Tampa Prep 2009-2010 Impact Defense File

AT: Japanese Economy

He said there was no change to the bank’s basic monetary policy stance, which is to adjust rates by closely examining upside and downside risks. Market adjustments amid repricing of risks would take time, making it unavoidable for banks to incur losses, Mr. Fukui said. At a financial committee in parliament’s lower house, Mr. Fukui said that Japan’s economy had become more resilient to external shocks, but that “downside risks to the global economy are heightening and their impact on Japan’s economy remains uncertain. “We will fully examine not just our main economic scenario” but the risks to the country in guiding monetary policy, said Mr. Fukui, whose term expires next month. The Bank of Japan has long said it will raise rates gradually, as its current policy rate of 0.5 percent is so low it could lead to overheating in the economy in the long term. But shaky global markets, concern over slowing American growth and growing pessimism over Japan’s economic outlook have kept the bank from raising rates for a year. A recovery in share prices since late January has led investors to cut back expectations of a rate cut this year. Mr. Fukui said Japan’s growth was slowing partly because of a slump in domestic housing investment. But it has become more resilient to external shocks than in the past and a positive cycle of output, incomes and spending remains intact, he said. “It is highly likely that the Japanese economy will continue to expand moderately,” he said.

TOKYO (Dow Jones)--The Japanese government Friday upgraded its assessment of the economy, saying it "has been picking up" as a result of recovering capital investment and strong exports. The government also said in its monthly economic report for June that "the foundation for a self-sustaining recovery is being laid." It was the first time for the government to raise its economic view since March. Last month, it said the economy was picking up but lacks autonomous growth factors. "The gradual economic recovery trend is intact," Economy Minister Satoshi Arai said at a press conference after the release of the monthly economic report. "A self-sustaining recovery is coming into sight." Steady overseas demand for Japanese exports and rebounding corporate capital spending helped the economy grow at a 5.0% annualized pace in the first quarter. New Prime Minister Naoto Kan has called for policies to encourage strong economic growth and fiscal health in the world's second largest economy. The ruling Democratic Party of Japan, which Kan leads, aims for average real growth of over 2% in the decade ahead.

Paul Danis (CFO of Lehman Brothers) 2008: US Housing Market Crunching Banks, Earnings and Economy. http://www.marketoracle.co.uk/Article5737.html

“The outperformance of Japanese stocks over the past few months looks set to continue, believes Paul Danis, equity strategist at Lehman Brothers.

“‘After strongly underperforming from early 2006 to March this year, Japan has outperformed the global equity market by 14% in dollar terms and 24% in local currency terms since mid-March,' he says. ‘We think that the rally has legs.'

“Mr Danis notes that the total cash yield in Japan has bucked the global trend and kept rising as net stock buybacks have increased, in contrast to the US and UK. ‘We view this development as supportive for two reasons. First, it reduces equity supply. Second, it is a vote of confidence from the Japanese corporate sector.'

“Mr Danis also says that while the economic backdrop in Japan is far from great, he expects growth to be strong relative to the rest of the world. ‘Some key Japanese economic indicators are showing resilience, and there are continued signs that Japan's economy is exiting a deflationary period.'