Monday, June 20, 2011

Japanese trade data looking ugly

The Japanese Trade Data for the month of May was released over night and it does not look good.

In absolute terms the trade-deficit registered, non-seasonally adjusted, was the 2nd worst ever. It was beat by the peak-crisis number from  January 2009.

Looking at seasonally-adjusted data now we face some interesting pieces:

On Bloomberg the info is available since January 1993, around 220 observations.
Since then there were only 12 monthly deficits and, to our surprise, 10 of those happened during 2008's crisis and the remaining 2 were May and April 2011, after the earthquake+tsunami.

Below you will find tables and charts to illustrate what I mentioned above.

Of course there is a huge impact from the natural disasters and their consequences, but is Japan losing competitivity that will enhance the tragedies' effects?
Will ongoing supply-disruption from Japan make buyers of nipponese goods switch business counterparties? Will they source from other countries? Is the strong Yen making things worse for them?

*Disclaimer: charts and data are presented as I receive/see them. Sources are usually not checked for validation and my own calculations are of 'back of the envelope'-type. I am aware that some math that I do myself might be wrong and/or misleading to some extent. In financial markets the rate of change of economic data is often more important than the actual level and the perception of 'what is priced in' is more important than 'what is actually going to happen'. This is actually the way people pick entry and exit points. So... yes, sometimes you might say 'This guy is an idiot, this is way wrong!' with a high conviction, being right. Not to worry. Markets are made of expectations and the clash of conviction between its participants. Portfolio managers know that being an idiot is sometimes profitable and being smart is often a bad choice. It is all reality, sometimes good, sometimes bad. By the way: corrections to my analysis and intelligent debate is welcome. theintriguedtrader AT gmail do com

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