PM Abe's plan for $265 billion stimulus puts pressure on BOJ to ease
Date
7/28/2016 5:43:32 AM
(MENAFN- ProactiveInvestors - UK) Fuller Treacy Money, 08:26
PM Abe's plan for $265 billion stimulus puts pressure on BOJ to ease
Japan's prime minister unveiled a surprisingly large $265 billion stimulus package on Wednesday to reflate the world's third-largest economy, adding pressure on the central bank to match the measures with monetary stimulus later this week.
The earlier-than-expected announcement to boost the flagging economy sent Japanese and other Asian stock markets higher while it weighed on the safe-haven yen, but lacked crucial details on how much of the package would be direct government spending.
The size of the package, at more than 28 trillion yen ($265.30 billion), exceeds initial estimates of around 20 trillion yen and is nearly 6 percent the size of Japan's economy. It will consist of 13 trillion yen in "fiscal measures," which likely includes spending by national and local governments, as well as loan program.
"We need to take steps to support domestic demand and put the economy on a firmer recovery path," Shinzo Abe said in a speech in southern Japan on Wednesday. "I want to use various measures to increase our escape velocity from deflation."
The market expects the Bank of Japan to produce some fire power of its own at its rate review ending on Friday.
Eoin Treacy's view
In last night's Audio I discussed the likelihood that the 100 represents something of a Rubicon for the Japanese as they decide how next to try and re-instil an inflation bias in economic activity. Today's announcement of fresh fiscal stimulus is likely to be accompanied by additional measures from the BOJ; in a further iteration of the fiscal/monetary partnership that is the primary attribute of Abenomics.
Email of the day on the importance of a global perspective
I want to say thanks for all your interesting charts from all over the world. You both give us a fantastic view from around the globe! Some examples, Valeant, Kinder Morgan, Orocobre and metals. They have all recently helped me pay my expenses and more. And last but not least, Thank you for not bringing Brexit up every day, I suppose you have a lot of customers living outside England and Wales and a few of us do not think Brexit is the center of the world. A Swedish Citizen, and FM for more than 25 years. (With an international portfolio.) Keep up your good work.
Eoin Treacy's view
Thank you for your kind words and congratulations on seizing opportunities as they have presented themselves. It's a big world out there and while the political ramifications of Brexit remain a major topic of conversation, not least in the UK and Europe, I believe we have a responsibility to focus on the investment ramifications of the event and also the fact that there are a great many asset classes for which the referendum has been a non-event.
Musings From the Oil Patch July 26th 2016
Thanks to a subscriber for this edition of Allen Brooks' ever interesting report for PPHB which contains an interesting discussion on the longevity of products but here is a section on the liquefied natural gas market:
In recent months, two LNG cargoes from Cheniere Energy's (LNG-NYSE) Sabine Pass export terminal in Louisiana have been delivered to Kuwait and Dubai. So far, since it began shipping LNG in February, Cheniere has sent cargos to seven countries, including Argentina, Chile, Brazil, India, Portugal, Dubai and Kuwait. The shipments to the Middle East reflect the soaring demand for energy in these countries. (As a testament to the nation's energy demand issue, Saudi Arabia recently disclosed it has been drawing on its domestic oil inventories to meet the summer energy demand surge and to avoid having to further boost oil production above the country's current 10.5 million barrels a day rate.) As all he countries in the Middle East have rapidly growing populations, their domestic demand is growing and tends to soar during the hot summer months. Most of these countries have large natural gas resources, but other than Qatar, which is currently the world's largest LNG exporter, they are less developed. We expect the rest of the countries in the region will step up the pace of their natural gas resource development.
In order to appreciate the market potential for cheap U.S. natural gas, Kuwait's LNG imports exploded from one million tons in 2012 to 3.04 million tons last year, according to the Middle East Economic Survey. We know that Saudi Arabia has been ramping up its drilling for natural gas in order to power more of the country's water desalination plants and electricity generators. By using more domestic natural gas, Saudi Arabia will be able to reduce the volume of crude oil burned to power these facilitates. That will enable Saudi Arabia to have more of its crude oil output available for export and to generate income for the government, rather than burning it under utility boilers. For the meantime, we expect more U.S. LNG cargos will find their way to the Middle East. Those LNG exports will help to tighten the domestic gas market and send natural gas prices higher as we move into 2017, but we are not sure that the Middle East will become a long-term U.S. LNG export market. But the industry will take whatever demand it can find it now.
Eoin Treacy's view
For much of the last century natural gas was in such abundance that it had no economic value and was burned off as a by-product of oil drilling. With increasing demand for less polluting, but energy dense resources, to provide heating, cooling and cooking natural gas has experienced a renaissance.
Security Landscape Continues to Evolve
431 million new malware variants seen in 2015, an increase of 36% Source: Symantec Internet Security Report, April 2016
The mean number of days to resolve cyber-attacks is 46, with an average cost of $21,155/day (global, standardized into U.S. dollars) Source: Ponemon 2015 Global Cost of Cyber Crime Study, October 2015
9 breaches in 2015 with more than 10 million identities exposed: a total of 429 million exposed Source: Symantec Internet Security Report, April 2016
The mean annualized cost of cybercrime to global organizations is $7.7 million/year (standardized into U.S. dollars) Source: Ponemon 2015 Global Cost of Cyber Crime Study, October 2015
Eoin Treacy's view
The growth of cybercrime is nothing short of exponential not least because it is comparatively cheap to develop, it is global in nature, prosecution rates are woefully low and the rewards are highly attractive. Combatting the threat requires a war footing to be adopted by corporations and outside of the high tech sector many companies have proven ill-equipped to deal with the challenge.
Fuller Treacy Money