Strong yen threatens GDP growth and the equities market


12 Mar

Strong yen threatens GDP growth and the equities market

It is essential that the yen weaken. Consumption and leading indicators are wavering. Exports and corporate earnings are faltering. Going long the Nikkei is premature.

Key points

  • The strong yen is threatening Japanese growth
  • Risk of economic slowdown in Q1 2018
  • The export cycle has already decelerated
  • Corporate earnings growth is faltering
  • Private consumption trends remain moderate
  • Leading indicators are lacklustre
  • The yen has temporarily regained its safe haven status
  • The BOJ has no choice but to persist with its monetary policy to weaken the yen
  • Finally some signs that inflation is gaining momentum
  • Still too early to go long the Nikkei
  • Underweight Japanese equities
  • The yen must weaken