Japan exports and industrial output, US markets, Jakarta election
Japan exports and industrial output – The only bright spotsJapanese exports are strengthening rapidly and the outlook for manufacturing is brightening. In March, overseas shipments in yen terms rose by 12% YoY, almost double the pace forecast by the consensus. In US dollar terms, our preferred measure, exports were up 10% YoY with both export prices and volumes continuing to gain. Interestingly, over the last five months it is rising demand from China and the rest of Asia, not Europe and the US, that has been behind the strength of export volumes which increased by a further 6.6% YoY in March.
US Markets – Earning some respect?
This past week or so, there has been much ado about what the mainstream calls the ‘air coming out of the Trump reflation trade’. Ironic enough, since it was that same mainstream which piled mindlessly into said ‘trade’ – loosely, a switch from bonds to stocks, coupled with a little dose of piggy-backing on the keen Chinese appetite for commodities and a not altogether consistent preference for the US dollar over its rival currencies – in the first instance!
Jakarta Governor – The Empire strikes back
There was much huffing and puffing about the rise of racist politicking in Indonesia when the result of Jakarta’s run-off gubernatorial election was announced last week. The outgoing governor, Basuki Tjahaja (Ahok) Purnama, inherited the post after Joko Widodo, the former Jakarta governor and Ahok’s running mate in the 2012 election), won the presidency in 2014. Mr Purnama is a Christian and ethnic Chinese and was considered an excellent administrator. He lost – by around 20 percentage points – to Anies Baswedan, a political novice backed by the head of the Gerindra Party, Prabowo Subianto (who lost badly to Mr Widodo in 2014). There was indeed an Islamist feature to the election.
Asianomics, founded by Dr Jim Walker in 2007 and based in Hong Kong, specialises in economic analysis research, cross-referencing their work with credit cycles, profit cycles and cash flows. Asianomics focus is on developments in the Asia-Pacific region, and they also cover developed markets like the US and Europe.
The Austrian Economics model provides a framework for the economic research. The basis of the School of Austrian Economics is that economies work more efficiently and effectively when companies and individuals are free from excessive interference by government and special interest groups. The Asianomics economic research team includes Deputy Chief Economist Sharmila Whelan who is recognised for non-consensus thinking and her depth and quality of primary research, and Chief Economist Dr. Jim Walker.
Asianomics’ subscribers have access to regular economic commentary, stand-alone Country Reports, Special Reports and Investment Strategy Reports. Dr. Jim Walker also provides weekly webcasts.
Dr. Jim Walker is regarded as one of Asia’s leading economists. Prior to setting up Asianomics, he was the Chief Economist at CLSA Asia-Pacific Markets, where he worked for more than 16 years. He has achieved numerous ‘Best Economist’ rankings in the Asiamoney, Institutional Investor and Greenwich surveys of fund managers.
Previous successful calls include:
- In 1995 Dr. Jim Walker wrote about the prospect of Asia being forced off its de facto dollar peg “within the next two-three years”. The Asian Crisis, precipitated by the Thai baht devaluation, began in July 1997.
- Forecasted the US 2007 downturn and financial sector meltdown in series of ‘Apocalypse’ reports.
- Called early the upswing in the Indian stock market in the final quarter of 2013.
Recent Recommendations:
- Overweight China - We are overweight Chinese equities with momentum improvement in the economy.
- Short Sterling, Long Renminbi - China’s currency offers good upside with a positive carry.
- Short European Financials, Long Indian Financials - This is the simplest pair trade to play superior demographics and growth in Asia relative to the region with the biggest problems.
- Long EM Asia, Short Developed countries - South and SE Asia, and direct investors from North Asia, are ‘buy and hold’ investment bets.
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