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mminion

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The alarmingly unbalanced Japanese economy and the gravity defying yen just seem to keep on keeping on (or to use the bug analogy, keep missing all oncoming windscreens) but as Herbert Stein was wont to say: "if something cannot go on forever, it will stop". (such profundity...).

 

And despite all the focus on how reliant Australia is on the rude health of China we also continue to rely heavily on trade with Japan to keep us meaningfully occupied.

 

http://www.dfat.gov.au/tradematters/aus-graph.html

 

As it happens the lower house of the Japanese parliament goes to the polls this Sunday, and it seems increasingly likely that the old conservative guard may be the big winners. If they can manage to win decisively - I dunno, is that even possible in the Japanese political system? - then we can perhaps expect sudden and major upheaval.

 

A[] [conservative Liberal Democratic Party] win on Sunday would usher in a government committed to a tough stance in a territorial row with China, a pro-nuclear power energy policy despite last year's Fukushima disaster and a radical recipe of hyper-easy monetary policy and big fiscal spending to end persistent deflation and tame a strong yen.

 

http://www.reuters.com/article/2012/12/14/...E8BD01M20121214

 

Obvious winners could include the uranium sector, amongst the possible losers could be the gas / LNG sector, and our domestic car industry. Were the waters to break on the yen I am not sure how the Aussie would be affected (?): the last thing Glenn Stevens would want is for a few million Mrs Watanabe's to decide to desert yen denominated assets for the AUD.

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wren

 

Yes I think that you are right about that being the case in recent days but ever since the gfc the yen has been trending up in terms of the USD. Apparently in recent times the Chinese have been using their USD to buy the yen which has been exerting upward pressure on the Japanese currency and in turn forcing the Japanese to buy USD denominated assets in an attempt to keep a lid on the yen. But if a conservative government came to power and simply turned on the printing presses then that could totally change the dynamics (?).

 

http://www.bloomberg.com/quote/JPYUSD:CUR/chart

 

(way out of my area of comfort here talking about currencies but how the yen has managed to keep getting stronger has been one of the great mysteries of the last few decades.)

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Dates with Destiny?

 

-----------------------------

Dec 11 (Reuters) - Sharp U.S. tax increases and government spending cuts will take effect in January unless Congress and President Barack Obama can agree on a package of deficit reduction measures.With lawmakers rushing to avert events that could trigger another recession, here is a look at key dates ahead, with estimated impacts based on research by the Tax Policy Center and the Bipartisan Policy Center, both non-partisan think tanks.

 

* Dec. 14. This was the targeted adjournment date for the U.S. House of Representatives, but it has been postponed. The U.S. Senate has not set an adjournment date.

 

* Dec. 17. Unofficial optimal date to have a "framework" for a deal in place, congressional aides say, in order to permit time for review and procedural delays in Congress. Congress can go beyond this time without much trouble, however.

 

* Dec. 21. Target date for a final deal that would permit lawmakers a full holiday break, aides say.

 

The House could be in session through at least Dec. 21 and will not adjourn "until a credible solution to the fiscal cliff has been found," according to Republican House leadership.

 

* Dec. 24. Some skeptical aides say Congress will work to Christmas Eve, possibly reaching a deal, or possibly not.

 

* Dec. 25. Christmas holiday.

 

* Dec. 26-31. If no deal has been reached by this time to raise the government's debt ceiling of $16.4 trillion, the U.S. Treasury Department will have to take "extraordinary measures" to put off possible default, as it has done before.

 

If Congress does not have a "fiscal cliff" deal before Christmas, lawmakers may have to return to Washington this week.

 

* Jan. 1. Expiration of low tax rates enacted under President George W. Bush and extended in 2010 under Obama. This event would raise taxes an estimated $1,600 per U.S. household annually.

 

Expiration of Obama payroll tax cut of 2011 and 2012. This would raise taxes an estimated $700 per household.

 

Deadline for dealing with "tax extenders" such as the corporate research and development tax credit. These and other items must be extended by year-end to be claimed in 2013.

