Disclaimer

Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. These days I'm retired, and I can't by law give you advice. I do make mistakes, but I try hard to do my analysis thoroughly, and to make sure my data are correct. Remember: the unexpected sometimes happens. The expected does too, but all too often it takes longer than you thought it would.

The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you've served Her. Take care. Be humble. And don't blame me.

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Friday, June 24, 2011

Japan IP starts to recover

A lot of the weakness in US economic activity has been due to natural disasters.  The earthquake and tsunami in Japan  and the resulting loss of electric power caused a loss of production in tightly-linked production processes.  Just-in-time manufacturing comes to a juddering halt if any part can't be produced -- and disruption from the earthquake itself followed by a collapse in electricity production meant that even unaffected plants couldn't continue manufacturing.  This affected the US car plants of the Japanese car manufacturers too.  There was also a major flood in the mid-west of the US, which also impacted production and sales.

Japanese production has started to recover.  The US will too.  How much of the US and Japanese weakness is due to natural factors and how much is just a classic mid-cycle dip remains to be seen.  My guess remains that growth in the US will re-accelerate in coming months.  Monetary stimulus has been too great for it not to.  And fiscal tightening -- which would have a big negative impact if post-bubble Japan is any guide -- is still a year away.  Unless of course, the pollies can't get their act together and the debt ceiling isn't raised.  Bizarre.

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