The March “tankan” survey results are not expected to lead to the BOJ's further acceleration of QE.
In sum, there certainly are some worrisome issues, as always, but we find none of them convincing enough to prevent moderate increases in equity prices.
Central Banks: Despite firm economic growth, we believe that a negative YoY CPI through September will steady the Fed's hand.
Coupled with our expectation for global bond yields to rise moderately, we maintain our overweight view on global equities vs. bonds.
The recovery in profits by Japanese export firms should continue to attract the attention of the markets in the first half of 2015.
John Vail updates his long-standing theme: Japan's Successful “Show Me the Money” Corporate Governance.
The disappointing economic data should not worry investors in Japanese risk assets very much at all.
In a pre-GFC and pre-QE world, zero or negative interest rates on a German, Japanese or US 10-year bond would have been considered highly implausible. However...
Now that oil prices have declined, if a central bank targets its overall CPI at 2.0% for 2015, it would likely be labeled as being overly aggressive and perhaps attempting to unfairly weaken its currency.
The investment world is changing quickly and 2015 should prove to be a very interesting year, but we see no reason to change our long-held positive view on global equities.