Lance

Will This Be Japan's Longest Running Recession?

As long as your income isn't declining. Of course that is exactly the problem for a large number of people. Did anyone catch the IBM "PET bottle toss" on NHK this morning? Middle-aged IBM full-timers are being given the choice between resignation (severance pay) and being axed (no severance). The situation calmed down only after the manager threatened to call security.

I've been here since 1993. One small subway fare hike down here in Tokyo since then. When I arrived, I estimated "middle class" salaries at around 7 to 8 million yen. It's significantly lower than that now. I recently saw an article that said 38 percent of Japanese wage earners now make less than 3 million yen a year. Three million yen is the level at which companies that sponsor working visa applicants need to guarantee salaries (i.e. English teachers). So nearly 40 percent of Japanese would now be working for less than the salary of a typical English teacher.

Will This Be Japan's Longest Running Recession?

It's very funny to be severely worried about inflation in July, only to become severely worried about deflation by Thanksgiving, isn't it?

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.

Nikkei Weekly Outlook: Eye on I-banks, Inflation and the Yen

Hello Steven,

We've also got 63.3 percent of the issues in the TSE 1st section trading above their 10-week MAs. That number reached a rather eye-catching 84.4 percent in mid May, and it's been stubbornly high since then, even with the recent pullback. Either the market is embarking on a serious trend higher, which I would tend to doubt, or that number needs to come down below 50 percent, perhaps to 40 or just below, where I would expect safer buying.

I continue to like Sumitomo Trust, and full disclosure: I have a position. At below 850 (closed up 29 at 852 today), it yields more than 2 percent, and the dividend is solid. Actually, some of the banks here are still trading at undeserved discounts, IMHO. Indeed, Wall Street will either erase some of those discounts or pad them this week. But I continue to buy on bouts of weakness. The systemic risk seems to be over there (stateside), not over here.

Japanese Market Awakening from Its Long Slumber?

Lies, damned lies, and statistics.

Sure, Japan is outperforming in the short time frame of less than 90 days. Yes, Japan is up from the March lows ~20 percent versus ~10 percent for the US.

But one would assume that you are aware that Japan bottomed nearly a full 35 percent (!) off its 2007 highs, whereas the US bottomed roughly 19 percent off its 2007 highs.

So the US currently stands (basis the S&P 500) about 11 or 12 percent off its 2007 highs, while Japan's Nikkei 225 still remains, after this 20 percent rally, about 21 percent below its 2007 highs. Yes, Virgina, it takes more of a percentage gain to get back the larger percentage loss, and Japan is still hanging on to a dandy loss from last year. In fact, Japan is still farther down from it's 2007 highs than the S&P 500 was at the apparent *bottom* of its swoon on March 17.

Now tell me who is outperforming whom in, say, the past 11 months.

Note: The TOPIX is running about 3 percent better than the Nikkei, but both Japanese indices languish much lower compared to their 2007 highs than the S&P 500. An equivalent S&P 500 loss from the 2007 highs would have taken that index down to somewhere just above 1,000. So far, it's never gotten close.