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Japanese export data for January registered at an abysmal -45.7% year-over-year. The decline in demand for Japanese products was felt hardest in the US, where the sequential decline exceeded 50% on a one, two, and three year basis. Imports declined 31.7% Y/Y for the month.

As job cuts pick up pace, Japan appears poised to submerge back into stagnation for a prolonged period as it waits helplessly for returning demand from abroad.

Although it is anticipated that Prime Minister Aso’s government will introduce new stimulus plans as the fiscal year draws to a close in March, internal data points like domestic auto sales (Toyota registered January sales at home that are the lowest since they began releasing data in 2001) and anecdotal media reports suggest that the Japanese consumers have begun to hoarding cash as they did during the “lost decade”, leaving the odds heavily stacked against any attempt to kick start internal demand.

The USA better be very careful in letting her Dollar reflate. The output of the Japanese Yen reflating in January is as ugly as it gets.

Andrew Barber
Director