The Sun is Finally Rising

By Monday, August 1, 2005

It looks like things are finally looking up for people in Japan. After a decade-long recession, the world’s second-biggest economy is now seeing signs of a recovery.

Many of the key economic indicators are looking more positive today than they have in years. Last week, Japan’s Ministry of Economy, Trade, and Industry released the following encouraging news:

—Production is up by a seasonally adjusted 1.5%

—Unemployment has dropped to a seven-year low of 4.2% (that’s lower than the unemployment rate of most European countries)

—Manufacturers of electronics and auto parts are announcing that they are expanding to meet the demand of higher sales in the U.S. and throughout Asia

—GDP is growing at a 4.9% rate (as seen in the first quarter of 2005)

—Exports rose 3.6% year over year in June

—Job creation is up throughout the country

—Discretionary bonuses to employees have also risen

—Wages have seen increases in five of the last seven months

—Consumer spending is up slightly

Would I bet that the Japanese economy is now in full turnaround mode? Nope, not yet. One positive quarter doesn’t mean a trend in my books. That said, a little hope never hurt, and I’m sure that a lot of people in Japan are breathing a sigh of relief and loosening their belts just a little bit.

I’ll be watching this economy closely over the short term; you can be sure of that. In the meantime, if your investment portfolio could use a little boost in its international holdings, now might be the time to get in early on electronics and auto parts makers in this land of a newly rising sun.


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Sep. 2, 2015
Trailing 12-month EPS for Dow Jones companies (Most Recent Quarter) $1014.15
Trailing 12-month Price/earnings multiple (Most Recent Quarter)

17.44

Dow Jones Industrial Average Dividend Yield 2.71%
10-year U.S. Treasury Yield 2.14%

Immediate term outlook:
The bear market rally in stocks that started in March 2009, extended because of unprecedented central bank money printing, is coming to an end. Gold bullion is up $1,000 an ounce since we first recommended it in 2002 and we are still bullish on the physical metal.

Short-to-medium term outlook:
World economies are entering their slowest growth period since 2009. The Chinese economy grew last year at its slowest pace in 24 years. Japan is in recession. The eurozone is in depression. With almost half the S&P 500 companies deriving revenue outside the U.S., slower world economic growth will negatively impact revenue and earnings growth of American companies. Domestically, America’s gross domestic product grew by only a meager 2.3% in the second quarter, which will negatively impact an already overpriced equity market.

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