 

Deadline for fix to the alternative minimum tax. Without action, the AMT will increase the tax bills for an estimated 27 million more Americans. T h e Internal Revenue Service will need to reprogram systems and delay refunds for millions of taxpayers until late March if the fix is not passed.

 

* Jan. 1. New taxes take effect under Obama's healthcare overhaul. One is a 0.9-percent increase in wage income tax for individuals earning more than $200,000 a year. The other is a 3.8-percent Medicare tax on investment income above the same level. These take effect regardless of the cliff outcome.

 

* Jan. 2. Without congressional action to waive or postpone them, spending cuts of $1.2 trillion over 10 years begin. Known as "sequestration," these were put in place in 2011 after a congressional "super committee" failed to devise a fiscal plan.

 

* Jan. 3. The new Congress is scheduled to convene.

 

* Jan. 7-11. Congress scheduled to be out of session.

 

* Jan. 14. Congress scheduled to reconvene.

 

* Jan. 20. Presidential inauguration day. A public ceremony is planned for the following day.

 

* February. White House releases annual proposed budget. Treasury exhausts its "extraordinary measures" and U.S. faces possible rating downgrade again.

 

* March. Funding of federal government expires with the expiration of a continuing resolution.

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Have stated a few times that it's 'the home of the meek and the slave'.

 

Looks like some a waking up to it also, this is from Armstrongs Blog.

 

US Is killing The Global Economy

Posted on December 16, 2012

 

The United States is the ONLY country that taxes American citizens even if they have never lived in the United States at any time. Once born American, you owe taxes as an economic slave even when you receive nothing and have never lived in the USA. This law passed last December that authorizes the confiscation of any firmÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s assets if they do not report what an American citizen does overseas has been devastating. Americans have been thrown out of banks everywhere. In Switzerland, you have to fill out papers to open and account swearing you are not an American citizen even if you are Swiss. Americans are being thrown out of public funds and just about everything anywhere right down to safety deposit boxes. The balance of trade will continue to collapse as foreign goods can be sold to Americans but Americans cannot open businesses overseas unless you are part of the big multinational corporations. This alone has sent the velocity of money spiraling downward. However, what is going on now is just off the wall.

 

The US government is now hunting down people who may have had one parent as an American yet they have lived outside the USA all their lives. The IRS has been hunting lineage of Canadians who had one American parent and are sending them letters informing them that by US law they should have been paying taxes their whole life to America in addition to Canada. This is sending countless Canadians running for lawyers all because the USA is broke.

 

http://www.theglobeandmail.com/globe-inves.../article584297/

 

How Americans are being treated by their own country is not as a free individual, but as economic property to pay revenue to the government regardless of where they live. NO OTHER NATION DOES THIS BUT THE USA. We are in such serious trouble with this Sovereign Debt Crisis that all liberty is being lost. Virtually every other major nation does not tax worldwide income if earned outside the country under the simple theory you pay taxes to use state services. If you are not there, you do not pay. American are owned by the government no different than the days of slavery. If your parents were slaves, you were the moment you were born. We perhaps ended private ownership of people, but we did not end state ownership of people. You must work and pay taxes and it has nothing to do with paying your ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“fair shareÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ since there is nothing owed to a citizen by the state.

 

The desperate need for revenue to pay the bond holders has destroyed everything the constitution was intended to secure.

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Well folks it could be game on, with THE black swan event of 2012 emerging from the land of the rising sun.

 

Official results are expected later in the day, but tallies by Japanese media organisations suggest that the LDP secured 294 seats. Together with the New Komeito Party's 31 seats, a coalition would have a two-thirds majority in the 480-seat chamber, putting it

in a position to override the upper house on stalled legislation....

 

..."We won more seats than even we expected," he said on Monday. "We have a very heavy responsibility."

