In the U.S., Wall Street is already looking forward to another rate cut by the Feds. The short-lived stock market rally ran out of steam, and is holding on with hopes of further rate cuts. That is the problem with developed economies. Growth is always slim, as compared to developing nations. So when the overall economy is bad, it is more difficult to find stimulants within the economy.
Japan is the perfect example. It's market ran a huge bubble in the 80's that created tremendous wealth for the Japanese. However, when the bubble busted in the 90's, the country has been trying to find growth for the past 20 years. That is two decades. Because it is a developed nation, it has a hard time finding sectors that can bring such a large economy back on the growth track.
The newest report a jump in the nation's jobless rate and a continued decline in consumer prices. But in some good news, the government said Japanese industrial production rebounded 3.4 percent in August after declining in July due to plant shutdowns after an earthquake hit north-central Japan, cutting supplies from a major auto parts maker.
The unemployment rate, meanwhile, worsened to 3.8 percent in August from 3.6 percent a month earlier, the Ministry of Internal Affairs and Communications said, the first rise since September 2006.
Japan's nationwide core consumer price index fell for the seventh straight month, falling 0.1 percent in August from a year earlier, the ministry said. That suggests Japan has yet to escape from deflation.
A lack of inflationary pressure will likely cast doubt on the Bank of Japan's decision to raise rates in the coming months, even as the central bank deals with lingering concerns over a U.S. economic slowdown and the fallout from the subprime mortgage problems.
The core CPI for the Tokyo metropolitan area -- leading price indicator for rest of nation -- fell 0.1 percent in September from a year earlier. Economists had forecast a flat reading. Looking ahead, the ministry said it expects output to dip 0.8 percent in September and then increase 4.1 percent in October, based on surveys of companies.
If you want to invest in Asia, Japan clearly is not a good place to do so. When compared to the triple digit growth in stock prices in China, India, and South East Asia, Japan holdings in your portfolio should be dumped.
Of course the concern now is that China is also running up a bubble. I agree. But this is the largest bubble anyone has seen in decades, if not the biggest in 21st century. When this bubble bursts, it would be very devastating. However, the fact remains, it is still getting bigger. So why not jump on the gravy train? You know it's a controlled economy. So unlike the States or Japan, the government will continue to prop up its market at least until end of the 2008 Olympics. What happens after that I have no clue, but making money today is what I care about. In my previous blogs I've advocated cashing out Chinese stocks in 2008, and I still do. What I'm saying is, you can still make money from today until after the Olympics. It would be short term plays, but I say adding another 10% to your portfolio in the next 6 months probably is a better idea than having it sit idle, along with the rest of the Japan's economy.
Where would I invest? I'd look into China petro, and chemical, China Life Insurance.
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