{"id":15918,"date":"2016-01-03T11:12:35","date_gmt":"2016-01-03T16:12:35","guid":{"rendered":"http:\/\/olduvai.ca\/?p=15918"},"modified":"2016-01-03T11:12:35","modified_gmt":"2016-01-03T16:12:35","slug":"the-incredible-shrinking-benefits-of-massive-japanese-money-printing","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=15918","title":{"rendered":"The Incredible Shrinking Benefits Of Massive Japanese Money Printing"},"content":{"rendered":"

The Incredible Shrinking Benefits Of Massive Japanese Money Printing<\/a><\/h3>\n
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Excerpted from JPMorgan CIO Michael Cembalest 2016 Outlook,<\/em><\/p>\n

Something is wrong with this picture<\/strong><\/u>.\u00a0 In the US and Japan, corporate profits sank during the global financial crisis.\u00a0 In the US, the profit recovery was accompanied by a recovery in household income.\u00a0 In Japan, however, corporate profits and household income moved in opposite directions, as dynamics that helped profits recover did not help consumers.<\/p>\n

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How can we explain the outcome in Japan?<\/strong><\/u>\u00a0The benefits of a weak Yen are mostly concentrated among large corporations, given translation gains on offshore non-Yen income relative to Yen-denominated costs.\u00a0\u00a0For smaller companies and households, a weaker Yen simply resulted in imported inflation.\u00a0<\/strong>\u00a0While consumer spending has stabilized after a decline caused by the imposition of a Value Added Tax in 2014, there are few signs of a rebound to pre-VAT levels.\u00a0\u00a0Japanese GDP growth has been volatile and averaged 1.5% in 2015; we\u2019re expecting a similar outcome in 2016.\u00a0\u00a0<\/strong><\/p>\n

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In October 2015, the Bank of Japan did not take further steps which markets were anticipating\u00a0<\/strong>(e.g., an increase in equity ETF purchases from \u00a53tn per year, an increase in REIT purchases from \u00a590bn per year or an increase in government bond purchases from \u00a580tn per year).\u00a0\u00a0Perhaps concerns about the negative domestic impacts from a weaker Yen are affecting BoJ policy.<\/strong><\/p>\n

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Our contacts in Japan believe that the BoJ is no longer being pre-emptive, and will wait until November 2016 to act.<\/strong><\/p>\n

The Japanese experiment.<\/strong><\/u><\/p>\n

There are few precedents for the kind of experiment Japan is conducting.<\/strong>\u00a0 At the current pace of BoJ purchases, private sector banks might actually run out of JGBs by the end of 2016, at which point the BoJ would have to buy them directly from the non-bank private sector;\u00a0I think it\u2019s fair to say that no one really knows what would happen then.\u00a0<\/strong><\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Incredible Shrinking Benefits Of Massive Japanese Money Printing Excerpted from JPMorgan CIO Michael Cembalest 2016 Outlook, Something is wrong with this picture.\u00a0 In the US and Japan, corporate profits sank during the global financial crisis.\u00a0 In the US, the profit recovery was accompanied by a recovery in household income.\u00a0 In Japan, however, corporate profits […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[57,1719,452,11400,3926,670,1478,4318],"class_list":["post-15918","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-japan","tag-bond","tag-japan","tag-michael-cembalest","tag-monetization","tag-recovery","tag-yen","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15918","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15918"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15918\/revisions"}],"predecessor-version":[{"id":15919,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15918\/revisions\/15919"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15918"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15918"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15918"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}