Index. The Index and the fund are designed to provide exposure to equity securities in Japan.
Dalio: Japan Is Undergoing an ‘Ugly Deflationary Deleveraging’
“Deleveraging” refers to reducing the debt level. With Japan’s debt burden, deleveraging the economy’s balance sheet seems more than imperative.
Why Japanese ETFs outperform Chinese and Korean ETFs on “Abenomics”
Thanks to “Abenomics” and a weaker yen, Japanese equities have risen and have also outperformed both U.S. and E.U. equities and avoided the fate of Chinese, Korean, and emerging market shares.
China’s Great Wall of worry: The top ten causes for concern
The strength of Japanese equities The below graph reflects the strong performance of Japanese equities over Chinese and Korean equities since the election of Japan’s new Prime Minister, Shinzo Abe, in November last year. Hopes of ending deflation in Japan have led to a strong performance in Japanese markets, while Japan’s neighbors, China and Korea, […]
Market Realist Chronicles: Taking Advantage of a Political Disaster in Turkey, at a 9.2x P/E
We can expect low short-term interest rates through 2015, despite the fact that tapering will probably continue next year.
Why China’s growing trade economy supports Apple’s sales
With an economy that’s now approximately 60% larger than Japan’s (on a dollar basis), China’s reliance on trade for growth has become a larger issue.
Must-know: Will deflation end China’s investment boom?
The importance of capital formation The below graph reflects the historical dynamics of capital formation—the percentage amount of gross domestic product, or GDP, at which capital is invested—in the United States, Japan, and China. As the graph reflects, China exhibits a tremendous level of investment as a percentage of GDP relative to the more mature […]
Hang Seng Falls with Chinese Indexes, Nikkei Gains
Hang Seng falls Hong Kong’s Hang Seng Index fell in early trading and didn’t recover until the end of the trading day. The index dropped 1.16%, or 329 points, to end the day at 27,946.46, near the day’s low. On May 16, the iShares MSCI Hong Kong ETF (EWH) gained 0.28% in trading on the […]
Will slowing foreign investment cool consumption in China?
China’s waning foreign investment The below graph reflects an ongoing decline in the percentage of foreign direct investment (FDI) in China as a percent of China’s gross domestic product (GDP). You can see the dramatic increase in FDI that occurred in China in 1992, when China began to create its “special economic zones,” which served […]
Why the FOMC, BoJ, and EBA Will Drive Markets This Week
In terms of the major macro data release from the United States (VOO) (QQQ), it would be the FOMC monetary policy release on July 27. 2016.
Japanese Trade Surplus Rose in June, Imports Fell More than Exports
The trade surplus for Japan increased to 692.8 billion yen for June—compared to a deficit of 60.9 billion yen in the same month last year.
How the Deflationary Environment Impacts Japan’s Economic Growth
Despite persistent deflation, Japan’s (EWJ) economy is growing at a slower pace, and its 3Q16 growth exceeded expectations as exports recovered.
Chinese exports will face more competition from Japan and Korea
Chinese yuan appreciation The Chinese yuan has appreciated approximately 3% per year since the launch of exchange rate reform in 2005, appreciating from 8.25 to 6.15 versus the U.S. dollar. The Chinese Central Bank “pegs” its exchange rate to the U.S. dollar—though it has allowed its currency to appreciate against the U.S. dollar more aggressively […]
Slow growth in United States and European Union cool China export
GDP in the United States and European Union The below graph reflects ongoing trends in the gross domestic product (GDP) growth rates in the United States and European Union, major destinations of Chinese exports. With slow economic growth in the United States, and the EU gross domestic product finally hitting positive territory (+ 0.3%) after […]
Will China’s large-cap ETF, iShares’ FXI, stop underperforming?
For Baidu, Apple, and Google China, the improvement in the domestic consumption area has been encouraging, though construction and manufacturing still aren’t firing on all eight cylinders.
