Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Summary: Japan's preliminary Q3 GDP report is due out Nov. 14th, followed by a revision scheduled for release on Dec. 8th, which can be wide of the original release. Twenty-three analysts polled by Bloomberg expect Q3 GDP to be flat, at an annualized rate of 1%. That would be the slowest expansion since 2004. While exports are seen as robust, especially in autos led by Toyota, domestic demand has been weak with blame being pointed at consumer spending due to a longer than average rainy season, negligible quarterly wage growth and a struggling stock market. Yasunari Ueno, chief market economist at Mizuho Securities comments, "A weaker-than-expected GDP number would be a headwind against the Bank of Japan raising rates this year." Meanwhile, concern is growing over tech-related inventory, but Naoki Iizuka, chief economist at Dai-Ichi Life Research Institute says, "Sustainable overseas demand will be key in reducing the risk of inventory adjustments that could cause the economy to stall." A preliminary reading of Japan's leading economic indicators showed they improved slightly over August, but at a reading of 20, still suggest contraction (>50 = expansion, <50 = contraction).
Related links: Additional coverage: Forbes.com newswire. Seeking Alpha commentary: Sluggish Consumer Spending Dampens Japan's Economic Expansion • Weak Core CPI Keeps Pressure on BoJ to Hold Rates • BoJ Keeps Rate Unchanged; Producer Prices Up Sharply • BoJ's Tankan Surprises to Upside, Investment Implications
Potentially impacted stocks and ETFs: Mitsubishi UFJ Holdings (NYSE:MTU) • ETFs: iShares MSCI Japan Index (NYSEARCA:EWJ), iShares S&P/TOPIX 150 Index (ITF), BLDRS Asia 50 ADR Index (NASDAQ:ADRA), BLDRS Developed Markets 100 ADR Index (NASDAQ:ADRD) have Mitsubishi UFJ as a top-ten holding; the first two ETFs offer broad exposure to Japan with both having mega-banks and other financial stocks as components.
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