Abenomics


The Oriental Economist Report - January 2017

Richard Katz's January issue of the Oriental Economist includes reports on Why Japan Needs Boost in Productivity - Risk of Zero Per Capita Growth, The Abe-Putin tête-à-tête without Notetakers - “Secret Understanding”, and No Equivalent to Trump or Le Pen or Brexit - Why No Populism in Japan?

Accounting Illusion No Longer Works in Corporate's Favor Profits Slide on Yen Reversal

Key points of this report, - The current profits of Japanese corporations have fallen in the last three quarters. For all corporations, current profits are down 16% from April-June 2015 - Among manufacturers, who are the biggest multinationals, profits are down a whopping 29% from three quarters ago to a level first reached 13 years ago in 2003 - In part, profits are down because sales have slumped, but an even bigger reason for the plunge in profits is that the ratio of profits-to-sales is down 13.5% from its peak in April-June 2015 - The roller coaster ride of the yen’s value has played a pivotal role in the roller coaster ride of profits; over the last five years, there has been a stunningly high 95% correlation between the profits:sales ratio and the value of the yen ​- Most of the impact of the ups and downs of the yen on profits is a pure accounting illusion, but one that, for a while, misled many foreign investors

TOE Alert: Teflon Abe; the Curse of One-Party Democracy

Key points: - As we expected, public disenchantment has grown as Abenomics failed to deliver on its promises; in a new Nikkei poll, 50% of respondents said they were dissatisfied - However, we were wrong in our expectation that disenchantment with Abenomics would propel a steady erosion of Abe’s overall approval ratings; over the last year, approval has stabilized at around 40-50%, a high level for a PM with Abe’s tenure - There is growing expectation that Abe will call—and win—a double-election this summer of both Upper and Lower House; Abe will not, however, secure a two-thirds majority in both Houses needed to revise the Constitution

How Much Do Stock Prices Help Abe?

In this report, Richard argues why Abe's belief that the rising stock prices will help his overall approval rating is incorrect.

A Victory, not a Mandate

Hope in Abe and Abenomics disappearing.

LDP: A Victory, Not Mandate

In this report, Richard explains why Shinzo Abe and his Liberal Democratic Party (LDP) won a victory, but not a mandate.

Tax Delay the Right Move

Richard analyzes why Abe's delay on consumption tax hike is the right move to the Japanese economy.

TOE Alert: Election Likely to Buttress Abe - for a while

Abe likely to gain clout from elections--temporarily.

Japan Back in Recession: Surprise GDP Drop

The big picture is that GDP in 2014, so far, remains worse than 1997. Not a single major forecaster predicted that GDP would drop in July-Sept. The consensus forecast was in the 2.2-2.5% range, depending on the survey.

Incipient LDP/SME Revolt Against First Arrow

When some powerful leaders of the Liberal Democratic Party (LDP) complain that the “First Arrow” of Abenomics (monetary ease and yen deprecation) is causing more harm than good, you know that the credibility of Abenomics has reached a turning point. And when this coincides with an indicator from the Cabinet Office that suggests the risk of an out-and-out recession following the April hike in the consumption tax, then you know that the bloom is really off the rose.

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