The Japanese Economy: How Its Post-Earthquake Weakness and Scuffles With China Contribute to a Global-Market Reversal
In our ongoing search for possible "inflection-point" catalysts – financial stimulants that could help turn global markets upside down – the Japanese economy has to be a prime candidate.
In the last part of the 1980s, Japan was the world power – so much so that investors on the U.S. trading floors of New York each day watched the Tokyo markets with a mixture of awe and fear. An oft-cited investing aphorism of the day explained this very clearly by holding that "when Tokyo sneezes, Wall Street catches a cold."
Not long after, the Japanese miracle ended, the stock-and-real-estate markets crashed, and that Asian country fell into a funk known as the "Lost Decade" – a misnomer, since the economic malaise that's lasted virtually ever since is actually more than 20 years long.
Why Inflation in China Could Lead to Another Global Recession
Inflation in China is far more intractable than official headline statistics reveal.
That's potentially bad news for global growth and toppy stock and commodities markets.
If China effectively dampens dangerously high inflationary expectations and real, rapidly rising food, property and fixed-investment assets by hitting the brakes too hard, global growth could skid and potentially stall out.
The resulting sound of breaking glass would likely be clear support levels enjoyed by rising stock and commodity markets as they finally correct, along with theories of China's infinite growth trajectory.
LNG Imports: We Predicted How Japan Would Ease its Energy Crisis
Just days after Money Morning columnist Peter Krauth predicted a global uptick in liquefied natural gas (LNG) demand because of the nuclear-powerplant disaster in Japan, experts predicted the Asian heavyweight would boost LNG imports by 50% to help ease the massive energy shortage the country now faces because of the tragedy.
Krauth is Money Morning's resident natural resources expert, and he also runs the "Global Resource Alert" advisory service. Late last month, in the special report "A Trillion Reasons to Bet Big on LNG," Krauth told Money Morning subscribers to take a close look at liquefied natural gas, predicting that Japan would seize upon LNG as a ready and plentiful partial solution to its increasingly serious energy-shortfall quagmire.
Japan relies on fuel imports for most of its energy needs. After the March 11 earthquake and subsequent powerplant accident ruined 20% of its nuclear power output, Japan has been forced to seek out other sources of electricity.
The Future of the Euro: Why Europe's Key Currency is Doomed
The Eurozone project has seen better days, which is why the future of the euro isn't a bright one.
In fact, as all the latest speculation about Greece either abandoning the euro currency – or being booted out of the Eurozone outright – is demonstrating, "the market" is about to apply a level of pressure well beyond what the Eurozone and European Union (EU) were designed to handle.
The number of sovereign states in the EU that are facing difficulty selling new debt, or even a rollover of current debt, is growing.
The Eurozone and the EU are both in trouble. Clearly, the structure that exists today is flawed and will not withstand the rigors and pressures that are headed directly its way.
The ability to kick the can down the road is about to end, and with it some hard decisions will need to be made by the political and wealthy elite.
Let's take a closer look.
How Long Before Greece Leaves the Euro Zone?
I find it ironic that a country which defrauded its way into the Euro Zone is likely to be the first country to exit the Euro Zone. Despite a raft of hasty denials by just about everyone in Brussels, it now seems all but inevitable that Greece will bail on the Euro when they default on the €110 billion bailout they received just one year ago.
Of course, this all started on Friday when an article came out in Der Spiegel claiming that Greece was mulling an exit from the Euro due to near-daily violent protests and the apparent failure of austerity measures. An emergency meeting of European finance ministers was convened in Luxembourg in response to the report, which they all denied. Methinks they doth protest too much.
Coal Use in China Shines Light on Growth
International coal prices hit $124 per ton last week, the highest level in five months, as strong demand from reconstruction projects in Japan and reduced supply from flood-ravaged Australia have made coal supply tight.
The floods in Queensland, Australia cut the country's output of coal by 15%; other big coal producers such as Indonesia, South Africa and Colombia are experiencing similar production cuts due to floods of their own.
At the end of March, coal prices were 33% higher than a year ago, and earlier this month mining giant Xstrata PLC (PINK: XSRAF) inked a one-year deal with a Japanese utility at $130 per ton, effectively setting a floor under coal prices in the near-term. That's up from $98 per ton the company made in a similar deal a year ago.
Perhaps no country is more affected by this development than China.
Resurgent Greek Debt Crisis Stokes Concern, Causes S&P to Lower Rating
Concern that the Greek debt crisis is far from resolved led Standard & Poor's to lower that troubled country's debt rating even deeper into junk territory yesterday (Monday).
The S&P cut Greece to B from BB- with a warning it could downgrade further.
"In our view, there is increased risk that Greece will take steps to restructure the terms of its commercial debt, including its previously-issued government bonds," S&P said in a statement.
A restructuring of the Greek debt could result in principal reductions of 50% or more, with the loss borne by the bondholders.
One year after a bailout intended to help the Greek government address its crushing debt – it owes more than 150% of its gross domestic product (GDP) – European Union (EU) leaders are worried Greece is not doing enough to fix its debt problems.
China's Economy Continues to Ascend – But Watch Out for Speed Bumps
Everyone knows that China's economy is hot. The only question is whether it may be a little too hot.
China posted yet another quarter of stellar economic growth in the first quarter of 2011, with its gross domestic product (GDP) growing 9.7%. However, analysts are worried about some of the side effects that have accompanied that growth- namely soaring inflation and the emergence of speculative bubbles.
Inflation in China hit a 32-month high in March, and the country's real estate market is beyond scorching.
Policymakers in Beijing insist they have the situation under control, and they've been trying to rein in liquidity and curb speculation to prove it. That's why China's economy, accustomed to double-digit growth, is only expected to grow 8% to 9% this year.
The Coming Bond Market Collapse: Three Ways to Dodge the Damage
We're on a collision course with the worst bond market collapse in decades.
The warning signs are as clear as day.
There's still time to dodge the damage – and even to profit – if you know what to look for.
But the time to make your move is now…
How to Profit if the Nigeria Elections Drive Up Oil Prices
Oil prices are on the rise for a bevy of reasons – soaring demand in emerging markets, the weak dollar, and a strengthening U.S. recovery, to name a few.
However, supply disruptions and civil unrest in the Middle East-North Africa (MENA) region in recent months have had the biggest impact on oil prices. Egypt, Libya and Yemen have all played a part in driving up oil prices, and now they're about to be joined by another volatile oil producer.
I'm talking about Nigeria.