Think Japan being out of a recession will help stocks go higher? Think again

By: ispeculatornew
Date posted: 08.17.2009 (5:00 am) | Write a Comment  (3 Comments)

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japan_overview_2The spectacular rise in North American markets in 2009 has created the fear of a rellapse as many think the market might be overly positive. This weekend was a good example of why. Japan, the world’s #2 economy, is out of a recession with an impressive 3.7% expansion in the last quarter. But if you think the markets have been impressed, I can tell you right now that you are wrong, very wrong.  JP Morgan senior economist Masamichi Adachi said “the basic contours of the growth is what we had expected: Consumption, exports and public works all contributed to the positive side.”

In fact, when the numbers were announced, the Nikkei index actually dropped 2,4% prompting many to wonder what investors were actually anticipating. That problem might occur when numbers start to turn positive in the US as investors might be expecting a V-shaped recovery which most economists agree is very unlikely.

To be fair, Japan’s GDP was due to rebound after dropping a spectacular 11,7% in the last quarter, a number that is difficult to even imagine for most US investors. Of course, Japan’s economy always provides a good view of the world economy as an important portion of its economy is based on exports, of cars, technology, all things that have been going through very difficult times in these tough economic times.

Now the question remains how investors will react when the US actually does move out of the recession, especially considering a lot of the current growth actually originates from the US government as long as that is the case, it can be viewed as being unsustainable by many….

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  1. Comment by Frank — August 18, 2009 @ 10:18 am

    Actually, Japan’s recovery is vulnerable unless demand for exports grows and consumption maintains stable. We will see…

    For the U.S., retail sales and consumer sentiment numbers indicates that the economy is still weak… Even, a USA TODAY/Gallup poll found that 57% of Americans think President Barack Obama’s economic stimulus either had no impact on the recession or made it worse… Maybe, like you said, stock markets are being overly positive!

  2. Comment by IS — August 23, 2009 @ 7:00 pm

    I don’t get it how it could have “not had an impact”, just does not even sound possible….

    But in any case, yes, I agree, Japan is very vulnerable right now

  3. Comment by Frank — August 24, 2009 @ 8:08 am

    You might not get it. But. it’s all about perception. The moment that you put 100% of your faith in a president is the same moment you’ll be disappointed…

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