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
Sorry. No data so far.
Follow Us
The Affluent Mix
Media Malpractice April 6, 2021 | David Bahnsen
Persecution Of Christians: The 21st Century Crisis Which Is Not Making Headlines... April 6, 2021 | Frank Vernuccio
Audit The Fed? We Just Did April 6, 2021 | Jerry Bowyer
Individualism Is The Critical Key April 6, 2021 | Jim Huntzinger
The Next Crises: Debt And Debasement April 6, 2021 | Jerry Bowyer
Socialism Can’t Solve Poverty, Only Christianity Can... March 31, 2021 | Roger McKinney
What The Fed Really Said March 31, 2021 | Jerry Bowyer
What’s Tearing America Apart? March 31, 2021 | Frank Vernuccio
Solomon On Anger Addiction And The Atlanta Shooter... March 31, 2021 | Mark Horne
EM Capitulation Was A Foreseeable Investor Error... March 31, 2021 | Jerry Bowyer
Freedom Fatality Of The Fed March 31, 2021 | Michael Pento
Exceptionalism In Economic Terms March 31, 2021 | Jim Huntzinger
A Primer On Bubbles March 31, 2021 | David Bahnsen
Biden Spending Leak Triggers Inflation Trade... March 23, 2021 | Jerry Bowyer
Why The Left Is Attacking The First Amendment... March 23, 2021 | Frank Vernuccio
A Risk No One Thinks About Until It Matters... March 23, 2021 | David Bahnsen
Solomon On Strength March 23, 2021 | Mark Horne
The Result Of The Pies And Divine Light March 23, 2021 | Jim Huntzinger
Oil Rises March 23, 2021 | Jerry Bowyer
The Ultimate Cosmic Gamble March 23, 2021 | Terry Applegate
Reflecting On Two Historic Market Crises: COVID And The Great Recession... March 19, 2021 | David Bahnsen
The First Amendment Isn’t Supposed To Be A Partisan Issue... March 19, 2021 | Frank Vernuccio
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.