Wednesday, March 12, 2014

1---Japanese Consumer Pessimism Hits New High Under Abe , WSJ

While Japan Inc. may be whistling a happy tune on the back of robust profit growth and a weaker yen thanks to the pro-business agenda of Prime Minister Shinzo Abe, a key survey released Wednesday shows that consumers aren’t in a similar Abenomics-induced state of rapture.

 The Cabinet Office’s monthly Consumer Confidence Index contracted for the third straight month in February to 38.2. That’s the worst reading since Mr. Abe entered office in January 2013 and the lowest since September 2011. Respondents were even more pessimistic than during Mr. Abe’s year-long term as prime minister between September 2006 and September 2007.

Undercutting hopes that consumers would have a greater urge to get in some last-minute shopping ahead of a sales tax increase in April, sentiment toward buying durable goods fell sharply in February, continuing a trend that started in October.
Even though recent data showed the basic earnings of workers in the world’s third-largest economy rose for the first time in almost two years in January, respondents in the February survey were less optimistic about their income growth, the value of their assets, and their overall livelihood than they were a month earlier. 

The downbeat reading prompted the government to downgrade its assessment, saying it is “on a weak note.” 
But glum as they may be, consumers still seem to be spending. Wage-earner household spending has increased consistently since September, rising 1.1% from a year earlier in January

2---Wholesale Inventories Piled Up in January as Sales Tumbled, wsj

Merchandise piled up on wholesalers’ shelves in January, likely reflecting a shift in consumer spending toward heat and healthcare during a bad-weather month.
Wholesale inventories climbed 0.6% from December, the Commerce Department said Tuesday. Sales tumbled 1.9%, the sharpest decline since the tail end of the recession in March 2009.
“Recent inventory building may have been unintentional (and perhaps the result of a temporary weather-related hit to sales), so may reverse to some extent in the coming months,” Barclays Capital economist Peter Newland said in a note to clients.
Inventories are a key component of gross domestic product, the broadest measure of the nation’s economic output. Rising stockpiles added 0.14 percentage point to the fourth quarter’s 2.4% advance and 1.67 percentage points to the third quarter’s 4.1% growth

3---Bond Trading Grinds To A Halt: Goldman Set To Report Weakest Q1 Since 2005; Revenues Down As Much As 25% Elsewhere, zero hedge

: "Analysts now expect Goldman Sachs to record its weakest first quarter since 2005 and JPMorgan Chase and Bank of America are forecast to see their lowest revenues since they bought Bear Stearns and Merrill Lynch, respectively, in 2008."

4---Guest Post: Why 2014 Is Beginning To Look A Lot Like 2008, zero hedge

Here are three more charts for your consideration, of income and employment. I’ve annotated the first chart to match what I view as the waves of financialization that have inflated speculative credit bubbles and temporarily, incomes:

Notice that the current asset reflations (or bubbles, if you dare speak the word openly) in stocks, bonds and real estate have failed to lift the year-over-year rate of change in disposable per capita income, which has been declining since 2007.

5---G7 “Warn” Russia not to “Annex” Crimea while Pravy Sector Deploy’s 20.000 “National Security Guards

It  is worth noticing that Parubiy’s overtly Neo-Nazi Pravy Sector along with the UNA-UNSO, that entertains strong ties to NATO’s GLADIO operation, were behind the mass killing of 90, and the injuring of more than 500 protesters and police officers in Kiev. It is also worth noticing the UNA-UNSO has previously been deployed in Georgia’s war against Russia.
The deployment of the new National Security Chief’ Parubiy’s 20.000 strong “National Guard” conveys that these are well organized “armies”, of Neo-Nazi and Fascist character, which will be deployed to the Ukraine’s eastern and southeastern regions and along the Russian border.

6---Is It A Bubble Yet?, zero hedge

the soaring issuance of leveraged loans really takes the cake. This is a chart to make even hardened bubble-heads dizzy. It is especially noteworthy how the current surge compares to the surge in 2007, shortly before the last bubble peaked. Nothing remotely comparable has ever been seen before. It is a mirror image of record junk bond issuance and the mania for high yielding debt in general (whereby 'high yielding' these days actually means 'not yielding very much').


Leveraged Loans

Leveraged loan issuance goes bananas – click to enlarge.



So we ask again: Is it a bubble yet? Perhaps Ms. Yellen knows

Japanese Prime Minister Shinzo Abe looks set to drive an indicator of economic hardship to a 33-year high by increasing taxes and prices amid stagnant wages.
The misery index, which adds the jobless rate to the level of inflation, will climb to 7 percentage points in the three months starting April 1 when Japan raises its sales levy to 8 percent from 5 percent, based on the median estimates of economists in Bloomberg News surveys of unemployment and consumer prices. That would be the highest level for the measure since June 1981 when Japan was emerging out of depression after the oil shocks in the 1970s.

Bank of Japan monetary stimulus designed to spur economic growth and achieve 2 percent inflation has weakened the yen by 6.8 percent in the past 12 months, eroding the value of wages to a record low. Abe, the son of an ex-foreign minister who grew up in a house with servants, is under fire from the opposition party after the cost of living surged to a five-year high.
“Inflation is really tough,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees more than $77 billion. “Those who speak favorably about inflation might have been born in wealthy families and never experienced the hardship that inflation brought.”

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