 

http://www.bbc.co.uk/news/world-asia-20752308

 

I suspect that pretty much everyone would have assumed that the Japanese would produce another inconclusive outcome, just as the Europeans have been doing for the last few years, kicking that can down the road as they say. No significant lurch towards disaster but nothing significant enough to rectify the underlying problems either. Even the conservatives apparently were not expecting to gain a two thirds majority so their expectations would have been that they would win office but could go through the motions of addressing the core faults in the Japanese economy whilst relying on the upper house to stop them from doing anything of great consequence. But if they do manage to get that two thirds majority then they do indeed have to take responsibility for pushing through real changes.

 

I can only assume that the North Koreans - by shooting off that missile last week - and the Chinese - by flying a military plane over the disputed islands several days ago - were hoping to weaken the hand of whoever managed to come out on top in Japan. But this result is probably not quite what they were hoping for.

 

It will be interesting if such a radical political change affects the deliberations of Japan's central bank. From memory they next meet this coming Wednesday so that will be an early chance to see how dramatic a change happened on the weekend. (I cannot believe we have to wait another month to find out the consequences of the US presidential election which took place in early November...)

 

 

 

 

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India to replace China as the world's growth engine?

 

http://www.bloomberg.com/news/2012-12-16/w...wth-engine.html

 

ByA. Gary ShillingDec 17, 2012 7:30 AM GMT+08

 

Most of us still look at China, the world's second-largest economy, as the undisputed leader among major developing countries. In the long run, however, I'm betting on India to emerge as the more significant global economy. Those who are dazzled by China often forget that much of the rapid growth before 2008 was caused by the shift of global manufacturing from Europe and the U.S., not by domestic-oriented activity. China's economy remains export-driven, with consumers accounting for only 38 percent of gross domestic product, far below the levels of many developing and developed countries.

 

etc etc.

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LOS ANGELES (MarketWatch) -- President Barack Obama has made a new offer to avert the U.S. fiscal cliff of looming tax hikes and severe spending cuts, moving closer to the Republicans' position, reports said late Monday. The White House's latest counterproposal includes $1.2 trillion in revenue increases and $1.22 trillion in spending reductions, Reuters reported, citing an unnamed source familiar with the negotiations. Obama's latest offer would also use the "chained consumer price index" for regular cost-of-living increases to Social Security, but with protections for the vulnerable populations," Reuters reported. Meanwhile, the Associated Press cited its own unnamed source as saying the Obama offer Monday called for increasing taxes on those making more than $400,000, a higher threshhold than the president previously proposed. Obama's offer also added an additional $200 billion in spending cuts over the coming decade compared to his previous offer, the AP report said. Obama met again Monday with his chief Republican negotiating partner, House Speaker John Boehner, as the two seek to craft a deal to stop draconian austerity measures passed last year from coming into effect at the start of the coming year.

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Dates with destiny (for all of us given we own/trade shares) up to and including Christmas Day:

--------------------------------------------------------------------------------------------------------------

Dec 11 (Reuters) - Sharp U.S. tax increases and government spending cuts will take effect in January unless Congress and President Barack Obama can agree on a package of deficit reduction measures.With lawmakers rushing to avert events that could trigger another recession, here is a look at key dates ahead, with estimated impacts based on research by the Tax Policy Center and the Bipartisan Policy Center, both non-partisan think tanks.

 

* Dec. 14. This was the targeted adjournment date for the U.S. House of Representatives, but it has been postponed. The U.S. Senate has not set an adjournment date.

 

* Dec. 17. Unofficial optimal date to have a "framework" for a deal in place, congressional aides say, in order to permit time for review and procedural delays in Congress. Congress can go beyond this time without much trouble, however.

 

* Dec. 21. Target date for a final deal that would permit lawmakers a full holiday break, aides say.

 

The House could be in session through at least Dec. 21 and will not adjourn "until a credible solution to the fiscal cliff has been found," according to Republican House leadership.

 

* Dec. 24. Some skeptical aides say Congress will work to Christmas Eve, possibly reaching a deal, or possibly not.

 

* Dec. 25. Christmas holiday.

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