Why Japanese exports could break out of a 5-year slump in 2013
Japan’s export growth As reflected in the graph below, Japan’s export growth has remained sluggish since the 2008 crisis. It has since struggled to recover to pre-crisis levels. Japanese exports are still 20% to 30% below their 2008 pre-crisis levels. However, 2013 could be the year when Japanese exports finally break out of their five-year […]
Hang Seng Drops amid Protests and Nikkei Is Down Too
After rising for three consecutive days, Japan’s Nikkei 225 retreated today.
The Rise of Factory Automation in China
The rise of factory automation in China (GCH) has been rapid and unprecedented. China is the largest market for robots and automated parts.
The Aging World Means a Graying Workforce
We’re in a rapidly aging world. According to the United Nations World Population Prospects report, the median age of the world is estimated to grow from 29 years in 2010 to 36 years by 2050.
What Did the Market Want from Mario Draghi?
The higher level provided by Mario Draghi, the ECB’s president, indicated that the economy might be slowing at a faster pace than the expected level.
US taper in 2014 will be a tailwind for the yen exchange rate
While the US slows and eventually stops QE (quantitative easing), Japan will continue and likely increase QE In Part 1 of this series, I made the case that the BoJ (Bank of Japan) will likely step up its monetary easing, as current efforts haven’t led to the level of inflation it’s targeting. At the same […]
Analysis: Why China’s real estate construction is declining
Fixed asset investment in China The below graph reflects the significant decline in fixed asset investment as a percentage of GDP as well as the significant decline in the growth rate of real estate–related construction and investment. As noted in the prior article, since 1996, overall construction in China has seen five boom and decline […]
Why the outlook is sunnier in Japan, the land of the rising sun
In the policy statement, the BOJ said that it would continue its second round of monetary easing “as long as it is necessary for maintaining that target in a stable manner.”
Japan’s fixed asset investment and corporate profits rebound
Like the USA, Japan is once again seeing record corporate profit levels. Plus, fixed asset investment reflects a very large recovery since the new Prime Minister was elected at the end of 2012.
Why the decrease in consumer spending impacted Japan’s 2Q GDP
In Japan, consumer spending accounts for over 60% of the gross domestic product (or GDP). GDP plunged by 5% from the previous quarter in 2014. This was the first decline in the last seven quarters.
Must-know: Other factors that impacted Japan’s 2Q GDP growth
Real wages fell by 3.2% year-over-year (or YoY) in the second quarter—the steepest drop in 18 quarters. Although the labor market has improved with the ratio of job offers to job seekers hitting a 22-year high of 1.10 in June, businesses are trying to fill their manpower needs by hiring irregular workers
Must-know: Is Abenomics a success or failure so far?
The fiscal stimulus and monetary easing measures lifted the rate of inflation towards the government’s target of 2%. However, they have done nothing to boost the economy overall. Exports aren’t expanding as fast as anticipated in view of the falling value of the yen. Wage increases aren’t keeping pace with inflation.
The Japanese auto exports reach a 3 trillion yen record high!
This article considers the inter-temporal cost/benefit of importing oil with a weakening currency versus exporting merchandise such as vehicles for Japan.
Why liquidity, credit, and low interest support Japanese equities
The Nikkei index stands at approximately 15,000—roughly 6.0% off its December 31, 2013, close, though still below its pre-2008 crisis peak of closer to 18,000.
Japan’s GDP back to peak levels: Auto sales and Toyota benefit
This article considers the prospects for further real GDP growth acceleration and the implications for Japanese exporters like Toyota.
Are Asian equity ETFs like EWJ and FXI in purgatory for 2014?
The Japanese ETFs—DXJ and EWJ—performed very well. Meanwhile, both Korean and Chinese ETFs—EWY and FXI—have been flat, with China still in slightly negative territory.
GM’s nemesis returns: Japan restarts its investment activities
This article examines the trend in capital formation in Japan, and considers the future prospects for a sustainable turnaround in investment.
An overall investment growth supports Japan’s economy and Toyota
This article considers the recovery in Japan’s investment data and the implications for domestic exporters such as Toyota.
