Recession in Japan; QE in Europe
Mario Draghi, President of the European Central Bank
(Photo by Getty Images)
Futures in the U.S. markets were way down earlier this week when it was learned that Japan was in a tax-induced economic recession. Thanks to a new consumption tax, GDP fell 1.6% during the third quarter. Why this comes as a surprise to anyone is hard to understand. After all, a consumption tax is like a sales tax. The higher the tax, the less people will spend. The Nikkei 225, Japan’s best-known market index, lost more than 500 points, or almost 3% on the news.
Somewhat surprisingly, U.S. markets began to recover before the opening bell. Japan is our fourth-largest trading partner and year-to-date, it has accounted for about 5% of our total trade. U.S. investors apparently decided that wasn’t large enough for a recession in Japan to rock our economy. Besides, investors are still fixated on quantitative easing. The Federal Reserve may have cut back, but investors are finding their fix elsewhere. Mario Draghi, President of the European Central Bank, gave a speech Monday warning that economic growth in the euro zone has lost momentum. He said that buying government bonds would be an option he would consider. That’s something he had not confirmed before.
That remark was enough to immediately push up stock prices in Europe and the U.S. This just provides further evidence that asset prices continue to be driven by loose central bank policies and not by fundamental factors or expectations for stronger economies.
Read Vahan’s blog at Janjig.com.
Vahan Janjigian is Chief Investment Officer at Greenwich Wealth Management, LLC, a SEC Registered Investment Adviser, where he manages portfolios for clients in separate accounts. Dr. Janjigian is a former Forbes magazine columnist and former Editor of the Forbes Special Situation Survey. According to Hulbert Interactive, his stock picks returned more than 18% annually during one of the market’s worst 10-year periods.
Dr. Janjigian holds the Chartered Financial Analyst designation and has earned degrees in general sciences and finance from Villanova University and Virginia Polytechnic Institute and State University (Virginia Tech). He previously served on the faculties of several universities, including the University of Delaware, Northeastern University, the American University of Armenia, and Boston College, where he taught courses in corporate finance, financial theory, investments, accounting, and economics; and he currently teaches a seminar on equity investment management to business executives in Singapore through Baruch College’s Zicklin School of Business. Dr. Janjigian has served as an expert witness on matters involving portfolio management, churning, suitability, and hedge fund manager compensation.
Dr. Janjigian has published his research in numerous scholarly and professional journals; and has been quoted in many leading newspapers and magazines, including Barron’s, Forbes, The Wall Street Journal, and USA Today. He appears as a guest commentator on various television and radio networks, including Fox, CNBC, MSNBC, and CBS Radio. Dr. Janjigian is the author of Even Buffett Isn’t Perfect (published by Penguin) and co-author of The Forbes/CFA Institute Investment Course (published by Wiley).
Trending Now on Affluent Christian Investor
We’ll Get Through This Despite, Not Because Of, Government Spending
China Concealed COVID-19, Just Like It Did SARS
Panic Doesn’t Suspend Economic Laws
Premature Ending Of Quarantine = Death Panels
Factions Can’t Work Together Because We Have Different Goals
Let’s Please Not Insult ‘Stimulus’ By Calling This ‘Stimulus’
Solomon And The Pandemic
Conspiracy Theories, Sloppy Math, And Other Things To Avoid During A Pandemic
FDR Takes Lessons From Wilson
What Would Jesus Say About Inequality?
What Number Will Signal When the Dollar is About to Plunge to Zero Value?
The Futility of Managing Your Own Reputation
This App Exposes Left-Wing Companies
Who To Talk To Instead Of Talking To Yourself
The True Foundation Of America Is Individualism, Not Democracy
A Few Questions For The Many Critics Of The Gold Standard
COVID-19 And The Rise Of Christian Entrepreneurship
Follow Us
The Affluent Mix
We’ll Get Through This Despite, Not Because Of, Government Spending... April 2, 2020 | Daniel McLaughlin
Let’s Please Not Insult ‘Stimulus’ By Calling This ‘Stim... April 2, 2020 | John Tamny
Conspiracy Theories, Sloppy Math, And Other Things To Avoid During A Pandemic... April 2, 2020 | Jerry Bowyer
COVID-19 And The Rise Of Christian Entrepreneurship... April 2, 2020 | Kevin Cullis
China Concealed COVID-19, Just Like It Did SARS... April 2, 2020 | Frank Vernuccio
FDR Takes Lessons From Wilson April 2, 2020 | Jim Huntzinger
Solomon And The Pandemic April 2, 2020 | Mark Horne
Premature Ending Of Quarantine = Death Panels... March 26, 2020 | Jerry Bowyer
Panic Doesn’t Suspend Economic Laws March 26, 2020 | Daniel McLaughlin
Factions Can’t Work Together Because We Have Different Goals... March 26, 2020 | Frank Vernuccio
Debt Be Damned March 26, 2020 | Michael Pento
A Bridge Loan Too Far Blows Up World Bond Markets... March 26, 2020 | David Goldman
The Malicious Symbol Of The Blue Eagle March 26, 2020 | Jim Huntzinger
A Few Questions For The Many Critics Of The Gold Standard... March 26, 2020 | John Tamny
Solomon On How To Be A Hero March 26, 2020 | Mark Horne
Who To Talk To Instead Of Talking To Yourself... March 26, 2020 | Terry Applegate
This App Exposes Left-Wing Companies March 12, 2020 | Charles Bowyer
What Would Jesus Say About Inequality? March 12, 2020 | Roger McKinney
Who Is Stopping Needed Road And Bridge Repairs?... March 12, 2020 | Frank Vernuccio
Tariff-Free Trade Should Be A Bi-Partisan Consensus... March 12, 2020 | Nathan Cherry
Fed Cuts Rates By 50 Basis Points, Markets Shrug... March 12, 2020 | David Goldman
9 Things Christians Investors Need To Know About Handling The Dilemma Of Investi... March 12, 2020 | Jerry Bowyer
Join the conversation!
We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse.