Tuesday, May 7, 2013

Japan's rebound for real

“The Japanese stock market has been in decline for nearly 25 years, and all of its surges since the beginning of its deterioration have ended in new lows.  So is the recent 43% jump in four months really a sign that the worst is over?  Many investors think so, thanks to a new prime minister, Shinzo Abe.  He has pledged to do whatever it takes to end deflation and bring about inflation.  Japan’s plan is to weaken the yen, which will make the country’s many export companies more competitive around the world, lift their profits, create more jobs and boost the economy.”  [Kiplinger’s Personal Finance Adviser, May 2013]

Comment: As I noted in the Feb. 18 post, Japan was the first to enter deflation well before any other nation and will likely be the first to emerge from it.  It may turn out that while the U.S., China and other nations are experiencing their own fight against the deflationary headwinds created by the 120-year Kress cycle in 2014, Japan bucks the trend and leads the way into a new period of long-term inflation.  As I wrote then, “In the post-2014 world, Japan is worth keeping an eye on as a potential leader.”

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