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The Nikkei (NKY) continued with its wild ways today, surging 4.9% after Japanese Q1 GDP growth...

The Nikkei (NKY) continued with its wild ways today, surging 4.9% after Japanese Q1 GDP growth was revised upwards, and U.S. jobs data came in just right (not too good, not too bad) and helped boost the dollar vs the yen. Hong Kong +0.2%, China closed, India +0.1%. USD-JPY (FXY) +0.9%.
Comments (2)
  • CraigPowell
    , contributor
    Comments (96) | Send Message
     
    Nikkei soars to close +4.9% higher, and +30% this year in a good agreement with the forecast published on January 4: http://alturl.com/kbhhw
    Japan revises up Q1 growth to annual 4.1%
    10 Jun 2013, 09:57 AM Reply Like
  • positivethoughts
    , contributor
    Comments (1812) | Send Message
     
    In May, it was reported that Japan had a trade deficit of 879 Billion Yen.

     

    http://bit.ly/VXRRWY
    http://bit.ly/16WTAbl

     

    The current account is not the trade balance. Japan is importing more goods (in cost terms) then they are exporting (in revenue terms).

     

    The current account for Japan is supposedly positive, but that could mean that Japanese people own investments or other assets abroad that are producing income, and that income, when tallied in a dropping currency (Yen), is worth more in paper terms at home. But, given that Japanese people would be paying more Yen for their domestic comsumption - food, clothing, housing etc., as costs and inflation set in throughout Japan, and given that Japanese people are sening more money out of their country for imports than they are getting back from their exports, is a bad long term trend. Their standard of living is likely to drop, going forward.

     

    http://yhoo.it/11uw2SY

     

    'Hefty income gains including returns from Japanese investments abroad, which were boosted by a weak yen, more than made up for trade deficits, analysts say.'

     

    Longer term, as the trade deficit continues to be negative, the Japanese current account will likely go negative as well.

     

    As things get more expensive within Japan, and as their economy lags, Japanese people will dispose of their assets abroad and bring proceeds back home to afford basic necessities.

     

    For example, if I owned stock on the American stock exchange and earned income in the form of dividends, I might sell that stock and use it to pay off larger debts at home if my costs of living increased at home beyond what I could afford.

     

    Viewed another way, if a company was paying more in costs than they were earning in revenue, but were making up for the gap by previously invested interest income, quite possibly, down the road, their gap might surpass their interest income and they could find themselves in trouble. If their interest income rises further than their gap, things are okay. But, of course, their underlying business would still be bad, regardless.
    10 Jun 2013, 10:29 AM Reply Like
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