Japan Enters a Recession?

The Japanese stock market cruised to a 7 year high, then plummets into a recession.  Isn't that appropriate?   Abenomics has been great for the stock market since November of 2012.  While it was supposed to help the economy... the people who pay taxes and work their asses off for pennies on the Yen,  yet it looks like it's done very little for anyone who doesn't own stocks.  I guess the good thing for the central banks is they can keep utilizing failed policy forever without any significant consequences..... right?  .....yeah.... exactly.

But lets look on the bright side... every recession looks a lot better when stocks are soaring to new highs.

With stock markets around the world rallying to record levels.... is there really a recession somewhere?  Surely tonight's Japanese GDP figure was just a fat finger by some statistician?

What will be even more stunning....wink wink.... is when the stock market in the U.S. opens for trade tomorrow and promptly gets bought like the entire world had a 20% off Bed Bath and Beyond Coupon.

As I type stock futures are down .45%.  If I had a nickel for every time I said "Each dip since March 2009 has been a great buying opportunity" I might be able to afford a QB coach for Mark Sanchez.

Recessions are no match for central banks who will back stop every dip... which is why they need to be bought.... and which is why this will all end very badly down the road.

The question is do you want to fight the central banks and be broke when the short opportunity of a lifetime presents itself?  I didn't think so.

Just Buy It

Just Buy The Dip

Name That Pullback




Japanese shares tumbled with U.S. index futures and sovereign bonds rallied after the world’s third-largest economy unexpectedly entered recession. Chinese shares fluctuated and the yuan gained as a link between Hong Kong and Shanghaibegan, while New Zealand’s dollar advanced.

Japan’s Topix index dropped 2 percent by 1:01 p.m. in Tokyo as gross domestic product shrank 1.6 percent last quarter from a year before, missing projections for a 2.2 percent gain. Standard & Poor’s 500 Index (SPX) futures slid 0.4 percent and the MSCI Asia Pacific Index lost 0.7 percent. The Hang Seng Index declined 0.5 percent and the yuan strengthened. The yield on 10-year Japanese bonds fell one basis point and Treasuries rose. The so-called kiwi added 0.7 percent.

Japan’s yen rebounded after touching the lowest level since 2007 amid speculation the GDP miss will prompt Prime Minister Shinzo Abe to postpone a planned sales-tax increase. As investors gain mutual access to China’s biggest stock-trading venues for the first time, the country’s banks reported the biggest jump in bad loans last quarter since 2005. Weaker outlooks in the world’s second- and third-largest economies underscore the challenge for Group of 20 leaders who agreed at the weekend to boost member output by a collective $2 trillion by 2018.

“It’s official, Japan is now in recession,” Jesper Koll, the head of Japan equity research in Tokyo at JPMorgan Chase & Co., said in a Bloomberg TV interview. “The prime minister in all likelihood is going to say, look, we’re going to reduce the likelihood of Japan falling into recession again next year by taking away the VAT hike. Vote for me, endorse me, to stick through with this policy.”

Tax Impact

Japan’s second straight drop in GDP, matching the textbook definition of a recession, followed a 7.1 percent contraction in the second quarter that coincided with an increase in the national sales tax from 5 percent to 8 percent. Unadjusted for price changes, the economy contracted an annualized 3 percent in the three months through Sept. 30, the Cabinet Office said. Japanese stocks slumped.

Just one of the 33 industry groups on the Topix climbed today. The Nikkei 225 Stock Average retreated 2.4 percent.

U.S. equity index futures are signaling declines after the S&P 500 closed at a record 2,039.82 on Nov. 14. The new high masked the smallest market moves since 1979 as the 9.5 percent rally from October’s low ground almost to a halt.

Contracts on the Dow Jones Industrial Average weakened 0.4 percent and those on the Nasdaq 100 Index slipped 0.3 percent.

U.S. 10-year yields declined four basis points to 2.28 percent, according to Bloomberg Bond Trader data. The price of the 2.25 percent security due November 2024 advanced 11/32, or $3.44 per $1,000 face amount, to 99 22/32. A basis point is 0.01 percentage point.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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