Lance

Should Japan Investors Welcome the Return of Inflation?

CLH: Inflation is certainly apparent in Japan -- I live here, and I can tell you that for the first time in a decade and a half prices are rising.

And yes, as the article implies, it's cost-push inflation, not the best kind.

But as is typical with many phenomena in equity markets, the inflation is likely to be harmful in some cases, potentially helpful in others. Manufacturers will have to weigh resistance to price hikes. There very well might be enough resistance to hurt. But if the inflation is bothersome enough to manufacturers, the BoJ may have to respond, and that could make Japanese banks look even cheaper than they already do as spreads might widen.

Disclosure: Long Japanese banks since winter and loving it.