Third Point invests in Softbank and Sprint on global telecom play
As the yen weakens, Japanese exporters who have significant dollar and Euro-denominated profits like Sony tend to see gains in their yen-denominated bottom line.
Wage inflation improves China’s consumption and Baidu’s sales
Wages in China are simply growing much faster than the overall economy, which fuels inflation and real estate bubbles when banks are willing lenders.
Japan’s investment environment dependent upon government deficits
As the Japanese yen continues to weaken, and exports begin to grow, Japan will see better market data in the future.
China’s large caps: Will the iShares ETF, FXI, rally in 2014?
Both the Korean and Chinese ETFs, EWY and FXI, have been flat, with China still in slightly negative territory and the worst performer to date.
Consumer confidence improving China consumption and Baidu sales
This series examines the associated consumption growth trends in China, and considers the implications for Chinese companies like Baidu.
Japan’s business conditions haven’t been this good for a decade
This series examines the key economic indicators in the Bank of Japan’s “beige book,” as we call it in the USA in the case of our Federal Reserve Bank.
Are Global Interest Rate Hikes Inevitable?
The Federal Reserve has indicated that three interest rate hikes could occur in 2018, followed by another two increases in 2019.
How Did Japan’s Services PMI Trend in February 2018?
According to the report provided by Markit Economics, Japan’s services PMI stood at 51.7 in February—compared to 51.9 in January 2018.
How Japan’s Services PMI Trended in December 2017
According to a report provided by Markit Economics, Japan’s services PMI (EWJ) (DXJ) remained weaker in December 2017.
Why Japan’s Manufacturing Activity Improved in December 2017
Japan’s manufacturing activity in December Japan’s manufacturing PMI (purchasing managers’ index) improved in December 2017, rising to 54 from 53.6 in November 2017. Whereas the index was slightly below the preliminary market estimate of 54.2, it marked the strongest expansion in manufacturing activity since February 2014. The solid rise in Japan’s manufacturing PMI in December 2017 was mainly due […]
Why Japan Services PMI Didn’t Meet Expectations in November
The Japan Services PMI fell in November 2017. It came in at 51.2 compared to 53.4 in October. It didn’t meet the market expectation of 52.0.
Why Jamie Dimon Thinks Bitcoin Is a Fraud
Legendary investor Bill Miller said in an interview with CNBC that 30% of his asset allocation is currently in bitcoin.
Why Japan’s Services PMI Improved Solidly in October 2017
Japan’s services PMI (EWJ) (DXJ) rose solidly in October 2017. It stood at 53.4 in October 2017 compared to 51.0 in September 2017.
Key Insight into Japan’s Manufacturing PMI in October
Japan’s manufacturing PMI stood at 52.8 in October 2017, compared with 52.90 in September 2017, and beat the preliminary market estimation of 52.5.
Why the Recent Election Results Are Positive for Japan
Japanese Prime Minister Shinzo Abe’s call for an early election worked in his favor. He called for a snap election to take advantage of his high ratings.
Bank of Japan: No Changes in the October Policy Meeting
At its October policy meeting, the Bank of Japan left its ultra-loose monetary policy unchanged. The decision was made by an 8-1 majority vote.
Why Japan’s Services PMI Has Been Falling Gradually
According to the report provided by Markit Economics, Japan’s services PMI (EWJ) (DXJ) stood at 51.0 in September 2017 compared to 51.6 in August 2017.
Insight into Japan’s Manufacturing in September 2017
Japan’s manufacturing PMI stood at 52.90 in September 2017, compared to 52.20 in August 2017. The PMI figure beat the preliminary market estimation of 52.5.
Bank of Japan Sees Rising Political Uncertainty as a Risk
According to news reports, Japanese Prime Minister Shinzo Abe could be calling for a snap election next month to capitalize on the increased approval ratings in August.
Update on the Bank of Japan’s September Policy Meeting
The Bank of Japan left its policy unchanged at its September meeting. By an 8–1 majority vote, the policy board decided to leave its policy and its QQE with a yield curve control unchanged.
