Much has been made throughout 2013 about the three “arrows” of Japanese Prime Minister Shinzo Abe. While this deflation-fighting plan of monetary loosening, fiscal stimulus, and structural reforms has been broadly successful, I believe it will be the strength or weakness of the yen that will determine whether Japan’s economy emerges convincingly from its deflationary period in 2014.
Posts tagged ‘Shinzo Abe’
For those involved in trading the fixed income markets, August is usually one of the more mundane months. Issuance of new corporate debt slows down significantly since many global investment professionals are on vacation, forced two-week leaves, or holidays, which results in liquidity that is much more challenging. But unlike past years, we’re entering into a September time frame that is poised to be anything but boring, thus causing a likely increase in volatility. So just like the coming attractions at your local movie theater, this is what we have to look forward to in the month of September:
Specific events and their release date:
- “The Last Picture Show” (September 6) – On this Friday, the final major piece of the employment puzzle, the August non-farm payrolls, will be released to the market. This will either confirm the prevailing wisdom regarding the underlying strength of the U.S. economy and the likelihood of tapering of the Fed’s quantitative easing program, or it will provide a difficult conflicting perspective only days before the FOMC meeting. Read more
In this week’s Economic Commentary, we discussed the importance of the concept of “three arrows” in the economic policies of Japan’s Prime Minister Shinzo Abe. Definitely check out the full piece, but here’s a quick summary. In the 1500s, as the legend has it, a Japanese nobleman named Mori Motonari wanted to demonstrate to his three sons the strength that they had together, but lacked individually. He gave each son an arrow and told them to break it. Very easily, each son snapped the arrow. Then he gave each son three arrows and told them to break the bundle at once. They couldn’t because three arrows were too strong.
Mori-san hailed from the same prefecture that Prime Minister Abe comes from, so it’s fitting that Abe picked up the idea of three arrows when spelling out his economic policies meant to lift Japan from decades of deflation and economic stagnation. Abe’s three arrows are 1)easy monetary policy, 2)increased government spending, and 3)increased efficiency through economic reform. Read more
During a recent visit to the United States, the message of Japan’s prime minister Shinzo Abe to President Obama was “Japan is back!” This is Abe’s economic battle cry in his fight to end two decades of deflation, meager growth, and economic malaise. And much like Japan’s feudal lords of a bygone era, Shinzo Abe has a trusted advisor ready to lead his country into battle – a samurai, if you will. Shinzo’s samurai, to coin a phrase, is his appointee for the governor or the Bank of Japan, Haruhiko Kuroda.
Governor Kuroda’s first foray will be during this week’s policy meetings of the Bank of Japan. This week’s meetings, Kuroda’s first, will be his initial test to see if he can achieve the results that eluded his predecessor, Masaaki Shirakawa. Kuroda has assumed his own battle cry of sorts, adopting language from the European Central Bank’s Mario Draghi. “Whatever it takes!” That’s what Kuroda says he’ll do to reach a 2% inflation target within two years – a goal imposed by Abe on the central bank. Read more