Good evening to you all. In a press release issued only minutes ago,
the Bank of Japan stated "Japan's economy is caught in a vicious cycle of
sluggish demand and falling production with no recovery yet in sight."
Japan is fighting its deepest recession since World War II, with
unemployment and bankruptcy levels hitting record highs. The bank
suggested that private consumption has not shown any recovery, despite a
special income tax reduction, which contradicts earlier expectations of a
positive impact on consumer spending.
In addition, the Bank of Japan reports banks are extremely hesitant to
lend money due to the condition of the economy and borrowing companies,
which is putting pressure on companies trying to stay afloat, especially
small business. This, in turn, is decreasing consumer confidence which
leads to muted spending.
In short, a vicious cycle.
As a consequence, the BOJ stated "the economy is hardly expected to
recover immediately, judging from the negative interactions of economic
events and financial constraints."
NIKKEI AVERAGES
As of 11:40 PM EST, the Nikkei Stock Average is down 1.4% to 12,892.
Stock prices fell quickly amid rumours that Japan's largest brokerage,
Nomura Securities, is facing massive losses.
A Nomura representative, speaking on condition of anonymity, said the
brokerage would be making an announcement later in the day (sometime
tomorrow morning for North America).
TRADE SURPLUS
In other news, Japan's trade surplus rose 43.6% in August, compared to
the same period one year ago, the government announced. The increase was
higher than economists had expected and was the 17th consecutive monthly
increase in the surplus.
The current account deficit, quite simply, measures the difference
between imports and exports. The surplus signifies that Japan is
exporting far more than it is importing goods.
OUR COMMENTS
Wall Street may be trying to ignore or forget global economic
fundamentals, which has translated into higher trading as of late.
Reports such as these should make it very clear that global economic
conditions continue to deteriorate. When the Japanese lower taxes AND
interest rates without yielding any results, we can only expect the worst
is yet to come.
As such, we continue to use current market increases to raise cash. The
risk:reward ratio continues to heavily lean on the risk side.
Have a great day (early morning actually)
Regards,
Agora.
The Investor's Investor. Published by Agora International Enterprises Corp.
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