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Land of the Rising Dead

January 15, 2013

There's an unfolding strategy of Abenomics, named after the new Prime Minister, who campaigned on i) getting the BOJ to buy eurozone denominated bonds to weaken the yen ii) a higher inflation target in the form of an “anti deflation” program and iii) a large fiscal stimulus plan.
-Christian W. Thwaites, president & CEO, Sentinel Asset Management

 

Yes, you knew we were going to talk about Japan. It's all the rage and the big standout in market performance in the last few weeks. Since November the broad Nikkei-225 average has risen 24% because there's new thinking in town. It's hard to describe Japan's 20 year malaise. Once proud companies shaken, the shattering of a property market and total collapse of stocks. Even if the market rises at the same level of the last few months, it will take six years to re-reach its peak. A more reasonable 10% growth rate will take 14 years. Weird things happen when economies enter deflation. Real growth of 2% with a deflator of 2% allows 4% revenue increases

 

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