TOE


TOE Alert: BOJ throws in the towel

The keypoints of this report include, - The Bank of Japan has abandoned the pretense that it can achieve its 2% inflation target in two years, or any other particular timeframe - In the face of pressure from private banks, it refrained from going more deeply into negative rate territory regarding bank reserves at the BOJ - In another so-called “new framework” it has switched its main operating target: from an increase in the monetary base to keeping 10-year bond yields at zero - The BOJ also issued a Comprehensive Assessment of why it failed to meet its 2% target, but there is not a lot of culpa in its mea culpa; it keeps insisting that its policy will eventually work - There is no talk of what is really needed: a fiscal-monetary combination

TPP on the Ropes, Part 4

Key points included in this report are, - Ryan tells GOP members of House Obama has run out of legal time to force TPP ratification vote this year - Froman hosts breakfast of TPP Ambassadors and says US will not reopen settled issues - US gave up little in market-opening in return for the concessions it demanded of others; ITC says TPP will boost America’s global exports by just 0.2% of GDP - US could have lifted imports five times as much if it further opened government procurement, but it could not do so because Congress would have rejected the pact - Imagine the resentment of others at both the way the US negotiated and now the notion that it will talk away from a pact it virtually wrote - American state losing ability to corral special interests to compromise for the broader national interest

TPP on the Ropes, Part 3

Key points included in this part three of the report are, - Hatch says “progress” in talks with White House on 12 years for biologics, but he said something similar in the spring and it went nowhere - Hatch claims some TPP countries will to go to 12, but informed sources call this “unrealistic” - Not clear whether Obama Administration is even asking anyone for 12 years - Number two and three GOP leaders in Senate (Cornyn and Thune) seem unaware of any WH-Hatch talks, and say concessions on tobacco also needed; Thune says “odds are not good” - Hatch says, even with biologics solution, hard to get ratification - How could Froman ask other countries to make new concessions if he cannot reassure them it will lead to ratification?

TOE Alert -- Banks, FSA Push Back Against Negative Rates

The Bank of Japan’s (BOJ) failed negative interest rate policy (NIRP) is provoking increased opposition among the big banks and the Financial Services Agency (FSA), the ministry which protects them

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

The Oriental Economist - May 2016 Issue

Richard Katz's May 2016 issue of the Oriental Economist Report

The Oriental Economist - April 2016 Issue

Richard Katz's the Oriental Economist April 2016 issue includes reports Playing Trade Poker with Trump, Will a ‘double-election’ follow this summer - Second Tax Delay, Sad Shunto, Fiscal Straits Pit Elderly Against Children- Daycare Dilemma, and Pharaonic Construction Program - Call of the Crane.

TOE March 2016

Richard Katz's March 2016 issue of the Oriental Economist. Topics include Abe’s Approval: A Mile Wide, Just An Inch Deep, So Strong and Yet So Weak; Negative Rate Backfire, Tax Postponement Mulled; Raising Profits without Raising Sales, A New Bottom Line; Nuke Power Plans Don’t Add Up and Flood of New Diet Members Decimates LDP ‘Old Guard’ - Abe’s New Conservativism

TOE Alert: Court Injunction Probably Just Delays, Not Prevents, Nuke Restarts

Key points: - Court decision ordering shutdown of two nuclear reactors will likely just delay, rather than prevent, restarting many of Japan’s reactors - High courts will likely maintain their past rulings that lower courts must defer to the expertise of the nuclear regulators - Still, the decision could lead to other court cases causing further delays and more costs for the utilities - If the courts make the utilities add additional safety measures, that could lead the utilities to lessen the number of reactors they find financially viable - Tomorrow is the fifth anniversary of the march 2011 Fukushima disaster, and only two nuclear reactors are back in operation, far less than any pro-nuclear policymaker to whom we spoke expected by this time - The Abe administration policy is to have nuclear power supply 20-22% of all electricity in Japan by 2030; this goal is unlikely to be met

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

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