How Japan’s Service Activity Trended in August 2017
According to the latest report by Markit Economics, the Japan Services PMI (EWJ) (DXJ) stood at 51.6 in August 2017, compared with 52 in July 2017.
How Japan’s Manufacturing Activity Trended in August 2017
Japan’s manufacturing PMI stood at 52.2 in August 2017 as compared to 52.1 in July 2017.
Why Japan’s Services PMI Fell in July
The Japan Services PMI stood at 52.0 in July 2017, compared with 53.3 in June 2017, missing the market expectation of 53.3.
How Japan’s Manufacturing PMI Trended in July 2017
According to the report provided by Markit Economics, Japan’s manufacturing PMI (EWJ) (DXJ) stood at 52.1 in July 2017 as compared to 52.4 in June 2017.
An Asian Rally Will Likely Hinge on This
Although Asian markets have outperformed most of the other regions this year, their performance over the past few years has remained sluggish overall.
Will North Korea Undermine Broader Asian Markets?
Under Kim Jong-Un, North Korea has adopted a more aggressive stance toward its regional adversaries, fueling unprecedented tension in the region.
Are Asian Economies Stabilizing or Not?
While the weak global economic recovery has weighed heavily on Asian exports, domestic weakness has also played a role in the region’s economic slowdown.
Is It Time to Focus on Asian Markets?
Asian nations (AAXJ) are experiencing a continuation of the economic recovery that has been going on for a couple of quarters now.
The Bank of Japan Cuts Its Inflation Forecast
According to the statement it released at the end of its two-day meeting on July 20, 2017, the Bank of Japan has left its monetary policy unchanged.
What Japan’s Manufacturing Suggests for Its Economy
Japan’s manufacturing PMI (purchasing managers’ index) stood at 52.4 in June 2017 compared to 53.1 in May.
What Japan’s Falling Retail Sales Indicate for the Economy
According to the data provided by Japan’s Ministry of Economy, Trade and Industry, Japan’s retail sales rose to 2% in May 2017 on a yearly basis.
Japan’s Services PMI Strengthened, Impacted the Economy
Japan’s services PMI stood at 53 in May 2017—compared to 52.2 in April 2017. It met the market’s expectations of 53.
Japan’s Manufacturing PMI in May, and What to Make of It
The Japan Manufacturing PMI stood at 53.1 in May 2017, as compared to 52.7 in April, outperforming the preliminary market estimation of 52.0.
Why Japan’s Q1 GDP Growth Surprised the Market
On May 18, 2017, Japan released its first preliminary estimates for 1Q17 GDP.
How Does Capital Spending Affect Japan’s Economic Growth?
The Japanese economy (JPN) continued its trend of moderate recovery in 2016 and could move at the same pace in 2017.
Why Ericsson Is Eyeing the Internet of Things Space
According to Ericsson’s (ERIC) recent Mobility Report, mobile phones make up the largest category of connected devices.
The IMF Sees Improvement in Japanese Economic Growth Forecasts
The IMF expects Japanese economic growth to be 0.5% in 2016—the same as in 2015—and to tick up to 0.6% in 2017.
Why the Bank of Japan Wants to Overshoot Its Inflation Commitment
One of the key features of Japan’s new monetary policy framework is its inflation-overshooting commitment.
How Inflation Expectations Are Set in Japan
Kuroda pointed out that due to global headwinds, inflation in Japan took a hit from the sharp decline in crude oil prices and the slowdown in China.
Why Haruhiko Kuroda Says Japan Is out of Deflation
According to Kuroda, “Japan’s economic activity and prices, as well as financial conditions, have improved substantially, and Japan’s economy is no longer in deflation.”
Country ETFs: Once Again, It’s EEM!
Those who recognized the upside potential in emerging market equities in early 2016 are likely already in the “hangover stage” of celebrating sizable YTD (year-to-date) returns.
Japan’s Economy Exhibits Flat Growth, Abe Feels the Pressure
Japan’s economy showed no growth on a quarterly basis in 2Q16—compared to growth of 0.5% in the previous quarter and forecasts of a 0.2% expansion.