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Business/Finance See other Business/Finance Articles Title: Japan Throws in the Towel on Useless “Stimulus” as U.S. Growth Slows Sharply Japan Throws in the Towel on Useless “Stimulus” as U.S. Growth Slows Sharply Mike Larson | Thursday, April 28, 2016 at 4:30 pm Completely useless. That’s what all the so-called “stimulus” from policymakers in Japan has been. The central bank there literally printed up hundreds of trillions of yen to buy everything from government bonds to stock market ETFs to Real Estate Investment Trusts. It kept interest rates near zero for many years, and just cut them into negative territory. It launched the biggest currency devaluation effort in the world. It pledged to do anything and everything to eliminate the nation’s “deflationary mindset.” The Japanese economy is on the brink of recession — again. And what has happened? Japan’s economy is on the brink of slipping into its FIFTH recession since the Great Recession in 2008. Japanese prices also just dropped another 0.3% in March, the biggest decline in three years. Total, unequivocal failure. Then overnight, we got an even bigger shocker. The Bank of Japan basically threw in the towel! It didn’t boost the size of its 80 trillion yen-per-year QE program. It didn’t lower its negative-0.1% benchmark rate any further. And it didn’t say it would buy even more stock ETFs to artificially manipulate its market higher. Result: The Japanese yen skyrocketed by almost 3 yen against the buck. The move was the biggest single-day surge since the May 6, 2010 “Flash Crash” in U.S. markets. The country’s benchmark Nikkei Stock Average also tanked 3.6%, putting pressure on markets worldwide overnight. Why do I focus so much on the wild moves in the yen? First, because you can profit from its moves as an investor. I have helped my subscribers bag multiple rounds of gains on investments in this currency since the start of 2016 (Editor’s Note: Click here to get on board with Mike’s recommendations.) Second, because I believe it underscores how central banks are losing control of the markets. Their ever-more-radical policies are failing to succeed at best, and actually hurting at worst. This is exactly what you would expect to see happen at a key turning point in the credit cycle. It also comes at a time when several sectors in the U.S. economy – fueled by incredibly easy money – are starting to break down. Just look at the first-quarter GDP report we got this morning. Growth slowed to only 0.5% in the quarter, less than the 0.7% expectation of economists and a sharp deceleration from 1.4% in the fourth quarter of 2015. In fact, it was the worst reading in two years. “Those assumptions look awful suspect to me.” Business investment plunged 5.9% – the most in almost seven years. A “core” reading that tracks domestic sales to non-government entities gained only 1.2%, the least since 2012. And remember all the massive buildup in inventories I’ve been warning about? Something that argues for deep production cutbacks, particularly in bloated industries like autos? Well, they subtracted 0.33 percentage points from GDP after lopping 0.22 points off in Q4. That’s only going to get worse if auto sales, retail sales, and other indicators weaken as I expect. Bottom line? The stock market has been on a tear due to assumptions about the success of Chinese stimulus, ongoing health in the U.S. economy, and the belief that even more central bank hocus-pocus will actually “work.” Those assumptions look awful suspect to me based on everything I’m seeing. So invest accordingly. Poster Comment: They want to get rid of a bunch of us "useless eaters". Don't give them the chance. Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest Begin Trace Mode for Comment # 1.
#1. To: BTP Holdings (#0)
Looks like in Japan as in North America most consumers have more than they need so not much of as market for goods and services. Already, 40% of food produced goes to waste. Politicians to dumb to plan/invest in better infrastructure, renewable energy, water diversion, high-speed rail projects.
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